Q4 2024 QuinStreet Inc Earnings Call

Good day and welcome to Queen Street's fiscal fourth quarter and full year 2024 financial results conference call. Today's conference is being recorded.

Operator: Results Conference Call. Today's conference is being recorded. Following the prepared remarks, there will be a Q&A question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. At this time, I would like to turn the conference over to Senior Director of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin. Thank you, Operator.

Following the prepared remarks, there will be a QI question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Robert Amparo: And thank you, everyone, for joining us as we report Quinstreet's fiscal fourth quarter and full year 2024 financial results. Joining me on the call today are Chief Executive Officer Doug Valenti and Chief Financial Officer Greg Wong.

At this time, I would like to turn the conference over to Senior Director of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin.

Robert Amparo: Thank you, Operator, and thank you, everyone, for joining us as we report Quinstreet's fiscal fourth quarter and full year 2024 financial results.

Speaker Change: Joining me on the call today are Chief Executive Officer Doug Valenti and Chief Financial Officer Greg Wong.

Robert Amparo: Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Such 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 8K filing made today and our most recent 10Q filing.

Speaker Change: Before we begin, I would like to remind you that the following discussion will contain forward-looking statements.

Speaker Change: 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.

Speaker Change: Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8K filing made today and our most recent 10Q filing.

Robert Amparo: Forward-looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today, we will be discussing both GAAP and non-GAAP financial measures. A reconciliation of GAAP and non-GAAP financial measures is included in today's earnings press release, which is available on our investor relations website at investor.quinstreet.com. With that, I will turn the call over to Douglas Valenti. Please go ahead,

Speaker Change: Board-looking statements are based on assumptions as of today and the company undertakes no obligation to update his statements.

Speaker Change: Today, we will be discussing both GAAP and non-GAAP measures. A reconciliation of GAAP and non-GAAP financial measures is included in today's earnings press release, which is available on our investor relations website at investor.quinnstreet.com.

Speaker Change: With that, I will turn the call over to Douglas Valenti. Please go ahead, sir.

Douglas Valenti: Thank you, Rob.

Douglas Valenti: The fraud-based re-ramp of auto insurance revenue accelerated in fiscal Q4, with revenue growing over 200% year-over-year. We also grew revenue 13% in non-insurance financial services client verticals, and 12% in home service, and Greg. Total company revenue grew 52% year-over-year to a record $198 million. Adjusted EBITDA jumped about 500% year-over-year in the quarter, to over $11 million. Our balance sheet also strengthened. We now have over $50 million in cash, and we have No Bank Debt.

Douglas Valenti: Welcome, everyone.

Douglas Valenti: The broad-based re-ramp of auto insurance revenue accelerated in fiscal Q4.

Speaker Change: with revenue growing over 200% year of year.

Douglas Valenti: We also grew revenue 13% in non-insurance financial services client verticals.

Douglas Valenti: and 12% in Home Services.

Douglas Valenti: We're great.

Douglas Valenti: Total company revenue grew 52% year-over-year, to a record $198 million.

Douglas Valenti: Adjusted EBITDA jumped about 500% year-over-year in the quarter to over 11 million dollars.

Douglas Valenti: Our balance sheet also strengthened.

Douglas Valenti: We now have over $50 million in cash.

Douglas Valenti: Looking ahead, our expectations for auto insurance remain strongly and confidently positive. Carriers continue to report attractive financial results and are still ramping up their spins. They have not yet reached their previous peak product or geo footprint. Also..., re-expanding and re-optimizing media supply to best meet the extraordinary demand for auto insurance should be a tailwind going forward, especially with consumer shopping continuing at or near peak levels. Perhaps most importantly,

Douglas Valenti: and No Bank Debt.

Douglas Valenti: Looking ahead?

Douglas Valenti: Our expectations for our insurance remains strongly and confidently positive.

Douglas Valenti: Carriers continue to report attractive financial results.

Douglas Valenti: and are still ramping their spend.

Douglas Valenti: They have not yet reached previous peak product or geofot prints.

Douglas Valenti: Also...

Douglas Valenti: Re-expanding and re-optimizing media supply to best meet the extraordinary demand in auto insurance should be a tailwind going forward.

Douglas Valenti: especially with consumer shopping continuing at or near peak levels.

Douglas Valenti: Auto insurance trends should continue upward and to the right, as the relentless shift to digital performance marketing has returned as the dominant theme driving long-term channel and market growth. We are also confident in continued progress and performance in our other client verticals. Thanks again.

Douglas Valenti: Perhaps most importantly.

Douglas Valenti: Auto insurance trends should continue up and to the right.

Douglas Valenti: as the relentless shift to digital performance marketing has returned as the dominant theme driving long-term channel and market growth.

Douglas Valenti: We are also confident in continued progress and performance in our other client verticals.

Douglas Valenti: We expect strong revenue growth and Margin Expansion in Fiscal Q1 and in full fiscal year 2025, which began on July 1st. Turning to our outlook for fiscal Q1, revenue is expected to be between $220 and $230 million. Gross of 82% year-over at the midpoint of the range. Adjusted EBITDA is expected to be $14 to $16 million, growth of over 1,400%, at the midpoint of the range. As an initial, Early Full Fiscal Year 2025 Outlook.

Douglas Valenti: Overall, we expect strong revenue growth and margin expansion in fiscal Q1 and in full fiscal year 2025.

Douglas Valenti: which began on July 1st.

Douglas Valenti: Turning to our Outlook for fiscal Q1.

Douglas Valenti: Revenue is expected to be between $220 million and $230 million.

Douglas Valenti: growth of 82% year-over-year at the midpoint of the range.

Douglas Valenti: And just as it even done, is expected to be 14 to 16 million dollars.

Douglas Valenti: growth of over 1,400 percent.

Douglas Valenti: at the midpoint of the range.

Douglas Valenti: as an initial.

Douglas Valenti: We expect revenue of between $800 and $850 million, growth of 34% year-over-year at the midpoint of the range, and AdjustedEvaDoc of 50 to 60 million dollars, growth of 170% year-over-year at the midpoint of the range. We believe that there are opportunities to scale revenue and expand margins even further than that, and we will refine our outlook as the year progresses. With that, I will turn the call over to Greg.

Douglas Valenti: Rolling, full fiscal year 2025 outlook.

Douglas Valenti: We respect revenue of between 800 and 850 million dollars.

Douglas Valenti: Growth of 34% year-over-year at the midpoint of the range.

Douglas Valenti: and adjusted EBITDA of $50 to $60 million.

Douglas Valenti: growth of 170% year-over-year at the midpoint of the range.

Douglas Valenti: We believe that there are opportunities to scale revenue and expand margins even further than that.

Douglas Valenti: and we will refine our outlook as the year progresses.

Douglas Valenti: i

Douglas Valenti: With that, I will turn the call over to Greg.

Gregory Wong: Hello and thanks to everyone for joining us today. Q4 was a record revenue quarter for Quinstreet. All of our client verticals delivered year-over-year growth in the quarter. For the June quarter, total revenue grew 52% year-over-year and was $198.3 million. Adjusted net income was $6.5 million, or $0.11 per share, and adjusted EBITDA was $11 million.

Greg Wong: Thank you, Doug.

Greg Wong: Hello and thanks to everyone for joining us today.

Greg Wong: Q4 was a record revenue quarter for Quinstreet. All of our client verticals delivered year-over-year growth in the quarter.

Speaker Change: For the June quarter, total revenue grew 52% year-over-year and was $198.3 million.

Speaker Change: Adjusted net income was $6.5 million or $0.11 per share.

Greg Wong: and adjusted even though it was 11 million dollars.

Gregory Wong: As Doug noted, the strong re-ramp of auto insurance continued in the June quarter, auto insurance revenue ramped throughout the quarter, and the demand from carriers is broad-based. Additionally, our outlook for the vertical remains bullish as carriers continue to expand their footprints and as the shift to digital performance marketing returns as the dominant long-term theme in driving channel and market growth. Looking at revenue by client vertical, our financial services client vertical represented 69% of Q4 revenue and grew 82% year-over-year to $136.9 million, a record revenue quarter for that business.

Greg Wong: As Doug noted, the strong re-ramp of auto insurance continued in the June quarter.

Doug Valenti: Auto insurance revenue ramped throughout the quarter, and the demand from carriers is broad-based.

Doug Valenti: Additionally, our outlook for the vertical remains bullish as carriers continue to expand footprints and, as the ship the digital performance marketing returns as the dominant long-term theme in driving channel and market growth.

Gregory Wong: Our home services client vertical represented 30% of Q4 revenue and grew 12% year-over-year to $59.3 million, also a record revenue quarter for the business. The other revenue was the remaining $2 million of Q4 revenue, turning into our full fiscal year 2024 performance. We reported revenue of $613.5 million, up 6% year-over-year. Our financial services client vertical represented 64% of full fiscal year revenue and grew 3% year-over-year to $392.69. Our home services claim vertical represented 35% of full fiscal year revenue and grew 10% year-over-year to $211.9 million.

Speaker Change: Looking at revving the bike client vertical?

Speaker Change: are financial services quite vertical represented 69% of Q4 revenue and grew 82% year of year to 136.9 million dollars for record revenue quarter from that business.

Doug Valenti: Our home services client vertical represented 30% of Q4 revenue and grew 12% year-over-year to $59.3 million, also a record revenue quarter for the business.

Doug Valenti: Other revenue was the remaining $2 million of Q4 revenue.

Speaker Change: Turning to our full fiscal year 2024 performance.

Speaker Change: We reported revenue of $613.5 million, up 6% year-over-year.

Speaker Change: Our financial services client vertical represented 64% of full fiscal year revenue and grew 3% year-over-year to $392.6 million.

Speaker Change: are home services quite murderable, represent in 35% the full fiscal year revenue.

Speaker Change: and grew 10% year-over-year to $211.9 million.

Gregory Wong: The other revenue represented the remaining $9 million of full fiscal year revenue. Adjusted EBITDA for full fiscal year 2024 was $20.4 million. On the balance sheet, we close the year with $50.5 million of cash and equivalents and no bank debt.

Speaker Change: Other revenue represented the remaining $90 million of full fiscal year revenue.

Speaker Change: are just as deep and tough for full fiscal year 2020 more.

Speaker Change: was $20.4 million.

Speaker Change: from the Balachi. We close the year with $50.5 million of cash and equivalents and no bank debt.

Gregory Wong: In closing, our outlook on the business has never been brighter. We expect another record revenue quarter in fiscal Q1, with further margin expansion. We remain well positioned to benefit from the re-ramp of auto insurance client spending, and we are seeing continued momentum and our non-insurance business is quite vertical. We expect strong total company revenue growth and adjusted EBITDA expansion driven by a diversified portfolio. With that, I'll turn it over to the operator for Q&A.

Speaker Change: I'm calling.

Speaker Change: Our outlook on the business has never been a writer.

Speaker Change: We expect another record revenue quarter in fiscal Q1 with further margin expansion.

Speaker Change: We remain well-positioned to benefit from the re-ramp of auto insurance client spending.

Speaker Change: and are seeing continued momentum in our non-insurance clinic verticals.

Speaker Change: We expect strong total company revenue growth and adjusted EBITDA expansion driven by our diversified portfolio of CLEC verticals.

Speaker Change: with that. I'll turn it over to the operator for Q&A.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please make sure to lift the handset before pressing any key.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2.

Speaker Change: If you are using a speaker phone, please make sure to lift the handset before pressing any keys.

Operator: Your first question comes from the line of John Campbell, Firm Stevens. Please go ahead.

Speaker Change: Your first question comes from the line of John Campbell from Stevens. Please go ahead.

John Campbell: Hey guys, good afternoon. A-T-R-O-N. Hey, obviously, really solid results as far as client demand is concerned. I mean, it's coming in, I think, way better than any of us expected. And on the FY25 revenue guidance, the high end of your range is actually above where the consensus is for FY26. So, you know, it's tough to poke holes in it. But if I look, if I annualize the revenue this quarter, right, and this is not a seasonally strong quarter, which seems like it's pretty fair, it assumes that your midpoint of the revenue guidance is about 4% higher.

John Campbell: I think you've probably got a lot of conservatism in there, but maybe if you could talk to them about whether you expect a deceleration in home services or anything like that, or, you know, anything non-auto, any kind of color that would be helpful.

John Campbell: Hey guys, good afternoon.

John Campbell: A-chon.

John Campbell: Hey, so obviously really solid results as far as the client demand. I mean, it's coming in, I think, way better than any of us expected. And on the, you know, the FY25 revenue guidance, the high end of your range is actually above where consensus is for FY26.

Speaker Change: You know, it's tough to poke holes at it, but if I look, if I annualize the revenue this quarter, right, and this is not a seasonally strong quarter, which seems like it's pretty fair.

Speaker Change: It assumes that you're midpoint of the revenue guidance is about 4% higher. I'm thinking you've probably got a lot of conservatism in there, but maybe if you could talk to if you expect a disseleration in home services or anything like that or anything non-auto, you kind of color that would be helpful.

Douglas Valenti: Yeah, thank you, John. We do not expect a deceleration in any of our businesses. We expect all of our businesses to grow at pretty strong double-digit rates this year. I would say there are a couple of things. One is...

Speaker Change: Yeah, thank you, John. We do not expect a deceleration in any of our businesses. We expect all our businesses to grow a pretty strong doubled as it rates this year. I would say that it's a couple of things. One is...

Douglas Valenti: It's the first guide of the year, and it's early in the year, so we certainly don't want to get too far out ahead of ourselves. The other thing is the insurance ramp has been, spectacularly, largely foretold by us, as I'm sure you know, given that we did get to the range early in the year, as we had said we thought we might. And we just want to see how it settles out. We don't have any indications that it won't extend.

Speaker Change: It's the first guy in the year and it's early in the year so we certainly don't want to get too far out ahead of ourselves.

Speaker Change: The other thing is the insurance ramp has been...

Speaker Change: spectacular largely foretold by us as you would I'm sure you know given that we did get to the range on the year as we had said we thought we might.

Speaker Change: And we just want to see how it settles out. We don't have any indications that it won't extend.

Douglas Valenti: But we want to see how it settles out as we and others work to re-grow and optimize media to align better with the surge in demand, which is now what we're all working hard on, and see if and when that has any impact at all. So I would say, "First guy of the year." You're going to find us pretty conservative when we go out with the first guy of the year.

Speaker Change: But we want to see how it settles out as we and others.

Speaker Change: Work to regrow and optimize media.

Speaker Change: to align better with the surge in demand which is now what we're all working hard on.

Speaker Change: and see if and as that has any impact at all. So I would say, first guy of the year. You're going to find us pretty conservative when we go out with the first guy of the year. We do not expect any deceleration in any parts of the business.

Douglas Valenti: We do not expect any deceleration in any part of the business, and we do expect auto insurance to continue to be very strong for the rest of the year and beyond. But we'd like to see how it settles out in terms of the precise numbers as the media side of the market catches up to the demand side of the market.

Speaker Change: and we do expect our interests to continue to be very strong for the rest of the year and beyond. But we'd like to see how it settles out in terms of the precise numbers as the media son of the market.

John Campbell: Okay, that's helpful. And then maybe like a bigger picture industry, maybe strategic questions. But, you know, I think a lot of your competitors are, you know, I think this is a broad-based recovery; everybody's feeling the strength right now. As far as the margin flow through, I think, you know, you talked a little bit about maybe last quarter talking about 10% margins for this year. But you know, everybody's kind of chasing the same opportunity, it seems like at this point, so maybe a little bit lower margin. You have to obviously be there for your carrier partners; you can't sit on the sidelines.

Speaker Change: Um, catches up to the demand side of the market.

Speaker Change: Okay, that's helpful, and then maybe like a bigger picture industry, maybe strategic question, but you know, I think

Speaker Change: A lot of your competitors are, you know, I think this is a broad base recovery. Everybody is filling the string right now. As far as the margin flows through, I think, you know, you talked a little bit about.

Speaker Change: Maybe last quarter, talking about 10% margins for this year, but everybody is chasing the same opportunity. It seems like at this point, so maybe a little bit lower margin. You have to obviously be there for your carrier partners. You can't go sit on the sidelines.

John Campbell: So I totally understand it. But, like, if I think about industry consolidation, and Doug, you've been in this industry for a long time, I think you're maybe one of the godfathers or forefathers of this industry. Talk to me about what you feel like the market could head over time because it just feels like if you take some, you know, four or five of these competitors and make one or two, the whole customer acquisition cost, the margin opportunity is really there for you.

Speaker Change: So I totally understand it, but like, as I think about industry consolidation, and Doug, you've been in this industry, I think you're maybe one of the godfathers or forefathers of this industry.

Doug Valenti: Talk to me about what you feel like the market could, where you feel like the market could head over time. It just feels like if you take four or five of these competitors and make one or two, that whole customer acquisition costs, the margin opportunity is really there for you.

Douglas Valenti: Yeah, John, it's a good question. Let me touch on the margin. First of all, we think that 10% is still where we're heading. In terms of this particular quarter, in the near term, the heavier mix of auto insurance doesn't help that, because, as you know, auto insurance, given its scale, maturity, and competitiveness, comes in at a little bit lower than average median margin percent. We expect that mix to fix itself over time as we continue to expand all the other businesses, and we expect the margins in auto insurance to actually get better from here as we work to, as I indicated before, optimize the media against that surge in demand.

Doug Valenti: Yeah, John , it's a good question. Let me touch on the margin. First of all, we think that 10% is still where we're heading.

John Campbell: Um, yeah.

Speaker Change: in terms of this particular quarter in the near term, the heavier mix of auto insurance.

Speaker Change: It doesn't help that because as you know, under insurance given it's scale, maturity, competitiveness comes in at a little bit lower than average, medium margin per cent.

Doug Valenti: We expect that mix to fix itself over time as we continue to expand all the other businesses.

John Campbell: And we expect the margins in auto insurance to actually get better from here.

Douglas Valenti: Nobody had time to do that with the demand coming so fast. What media was still available got bid up by everybody, and it's taken a little while for the other media channels to reinvest and regrow themselves to catch up. That's all good stuff for going forward. That's all tailwind stuff for going forward.

John Campbell: And we worked, as I indicated before, to optimize the media.

Speaker Change: against that surge in demand. Nobody had time to do that. The demand came so fast.

Speaker Change: What video was still available got dead up by everybody, and it's taken a little while for the other media channels to reinvest and regrow themselves to catch up. That's all good stuff.

Douglas Valenti: In terms of the strategic context, there are arguments for and against consolidation. A number of larger clients want more than one player in the role that we play. And so it could be, and that consolidating could be you could not get the main synergy you're hoping for, which is the hope for an increase in media margin or gross margin through that combined market power. And that's something that I think is a big concern for anybody thinking about consolidating.

Doug Valenti: for going forward. That's all, you know, tailwind stuff for going forward. In terms of the strategic context, I'm not—there are arguments for and against consolidation. A number of the larger clients—

Speaker Change: want more than one player in the role that we play and so it could be and that consolidating

Doug Valenti: Could be, you could not get the main synergy you're hoping for, which is the hope for increase in media margin or gross margin to that combined market power.

Douglas Valenti: There are a lot of other potential barriers to consolidation in terms of how different companies operate, what they're good at, whether or not those are synergistic or not, and if they could be combined in a way that didn't destroy more value than it created. So I think it's a complicated question. It's not something I would count on in the foreseeable future, but it's not something I would count out in the long term, depending on how these markets continue to evolve. But I think in any and all cases, we're going to be in really good shape. We could not feel better about the setup for Quinstreet. All really great points. I appreciate the

Doug Valenti: And that's something that I think is a big concern for anybody thinking about consolidating. There are a lot of other...

Doug Valenti: Contention barriers to consolidation in terms of how different companies operate, what they're good at, whether or not those are synergistic or not, if they could be combined in a way that didn't just didn't.

Doug Valenti: didn't destroy more value than it created. So I think it's a complicated question. It's not something I would count on in the foreseeable future. It's not something I would count out.

Doug Valenti: In the long term, depending on how these markets continue to evolve, but I think in any and all cases, we're going to be in really good shape. We could not feel better about the setup for Quinstreet.

John Campbell: All really great points. I appreciate the color, Doug.

Doug Valenti: All really great points. I appreciate the color, Doug.

John Campbell: Thank you, John .

Operator: Your next question is from the line of Zach Cummins from B. Reilly Securities. Please go ahead.

Speaker Change: Your next question is from the line of Zach Cummins from B. Reilly Securities. Please go ahead.

Zachary Cummins: Hi, good afternoon. Thanks for taking my questions and congrats on the strong start to your fiscal 24. Just curious if you could give some more insight into where you're seeing strength among the carriers. I imagine there are some that are further along in terms of their recovery, but just various of the trends that you're seeing and how you expect that to continue to play out in the coming quarters.

Zach Cummins: Hi, good afternoon. Thanks for taking my questions and congrats on the strong into your fiscal 24. Just carry so you can get some more insight into...

Zach Cummins: Where you're seeing strength among the carriers? I imagine there's some that are further along in terms of their recovery, but just serious of the trends that you're seeing and how you expect that to continue to play out in the coming quarters.

Douglas Valenti: are more broad-based than ever in terms of scale demand. We have several clients doing multiple millions of dollars per month with us. We have twice that number.

Speaker Change: is a more broad-based than ever in terms of scale demand.

Speaker Change: He helped,

Speaker Change: Several clients doing multiple needs of dollars per month with us.

Speaker Change: We have

Douglas Valenti: So, you know, I'd say between five and 10 clients, depending on how you count some of it, doing over one million dollars a month with us. And we're seeing it across the spectrum in terms of both direct carriers as well as more agent-driven carriers. We're seeing it across the product mix, clicks, calls, and leads. Although, you know, we're dominantly clicks on the direct side, we have a lot more market to penetrate on the agency and lead side, and call side of the industry.

Zach Cummins: twice that number.

Zach Cummins: So, you know, I'd say between five and ten clients, depending on how you count some of it, doing over, in total, doing over one, at least a million dollars a month with us. And we're seeing it across the spectrum in terms of both direct carriers as well as more agent-driven carriers.

Zach Cummins: We're seeing it across the product mix, clicks, calls, MVs, although we know predominantly clicks.

Zach Cummins: On the direct side, we have a lot more market to penetrate on the agency and lead side and call side of the industry.

Douglas Valenti: So, you know, a mix of carriers and a mix of products and, honestly, probably the healthiest, most diverse mix we've ever had, in terms of the breadth of the footprint, is how I would mainly characterize it. I would say I don't see any, but the one other common theme, though, is that nobody's really back to their pre-COVID peak in terms of their footprint coverage, in terms of geo coverage and product coverage.

Zach Cummins: So a mix of carriers and a mix of products and a very healthy diverse mix and probably the healthiest most diverse mix we've ever had honestly in terms of the breadth of the footprint.

Zach Cummins: is how I would name the characterize it. I would say I don't see any, but the one other common thing though is that nobody's really back to their pre-tove at peak in terms of their footprint coverage.

Douglas Valenti: So, for example, not many folks back in California yet, and a lot of them are not covering big parts of Florida, or not covering Florida in a certain type of coverage range. And I could go, there's list, there's list, after list, after list, after list.

Zach Cummins: in terms of geo coverage and product coverage. So for example, not many folks back in California yet.

Zach Cummins: and a lot of the folks not covering big parts of Florida and or not covering Florida in a certain type of coverage range and I could go there's list there's list after list after list after list so and then and there are still carriers significant carriers

Operator: Financial Results Conference Call. Today's conference is being recorded.

Douglas Valenti: So, and then, and there are still carriers, significant carriers, who have not really moved dramatically from their lows of the past few years. So it's a good broad-based mix. Still, nobody is back to their pre-COVID peak, and still others are not really up in the market. And one of the areas that's still lagging quite a bit is the independent agency channel because they've just now started to get product back, and carriers are coming back into the market.

Operator: Following the prepared remarks, there will be a QAQI question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Zach Cummins: who have not really moved dramatically.

Robert Amparo: At this time, I would like to turn the conference over to Senior Director of Investor Relations in Finance, Robert Amparo. Mr. Amparo, you may begin. Thank you operator.

Zach Cummins: from their, from their loaves of the past few years. So there's, it's a good broad-based mix. Still nobody back to their pre-COVID peak and still others not really.

Robert Amparo: And thank you everyone for joining us as we report Quinstreet's fiscal fourth quarter and fully year 2020 for financial results. Joining me on a call today or Chief Executive Officer Doug Valenti and Chief Financial Officer Greg Wong.

Zach Cummins: up in the market and one of the areas that's still lagging quite a bit.

Zach Cummins: is the independent agency channel because they've just now...

Douglas Valenti: And so it will still take them a while to get staff back up, get set back up, and have enough of that product that they're in the right states to make their business work. So it's broad-based, but it's still not complete by any stretch.

Zach Cummins: started to get product back and carriers coming back into the market and so it will still take them a while to get, you know, staff back up, get set back up and have enough that product.

Robert Amparo: 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 certainties that they cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that they cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including how the most recent ATA filing made today and our most recent TENQ filing. Forward-looking statements are based on assumptions as of today and the company undertakes no obligation to update these statements.

Zach Cummins: I've earned the right states to make their business work, so it's been, it's run based, but it's still not complete by any stretch.

Zachary Cummins: Okay, and my one other question really centers around home services. Can you talk about your preparations in terms of the one-to-one consent regulations under the TCPA with those going into effect early next year? Any sort of indications of what kind of impact that could present to home services and how you're prepping to work through that?

Speaker Change: and my one other question really centers around home services.

Speaker Change: Can you talk about your preparations in terms of one-to-one consent regulations under the TCPA with those going into effect early next year? Any sort of indications of what kind of impact that could present to home services and how you're prepping to work through that?

Robert Amparo: Today we will be discussing both gap and on-gap measures. A reconciliation of gap and on-gap financial measures is included in today's earnings press release, which is available on our Investor Relations website at investor.quinstreet.com.

Douglas Valenti: That was a great question, and it is mainly for us, as you know, it's mainly a home services thing; somewhere between 20 and 30 percent of our total business would be impacted or applicable under the regulation. And just to kind of level the playing field, the FCC came out with a modification to the TCPA consumer consent rules that is slated to go into effect next January, which requires consumers to consent one-to-one for any service provider that intends to contact them either by phone or by text.

Speaker Change: That was a great question and it is mainly for us, as you know, it's a mainly home service Thanks somewhere between 20% and 30% of our total business

Douglas Valenti: With that, I will turn the call over to Doug Valenti. Please go answer. Thank you Rob.

Speaker Change: would be impacted or applicable under the regulation and just to kind of levels that everybody. The FCC came out with a modification to the TCPA consent rules that is spaded to go into effect next January.

Douglas Valenti: Welcome everyone. The broad-based re-ramp of auto insurance revenue accelerated in fiscal Q4 with revenue growing over 200% year-of-year. We also grew revenue 13% in non-insurance financial services client verticals and 12% in home services. Overall, total company revenue grew 52% year-of-year to a record $198 million. Adjusted EBITDA jumped about 500% year-of-year in the quarter to over $11 million. Our balance sheet also strengthened. We now have over $50 million in cash and no bank debt.

Speaker Change: which requires consumers to consent one-to-one for any service provider that intends to contact them either by phone or by text.

Douglas Valenti: And that is not current industry practice. Currently, you, and leads, and this applies to mainly leads based on what I just said, as I'm sure you figured out. And so that means that any lead that's generated, the consumer has to opt in, specifically opt in for that service provider contact. And that's new for the industry, and the industry has got to adapt to it. A few things.

Speaker Change: And that is not current industry practices, currently in leads, and this applies to mainly leads based on what I just said, as I'm sure you figured out. And so that means that any lead that's generated, the consumer has to...

Zach Cummins: opt-in, specifically opt-in for that service provider contact, and that's new for the industry, and the industry has got to adapt to it. A few things. First and foremost, we believe that it's well accounted for.

Douglas Valenti: First and foremost, we believe that it's well accounted for in terms of any impact or any effects it will have on the plan and outlook we just gave you, including the fact that we think there's probably, assuming we continue to execute well, more that we can add to that over time. So that's probably the most important point. The other points would be that we've been involved and known about this likely regulation for quite some time. We have a good dialogue with the FCC. We understand and, of course, respect what their objectives are here. We may or may not have gone about it the same way.

Douglas Valenti: Looking ahead, our expectations for auto insurance remain strongly and confidently positive. Carriers continue to report attractive financial results and are still ramping their spend. They have not yet reached previous peak product or geo-foot prints. Also, re-expanding and re-optimizing media supply to best meet the extraordinary demanded auto insurance should be a tailwind going forward, especially with consumer shopping continuing at or near peak levels. Perhaps most importantly Auto Insurance Trends should continue up and to the right as the relentless shift to digital performance marketing has returned as the dominant theme driving long-term channel and market growth. We are also confident in continued progress and performance in our other client verticals.

Speaker Change: In terms of any impact, radio effects you will have and the planet outlook we just gave you.

Zach Cummins: including the fact we think there's probably, assuming we continue to execute well, more that we can we can add to that over time. So that's probably the most important point.

Zach Cummins: But the other points would be we've been involved and known about this life-free regulation quite some time. We have a good dialogue with the FCC. We understand and, of course, respect what their objectives are here.

Douglas Valenti: We think that the main reason is that it is probably going to have a pretty negative effect on smaller service providers because they won't have the name recognition with consumers, and so they'll be less likely to get an opt-in. As you know, Quinstreet traffics primarily and mainly with large providers, big branded players. We're dominated in our client base by the big brands. But we've noticed something interesting.

Zach Cummins: We may or may not have gone about it this same way. We think that the and the main reason is that it is probably going to have a pretty negative effect on smaller service providers.

Speaker Change: because they won't have the name recognition with consumers, and so they'll be less likely to get an opt-in. As you know, Quinstreet traffics primarily and mainly in large providers, big branded players. We're dominated in our client base by the big brands.

Douglas Valenti: We've been looking at, testing, and preparing for it for quite some time. So I think that while there may be some disruption, which is again fully accounted for in our outlook, it might not be a lot because we've had so much notice, and we've been preparing for it, and it only applies to 20-30 percent of our business to the extent it has any impact. And I think in the longer run, and I don't mean 10 years, I think, you know, the next two, three to four years, it's a really good thing for the channel. And it's a really good thing for Quinstreet.

Speaker Change: But we've noticed common, we've been looking at and testing and preparing for it for quite some time.

Zach Cummins: And so I think that while there may be some disruption, which, again,

Zach Cummins: that is fully accounted for in our outlook.

Douglas Valenti: Overall, we expect strong revenue growth and margin expansion in fiscal Q1 and in full fiscal year 2025, which began on July 1st. Turning to our outlook for fiscal Q1, revenue is expected to be between 220 and 230 million dollars. Growth of 82% year-rearing at the midpoint of the range. Adjusted EBITDA is expected to be 14 to 16 million dollars. Growth of over early full fiscal year 2025 outlook. We expect revenue of between 800 and 850 million dollars.

Zach Cummins: It's likely to be a lot because we've had so much notice and we've been preparing for it, and it only applies to 20-30% of our business, to the extent it has any impact.

Zach Cummins: And I think in the longer run, and I don't mean 10 years, I think, you know, the next two to three to four years, it's a really good thing for the channel.

Douglas Valenti: It's going to take out, clean up, get rid of a lot of the junk in the channel. There are a lot of folks who do nothing but buy and resell leads and contacts and column leads and overmatch consumers to providers to the tune of, you know, more than five, 10 times. And that is not helpful to our consumer response. It's not helpful to the long-term health of the channel. It's not helpful to the clients, so we don't do any of that.

Zach Cummins: And it's a really good thing for Quinstreet. It's going to take out, clean up, get rid of a lot of the junk in the channel. There are a lot of folks who do nothing but

Zach Cummins: by and resell leads and contacts and calling leads.

Zach Cummins: and overmatch consumers to

Zach Cummins: providers to the tune of, you know, more than five, ten times, and that is not helpful to our consumer response. It's not helpful to the long-term health of the channel. It's not helpful to the clients. We don't do any of that.

Douglas Valenti: And so that means that there's going to be a lot more market share and a lot more market demand for what we do. The other thing is that it will likely make leads under that program much more highly effective and much more highly converting, which will make them more valuable, and nobody's better positioned than Quinstreet to benefit from that. We are all about being close to our clients and the right price for quality and value. It's going to be something we'll get to, it's accounted for in our guide, I think probably more than accounted for in our guide, and we feel really good about the other side.

Zach Cummins: and so that means that there's going to be a lot more market share and a lot more market demand for what we do.

Douglas Valenti: Growth of 34% year-rearing at the midpoint of the range. And adjusted EBITDA of 50 to 60 million dollars. Growth of 170% year-rearing at the midpoint of the range. We believe that there are opportunities to scale revenue and expand margins even further than that. And we will refine our outlook as the year progresses.

Zach Cummins: The other thing is it will likely make leads

Zach Cummins: under that program.

Zach Cummins: much more highly effective and much more highly converting.

Zach Cummins: which will make them more valuable, and nobody's better positioned than Quinstreet to benefit from that. We are all about being close to our clients and right pricing to quality and to value.

Speaker Change: It's got to be something we'll get to, it's California, our guide, and I think probably more than a count of four in our guide, and we've really good about the other side.

Zachary Cummins: Okay. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Gregory Wong: With that, I return the call over to Greg. Thank you, Doug.

Speaker Change: Understood. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Gregory Wong: Hello, and thanks to everyone for joining us today. Q4 was a record revenue quarter for Quinn Street. All of our client verticals delivered year-to-year growth in the quarter. To the June quarter total revenue were 52% year-of-year and was 198.3 million dollars. Adjusted net income was 6.5 million dollars or 11 cents per share. And adjusted EBITDA was $11 million dollars. As Doug noted, the strong re-ramp of auto insurance continued in the June quarter.

Operator: Your next question comes from the line of Jason Kreyer from Craig Hallam. Please go ahead.

Speaker Change: Your next question comes from the line of Jason Kriger from Craig Hallam. Please go ahead.

Jason Kreyer: Great. Thank you, guys. Again, nice results here. Doug, you included a comment about just the opportunity to scale revenue and margins faster. Curious if that's just a nod to conservatism in the numbers, or are you kind of alluding to some strategic opportunities that you see over the course of the year?

Jason Kriger: Great. Thank you, guys. Again, nice results here. Doug, you included a comment about just the opportunity to scale revenue and margins faster. Curious if that's just a nod to conservatism in the numbers, or are you kind of alluding to some strategic opportunities that you see over the course of the year?

Douglas Valenti: because we don't have a great connection. I think Rob got the gist of that.

Douglas Valenti: To that, Rob, what was the conservatism in the guide and any upside based on our initiatives? We do.

Rob: Jason, we don't have a great connection. I think Rob got the gist of that. Rob, what was the conservatism in the guide and any upside based off of our initiatives?

Gregory Wong: Auto insurance revenue ramped throughout the quarter and the demand from carriers is brought based. Additionally, our outlook for the vertical remains bullish as carriers continue to expand footprints and as the shift the digital performance marketing returns as the dominant long-term theme in driving channel and market growth. Looking at revenue by client vertical, our financial services client vertical represented 69% of Q4 revenue and grew 82% year-of-year to 136.9 million dollars. A record revenue quarter for that business. Our home service is calling vertical, represented 30% of Q4 revenue, and grew 12% year-to-59.3 million dollars, also a record revenue quarter for the business. Another revenue was the remaining $2 million of Q4 revenue.

Douglas Valenti: We do think there's a lot of potential upside based on our initiatives, Jason, both because of the current run rate, assuming that doesn't settle out differently, and because of a lot of initiatives we've got working in all of the businesses. So while I think this is a fair outlook given how early it is in the year and making sure that we think about, you know, I guess what I might facetiously call a duration risk, I think in terms of where we would put it on the scale relative to what we have in our internal plans based on the execution against the initiatives, we'd say it's pretty conservative, yeah.

Rob: We do think there's a lot of attempts left side based on our initiative, Jason, both because of the current runway, assuming that doesn't settle out.

Jason Kriger: differently and because of a lot of initiative you've got working in all of the businesses so

Rob: Well, I think this is a fair outlook given how early it is in the year and making sure that we think about, you know, I guess what I might facetiously call a duration risk. I think in terms of

Speaker Change: where we would put it on the scale relative to what we have in our internal plans based on the execution against the initiatives, we'd say it's pretty conservative, yeah.

Douglas Valenti: Okay, apologies if I have a bad connection. I'm going to try to squeeze one more, but you just mentioned the focus on optimizing media supply. Can you just elaborate on the things you can do there?

Speaker Change: Okay, apologies if I have a bad connection. I'm going to try to squeeze one more, but you just mentioned, you know, the focus on optimizing media supply. Can you just elaborate on the things you can do there?

Douglas Valenti: You bet. A few things. First of all, as I said, the demand came in so quickly that any discretionary media, in other words, media that isn't proprietary to any one of us that are in this business, was bid up very quickly because it was scarce, right? Simple supply and demand is happening, but that will soften as more media comes online. Folks that had stopped investing in, stopping to invest in either content or campaigns or other ways of driving media for auto insurance are very rapidly trying to rebuild that to catch up, including us, but also a lot of our partners.

Speaker Change: You bet. A few things.

Gregory Wong: Turned to our full fiscal year 2024 performance, we reported revenue of $613.5 million of 6% year-to-year revenue. Our financial services client vertical represented 64% of full fiscal year revenue and grew 3% year-to-392.6 million dollars. Our home service is quite vertical, represented 35% of full fiscal year revenue, and grew 10% year-to-2011.9 million dollars. Another revenue represented the remaining $9 million of full fiscal year revenue. Adjusted EBITDA for full fiscal year 2024 was $20.4 million. From the balance sheet, we closed the year with $50.5 million of cash and equivalents and no bank debt.

Speaker Change: First of all, as I said, the demand came in so quickly that any discretionary media, in other words, media that isn't proprietary to any one of us that are in this business, was bid up very quickly.

Speaker Change: because it was scarce, right, scarcity, simple, simple, supply and demand happening.

Speaker Change: and they were softened.

Rob: As more media comes online, folks that had stopped investing in, stopped in either content or campaigns or other ways of driving media for auto insurance are very rapidly trying to rebuild that to catch up, including us, but also a lot of our partners. So as that catches up...

Rob: That will cause media to be more right priced to its true value rather than overpriced because it's scarce. So that's a big part of it.

Douglas Valenti: So as that catches up, that will cause media to be more rightly priced to its true value rather than overpriced because it's scarce. So that's a big part of it. Another big part of it is that it has come in so quickly and in a narrower footprint than you would expect and across so many different clients so suddenly that the normal process and procedure we go through to make sure that we adequately segment, match and price that media to the right carrier in the right way just hasn't caught up with it. And that's a huge part of what we do, to add value and create and extract surplus from the media.

Rob: Another big part of it is that it has come in so quickly and in a narrower footprint than you would expect and across so many different clients so suddenly that the normal process and procedure we go through to make sure that we adequately segment.

Gregory Wong: In closing, our outlook on the business has never been brighter. We expected another record revenue quarter in fiscal Q1 with further margin expansion. We remained well positioned to benefit from the reramped bottom insurance client spending and are seeing continued momentum in our non insurance client verticals. We expect strong total company revenue growth and adjusted EBITDA expansion driven by the diversified portfolio of client verticals.

Rob: match and right price that media to the right carrier in the right way. We just haven't caught up.

Rob: and that's a huge part of what we do.

Rob: to add value and create an extract surplus from the media. And so we have not had, we just haven't had time to do all of that yet. So those two dimensions are things that we will be doing and that we're harder we're doing right now.

Douglas Valenti: And so we have not had, we just haven't had time, to do all of that yet. So those two dimensions are things that we will be doing and that we're hard at work doing right now. Great, thank you very much.

Operator: With that, I'll turn it over to the operator for Q&A. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please make sure to lift the handset before pressing any keys.

Speaker Change: Great. Thank you very much.

Jason Kriger: Thank you, Jason.

Operator: Your next question comes from the line of James Goss from Barrington Research. Your line is now open.

Jason Kriger: that

Jason Kriger: i

Jason Kriger: Your next question comes from the line of James Goss from Barrington Research. Your line is now open.

James Goss: All right, thank you. I was wondering if any M&A opportunities seem to be on the horizon, either tuck-in or otherwise. I know you've made a couple that have some material on both the financial and home services sides of your business.

James Goss: Alright, thank you. I was wondering if any M&A opportunities seemed to be on the horizon, either tuck in or otherwise, I know you made a couple that is material in.

John Campbell: Your first question comes from the line of John Campbell from Stevens. Please go ahead. Hey guys, good afternoon. Hey, John. Hey, so obviously really solid results as far as the client demand. I mean, that's coming in. I think way better than any of us expected on the, you know, the FY25 revenue guidance. The high end of your range is actually above work instances for FY26. So, you know, it's tough to poke holes at it.

Speaker Change: both the financial and home services side of your business.

Douglas Valenti: Yeah, Jim, we're always looking. I would say nothing imminent, but we are a natural consolidator of these small to mid-sized players on the media, client, or technology side of our industry, and we will continue to be so. We've had very, very good results from our acquisitions, both small and large, including some of the smaller ones lately, but I would say we'll be – we'll stay in the market, we'll continue to be opportunistic. That's the number one thing we expect to use capital for over time, and it's – and, you know, it's just – but there's nothing imminent.

Speaker Change: We're always looking. I would say nothing imminent, but we are a natural consolidator of these small to mid-sized players.

Jason Kriger: on the media, client, or technology side of our industry, and we will continue to be so.

Speaker Change: Very, very good results.

John Campbell: But if I look, if I annualize the revenue this quarter, right? And this is not a seasonally strong quarter, which seems like it's pretty fair. It assumes that your midpoint of the revenue guidance is about 4% higher. I'm thinking you've probably got a lot of conservatism in there.

Speaker Change: from our acquisitions, both small and large, including some of the smaller ones likely. But I would say we'll stay in market, we'll continue to be opportunistic. That's the number one thing we expect to use capital for over time.

Douglas Valenti: But maybe if you could talk to if you expect a deceleration in home services or anything like that or, you know, anything non auto. Any kind of color that would be helpful. Yeah, thank you, John. We do not expect a deceleration in any of our businesses. We expect all of our businesses to grow pretty strong. But is it rates this year? I would say there's a couple of things. One is, it's the first guy in the year.

James Goss: Okay, and as we move toward the time when interest rates cut, seem likely to begin to materialize. Are there certain verticals you expect, or businesses even, you expect will benefit more than others, either in financial or in home services? And are there any new verticals to potentially target?

Speaker Change: and you know it's just but there's nothing happening.

Speaker Change: Okay, and if we move, as we move toward the time when...

Speaker Change: Interest rates cuts in likely to begin a materialized. Are there certain verticals you expect or businesses even you expect will benefit more than others, either in financial or in on services?

Speaker Change: And are there any new verticals to potentially target?

Douglas Valenti: I think all businesses are in a pretty good position relative to interest rate cuts and, by the way, relative to a recession. We're very well positioned if, in fact, there is a recession. I think, you know, the latest Douglas Goss, Bruce Goldfarb, Joichi Sakai, Zachary Cummins, Cal Bartyzal, Douglas Valenti, Gregory Wong, Jonathan Bass, Quinstreet Inc. In our personal loans business, we will likely see a resurgence of lending relative to debt and credit management. As you know, that shifted the other way when interest rates went up. We'll see that go back. We're ready for that.

Douglas Valenti: And it's early in the year. So we certainly don't want to get too far out of head of our cell. James. The other thing is, the insurance ramp has been spectacular, largely foretold by us, as you would, I'm sure you know, given that we did get to the range on the year as we had said we thought we might. And we just want to see how it settles out. We don't have any indications that it won't extend.

Speaker Change: I think all of the businesses are in pretty good position relative to interest rate cuts and by the way relative to a recession. We're very well positioned if in fact there is a recession.

Speaker Change: estimates are 25 to 35% of that.

Speaker Change: I'd love to go business by business. I think we're in phenomenal shape relative to that, but we've grown through every past recession. So I think we're very well positioned for that in terms of interest rates. I don't expect that there's going to be a huge impact on any of our businesses from interest rates coming down. Here are some of the dynamics though.

Douglas Valenti: But we want to see how it settles out as we and others work to regrow and optimize media to align better with the surge in demand, which is now what we're all working hard on. And see if and as that has any impact at all. So I would say, first guy to the year, you're going to find this pretty conservative. When we go out with the first guy to the year, we do not expect any deceleration in any parts of the business.

Speaker Change: and our personal loans business.

Speaker Change: We will likely see a resurgence of lending.

Speaker Change: relative to debt and credit management. As you know, that had shifted the other way when interest rates went up. We'll see that go back. We're ready for that. We have great client coverage. We'll show just as, I think, flexible and faster response.

James Goss: We have great client coverage. We'll show just as much, I think, flexibility and faster response as we did the one way when we go the other way, but that will be a dynamic. I think in home services, you'll still have people that won't refi because I think 70% of mortgage holders still have under 5% of their mortgage, so there won't be a lot of refi action going on. We're not in that business, but it may loosen up moving, so more people may move.

Douglas Valenti: And we do expect our insurance to continue to be very strong for the rest of the year and beyond. But we'd like to see how it settles out in terms of the precise numbers as the media side of the market catches up to the demand side of the market.

Speaker Change: As we did the one way when we go the other way, but that will be a dynamic. I think in home services, you'll still have people that won't refi because I think 70% of mortgage holders still have under 5% mortgage.

Speaker Change: and there won't be a lot of refi action going on without that business, but it may loosen up moving, so more people may move.

John Campbell: Okay, that's helpful.

John Campbell: And then maybe like a bigger picture industry, maybe strategic question. But I think a lot of your competitors are, I think this is a broad base recovery. Everybody is filling the strength right now. As far as the margin flows through, I think you talked a little bit about maybe last quarter talking about 10% margins for this year. But everybody is kind of chasing the same opportunity. It seems like at this point. So maybe a little bit lower margin. You have to obviously be there for your carrier partner as you can go sit on the sidelines. So I totally understand it.

James Goss: If they do, that usually generates some home services activity. If they don't move, or if they don't want to move because they're in too low a mortgage, that usually generates some home services activity because they want to nest and they want to get their home ready for lots of things, including aging, and we are highly leveraged to aging in place in several of our trades in home services. I don't think it will have much of an effect on credit cards and probably keep the industry healthier because today the rates on balances are prohibitive, even though the credit card industry is very, very healthy right now, as you have heard from the banks and you will hear from us.

Speaker Change: If they do, that usually does generate some home services activity, if they don't move, or if they don't want to move, because they're in too low mortgage, that usually generates some home services activity, because they want to nest.

Speaker Change: And they want to get their home ready for lots of things, including aging. And we are highly leveraged to aging in place.

Speaker Change: as in several of our trades in home services.

Speaker Change: I don't think it will have much of an effect in credit cards and we're gonna keep the industry healthy or because today the rates on balances are

Douglas Valenti: But like, if I think about industry consolidation, and Doug, you've been in this industry, I think you're maybe one of the Godfathers, the forefathers of this industry, tell to me about what you feel like the market could, where you feel like the market could head over time. It just feels like if you take some four or five of these competitors and make one or two, the whole customer acquisition cost, the margin opportunity is really there for you. Yeah, John, it's a good question.

Speaker Change: are prohibited.

Speaker Change: Even though the credit card industry is very, very healthy right now, as you heard from the banks, and you would hear from us, I think in our banking business, which is our smallest

James Goss: I think in our banking business, which is our smallest independent client vertical, if you will, there'll be a shift around to different kinds of products, but I don't think that business will go away because we're not going back to zero, and if it goes back to 3%, 4%, there's still going to be a place for CDs and savings accounts and money market funds and those kinds of things in the consumer mix, and I don't know that I can think of any way that it would meaningfully impact anything in the range it likely happens to anything.

Speaker Change: independent client vertical if you will.

Speaker Change: There'll be a shift around the different kinds of products, but I don't think that business will go away because

Douglas Valenti: Let me touch on the margin. First of all, we think that 10% is still where we're heading. In terms of this particular quarter in the near term, the heavier mix of auto insurance doesn't help that because as you know, auto insurance given its scale, maturity, competitiveness comes in a little bit lower than average medium margin percent. We expect that in the mix to fix itself over time as we continue to expand on the other businesses.

Speaker Change: It's, you know, we're not going back to zero.

Speaker Change: And if it goes back to 3%, 4%, there's still going to be a place for CDs and savings accounts and money market funds and those kinds of things in the consumer mix. So, you know, as I, and in insurance, I just don't expect hardly any effect. I don't know that, I can't think of any way that it would.

James Goss: A reminder, though, going back to the recession: auto insurance shopping typically increases during the recession. So I think we've done a lot of scenario planning. We really like the setup for us in whatever scenario you're looking at.

Speaker Change: Meaningfully impact in the range it likely happens anything. A reminder though, going back to the recession, auto insurance shopping typically increases during a recession.

Douglas Valenti: And we expect the medium, the margins, and auto insurance actually give better from here, if we work to as I indicated before, optimize the media against that surge in demand. Nobody had time to do that. The demand came so fast, what media was still available, got bit up by everybody. And it's taken a little while for the other media channels to reinvest and regrow themselves to catch up. That's all good stuff for going forward. That's all tailwinds, stuff for going forward.

Speaker Change: So, I think we've done a lot of scenario planning. We really like the setup for us in whatever scenario you're looking at.

Douglas Valenti: Okay, maybe one last one. I wonder, you've talked sometimes of states that are avoiding adding new policies. Is there any exposure of note in your area, especially among larger states, that could be important to you that are, you know, very negative, and some of the new auto insurance, that would be more appropriate to you?

Speaker Change: Okay, maybe one last one. I wonder...

Speaker Change: You've talked sometimes of states that are avoiding adding new policies.

Speaker Change: Is there any exposure of note in your area, especially among larger states?

Speaker Change: that could be important to you that are...

Douglas Valenti: In terms of the strategic context, I'm not there. There are arguments for and against consolidation. A number of the larger clients want more than one player in the role that we play. And so it could be that consolidating Could be, you could not get the main synergy you're hoping for, which is the hope for increase in media margin or gross margin through that combined market power. And that's something that I think is a big concern for anybody thinking about consolidating.

Speaker Change: You know, for a negative end, some of the new auto insurance.

Douglas Valenti: There are a lot of other potential barriers to consolidation in terms of how different companies operate, what they're good at, whether or not those are synergistic or not, if they could be combined in a way that didn't destroy more value than it created. So I think it's a complicated question.

Douglas Valenti: I don't think so. We don't see anything like that that would be material at all.

Speaker Change: that would be more appropriate to you.

Speaker Change: I don't think so. We don't see anything like that that would be material.

James Goss: And by the way, I forgot to answer part of your last question, Jim, and I apologize. You asked about new verticals. Not explicitly new verticals, but what we will do when we have plans to do is continue to add new trades and home services, and some of those trades are, you know, many millions of dollars a year, so the effect is almost a new vertical. We expect to add new segments in banking, including trading platforms and other ways that people put their money to work.

Speaker Change: at all. And by the way, I forgot to answer part of your last question, Jim and I apologize. As you asked about new verticals.

Speaker Change: and not explicit to be new verticals, but what we will do when we have plants to do is continue to add new trades and home services and some of those trades are.

Speaker Change: You know, many of the age of dollars a year, so it's the effect is almost a new vertical. We expect to add new segments in banking, including trading platforms and other ways that people put their money to work and credit cards, we expect to add new segments.

James Goss: In credit cards, we expect to add new segments of cards. We're really leveraged to do promotional miles-based cards now, and there are a lot of other areas of cards where we can get a lot bigger. In insurance, we're growing, and we'll continue to grow new areas of insurance, including B2B and commercial insurance, which is a big initiative for us. None that we would at the big name level necessarily get into, though, you know, we didn't expect to get into personal loans when we did, so certainly we'll remain opportunistic, but we will continue to add big, chunky legs to the business that create more footprint All right, thanks for listening.

Speaker Change: of Cards, we're really, really leveraged, promotional miles based.

Speaker Change: Cards now and there are a lot of other areas of cards where we can get a lot bigger in insurance. We're growing and we'll continue to grow in new areas of insurance, including B to B and commercial insurance. This is a big initiative for us.

Douglas Valenti: It's not something I would count on in the foreseeable future. It's not something I would count out in the long term, that depending on how these markets continue to evolve, but I think in any, in all cases, we're going to be in really good shape.

Speaker Change: And so, we won't, and not none that we would at the big name level necessarily get into though, you know, we didn't expect it into personal loans when we did, so surgery will remain opportunistic. But we will continue to add big chunky legs.

John Campbell: We could not feel better about the setup for Quinstreet. All really great points. I appreciate the color.

John Campbell: Thank you, John.

Speaker Change: to the business that create more footprint for growth in the future.

James Goss: All right. Thanks for all your explanation.

Zach Cummins: Your next question is from the line of Zach Cummins from Gear Ily Securities. Please go ahead. Hi, good afternoon.

Speaker Change: Alright, thanks for all your elaboration.

Jim: Thank you, Jim.

Operator: Your last question comes from the line of Chris Sakai from Singular Research. Please go ahead.

Douglas Valenti: Thanks for taking my questions and congrats on the strong into your fiscal 24. Just curious if you could give some more insight into where you're seeing strength among the carriers. I imagine there's some that are further along in terms of their recovery, but just curious of the trends that you're seeing and how you expect that to continue to play out in the coming quarters. Yes, Zach, more broad-based than ever in terms of scale demand.

Speaker Change: Your last question comes from the line of Chris Sakai from Singular Research. Please go ahead.

Christopher Sakai: Yes, I, Doug, and Greg. Thank you, Chris. On so on, based on your experience with these prior auto insurance sort of turnarounds, like we're seeing what how high and how much can it keep growing before it tails off.

Speaker Change: Yes, I, Doug, and Greg. Hey, Chris.

Chris Sakai: So, on your experience with prior auto insurance sort of turnarounds like we're seeing, how high and how much can it keep growing?

Douglas Valenti: Hey Chris, it's a massive market, and most of the spend is still offline. As far as I know, we still only have one significant, one of the majors, progressive; just a couple of years ago, 5% started spending more than half their marketing media budget online. If you look at the consumer shopping patterns and you allocate budget based on that, most carriers, most clients of any type, should be spending 70 or more percent of their budgets online.

Douglas Valenti: We have several clients doing multiple millions of dollars per month with us. We have twice that number, so I'd say between five and 10 clients, spending on how you count some of it, doing over and total, doing over one, at least a million dollars a month with us. We're seeing it across the spectrum in terms of direct carriers as well as more agent-driven carriers. We're seeing it across the product mix, clicks, calls, and these, although we're dominant, we click on the direct side.

Speaker Change: before it tails off.

Speaker Change: Hey, Chris, it's a massive market, and most of the spend is still offline. As far as I know, we still only have one significant, one of the majors, progressive, just a couple of years ago.

Speaker Change: started spending more than half their marketing media budget online?

Chris Sakai: If you look at the consumer shopping patterns and you allocate budget based on that,

Speaker Change: Modes carries most clients of any time.

Douglas Valenti: So the most advanced, most penetrated carrier still isn't there, and most of the others, none of the others that we know of, except for some of the upstarts, which aren't that significant, are way, way, way below where they should be.

Speaker Change: I should be spending 70 or more percent of their budgets online. So the most advanced, most penetrated carrier still isn't there.

Douglas Valenti: We see have a lot more market to penetrate on the agency and lead side and call side of the industry. A mix of carriers, and a mix of products, and a very healthy, diverse mix, and probably the healthiest, most diverse mix we've ever had. Honestly, in terms of the breadth of the footprint is how I would mainly characterize it. I would say, I don't see any, but the one other common theme, though, is that nobody's really back to their pre-COVID peak in terms of their footprint coverage, in terms of geo-coverage and product coverage.

Speaker Change: and most of the others.

Speaker Change: None of the others that we know of except for some of the upstarts which aren't that significant.

Douglas Valenti: So that's going to be billions of dollars still to come in terms of just the natural shift over to digital. They find their way to digital performance marketplaces like ours when they do that, because that's where they want to be, and obviously, I don't think that's arguable anymore. When you look at the patterns, and you look at people like progressive, and so that could last us for many, many years to come, then you've got it.

Speaker Change: are way, way, way below where they should be, so that's going to be there this.

Speaker Change: You know

Speaker Change: Billions of dollars still to come in terms of just the natural shift over to digital. And they find their way to digital performance marketplaces like ours when they do that, because that's where you want to be, and obviously I don't think that's arguable anymore, when you look at the patterns and you look at people like Progressive.

Speaker Change: and so that could last us for many, many years to come and then you've got...

Douglas Valenti: You've got commercial insurance, which is super early, and it's half the industry. And you've got other areas of insurance that you can tuck in. So we ourselves participate in just really mainly clicks to direct carriers, which is pretty much one half of the overall P&C market. And we have clicks, and we have more clicks to more carriers because of the budget moving online. We have calls and leads, which are very early stages for us that apply to the market that we're ramping up very aggressively, growing very aggressively.

Speaker Change: You've got commercial insurance, it's a super early in its half the industry, and you've got other areas of insurance that you can tuck in, so we ourselves.

Douglas Valenti: For example, not many folks back in California yet, and a lot of the folks not covering big parts of Florida and or not covering Florida in a certain type of coverage range, and I could go, there's lists, lists have to list, lists have to list, list have to list. There are still carriers, significant carriers, who have not really moved dramatically from their from their lows of the past few years. So there's it's a good broad base mix.

Speaker Change: participate in just really mainly clicks to direct carriers which is one half of the pretty much one half of the overall PNC market we have and and we're and and we have clicks

Speaker Change: and we have more clicks to more care because the budget moving online.

Speaker Change: We have calls and leads, which are very early stages for us and apply to the market that we're wrapping up very aggressively growing very aggressively. We have the more agency-driven clients, which have not represented much for us historically, and the will as we add the other products.

Douglas Valenti: We have the more agency-driven clients, which have not represented much for us historically but will as we add the other products. And then we get to go into the agency side, as I indicated, which is half the P&C market, and the other half of the overall market is commercial. We will be growing at good rates in insurance long past my leaving Quinstreet, and I don't have any near-term plans to leave Quinstreet.

Douglas Valenti: Still nobody back to their pre-COVID peak, and still others not really up in the market, in one areas, one of the areas that's still lagging quite a bit is the independent agency channel, because they've just now started to get product back of carriers coming back into the market. And so it will still take them a while to get, you know, staff back up, get set back up and have enough that product that's run the right states to make their business work. So it's it's been it's run based, but it's still not complete by stress. Understead.

Speaker Change: and then we get to go into the agency side, as I indicated, which is half PNC market and the other half of the overall market is commercial. So, you know, we will be growing at good rates in insurance long past my leaving Quinn Street and I don't have any near-term plans to leave Quinn Street.

Christopher Sakai: Okay, thanks for that answer. One question as well, with the, I know there's a lot of fires on the West Coast and storms and... and the East Coast, are you seeing an increase in revenue and online searching for different insurances because of that?

Speaker Change: Okay, thanks for that answer. And then one question as well. I know there's a lot of fires in the West Coast and storms.

Zach Cummins: And my one other question really centers around home services. Can you talk about your preparations in terms of one-to-one consent regulations under the TCPA, but with those going into fact early next year, any sort of indications of what kind of impact that could present to home services and how you're prepping to work through that? That was a great question.

Speaker Change: and the East Coast. Are you seeing an increase in revenue and online searching for different insurances because of that?

Douglas Valenti: We're seeing a lot of searching and shopping in California, but not a lot of carriers willing to cover California, both because of the risk and because California won't allow insurers to raise their rates big enough, fast enough. So, there's a lot of wasted shopping, if you will, going on in California because consumers just aren't finding results, but more broadly, the main thing we're seeing relative to shopping and activity is record shopping levels because of inflation and consumers trying to find ways to save money, and because of the, The increase in rates that they've seen over the past few years, you know, insurance rates you probably know yourself have gone up 30% to 50% after multiple years of compound rate increases.

Speaker Change: We're seeing a lot of searching and shopping in California, but not a lot of carriers willing to cover California, both because of the risk and because California.

Douglas Valenti: And it is mainly for us, as you know, it's mainly a home services thing. Some are between 20% and 30% or a total business would be impacted or applicable under the regulation.

Speaker Change: won't allow insurers to raise their rates.

Speaker Change: Big enough fast enough.

Speaker Change: So there's a lot of wasted shopping if you were going on a Catholic Wank that's considered just aren't finding results, but more broadly, the main thing we're seeing relative to shopping and activity is record shopping levels.

Douglas Valenti: And just to make to kind of level set everybody, the FCC came out with a modification to the TCPA consumer consent rules that is slated to go into effect next January, which requires consumers to consent one-to-one for any service provider that intends to contact them either by phone or by text. And that is not current industry practices currently. And this applies to mainly leads, based on what I just said, as you're sure you figured out. And so that means that any lead that's generated, the consumer has to opt in, specifically opt in for that service provider to contact them. That's new for the industry industry. It's got to adapt to it.

Speaker Change: because of inflation.

Speaker Change: and consumers trying to find ways to save money, and because of the

Speaker Change: The increase in rates that they've seen over the past few years, you know, interest rates, you probably know yourself about a 30 to 50% after the month will come here as a compound rate increases. So there's a big surge in shopping nationwide because the rate increases and because of inflation.

Douglas Valenti: So there's been a big surge in shopping nationwide because of rate increases and because of inflation. And that's only going to, that's going to get bigger, we think, with, as, and as the economy softens more, more consumers are going to want to save money. And so, you know, we expect consumer shopping to be high for a long time to come and should be a tailwind for the industry for quite some time.

Speaker Change: And that's only going to get bigger, we think, if and as the economy softens more so more consumers are going to want to save money.

Speaker Change: So, you know, we expect consumers shopping.

Douglas Valenti: A few things. First and foremost, we believe that it's well accounted for in terms of any impact or any effects it will have in the planet outlook we just gave you. Including the fact that we think there's probably, assuming we continue to actually well more that we can add to that over time. So that's probably the most important point. But the other points would be we've been involved and known about this light clear regulation with quite some time.

Speaker Change: to be high for a long time to come and should be a tear went to the industry.

Douglas Valenti: And, you know, the rate down cycle if it starts happening, then you're going to get more shopping again because then people are going to want to go see who lowered their rates first. So changes are good for us in insurance, and there are a lot of changes right now. Okay, great. Thanks for the answer.

Speaker Change: for quite a while and the rate down cycle, if this starts happening, then you're going to get more shopping again because then people are going to want to go see who's over the rates first, where so changes are good for us and insurance and there's a lot of change right now.

Speaker Change: Okay, great. Thanks for the answer.

Chris Sakai: Thank you, Chris.

Douglas Valenti: We have a good dialogue with the FCC. We understand and of course respect what their objectives aren't here. We may or may not have gone about it in the same way. We think that the and the main reason is that it is probably going to have a pretty negative effect on smaller service providers because they don't have the name recognition with consumers. And so there'll be less likely to get an opt in.

Operator: There are no further questions at this time. Thank you everyone for taking the time to join Quinstreet's earnings call. Replay information is available on the earnings press release issued this afternoon. This concludes today's conference call. Thank you.

Speaker Change: There are no further questions at this time. Thank you everyone for taking the time to join Quinstreet's earnings call. Replay information is available on the earnings press release issued this afternoon. This concludes today's conference call. Thank you.

Speaker Change: and many more. Thank you. Thank you. Thank you. Thank you.

Douglas Valenti: As you know, Twin Street traffic is primarily and mainly in large providers. Big branded players were dominated in our client base by the big brands. But we've known as common. We've been looking at and testing and preparing for it for quite some time. And so I think that while there may be some disruption, which again is fully accounted for in our outlook, likely to be a lot because we've had so much notice and we've been preparing for it.

Douglas Valenti: And it only affects our applies to 20 to 30% of our business to the extent it has any impact. And I think in the longer run, and I don't mean 10 years, I think the next two to three to four years, it's a really good thing for the channel. And it's a really good thing for Quinstream. It's going to take out clean up, get rid of a lot of the junk in the channel.

Douglas Valenti: There are a lot of folks who do nothing but.., by and resell leads in contacts, in column leads, and over-match consumers to providers to the two, you know, more than 5, 10 times. And that is not helpful to our consumer response. It's not helpful to the long-term health of the channel. It's not helpful to the clients. We don't do any of that. And so that means that there's going to be a lot more market share and a lot more market demand for what we do.

Douglas Valenti: The other thing is it will likely make leads under that program much more highly effective and much more highly converting, which will make them more valuable and nobody's better position than Quinstreet to benefit from that. We are all about being close to our clients and ride pricing to quality and to value.

Douglas Valenti: So, you know, it's going to be something we'll get through, it's California guide, and I think probably more than a California guide. And we've really good about the other side.

Zach Cummins: Understood.

Zach Cummins: Well, thanks for taking my questions and best of luck with the rest of the quarter. Thank you, Zai.

Jason Kreyer: Your next question comes from the line of Jason Kreyer from Craig Hallam. Please go ahead. Great. Thank you, guys. Again, nice result here. So, if you included a comment about just the opportunity to scale revenue in March and Saturday, here is that that's just a nod to conservatism in the numbers. Or are you kind of alluding to some strategic opportunities that you see over the course of the year? Yes, we don't have a great connection.

Jason Kreyer: I think Rob got the gist of that. Rob, what was that? That's a conservatism in the guide and any any outside based off of our initiatives. We do think there's a lot of potential outside based on our initiatives. Jason, both because of the current run rate, assuming that doesn't settle out differently. And because of a lot of initiative, you've got working in all of the businesses. So, while I think this is a fair outlook given how early it is in the year, and making sure that we we think about, you know, I guess what I might my procedures are called duration risk, I think in terms of in terms of where we would put it on the scale relative to what we have in our internal plans based on the execution against the initiatives. We'd say it's pretty conservative yet.

Douglas Valenti: Okay, apologies if I have a bad connection. I'm going to try to squeeze one more, but you just mentioned, you know, the focus on optimizing media supply. You just elaborate on the things you can do there. You bet. A few things. First of all, as I said, the demand came in so quickly that any discretionary media in the words media that isn't proprietary to any one of us that that are in this business was did up very quickly because it was scarce, right?

Douglas Valenti: Scarsie, simple simple supply demand happening. That was often as more media comes online, folks that had stopped investing in, stopped in either content or campaigns or other ways of driving media for oil insurance are very rapidly trying to rebuild that to catch up, including us, but also a lot of our partners. So as that catches up, that will cause media to be more right price to its true value rather than over price because it's scarce.

Douglas Valenti: So that's that's a big part of it. Another big part of it is that it has come in so quickly and in a narrower footprint than you would expect and across so many different clients so suddenly that the normal process and procedure we go through to make sure that we adequately segment, match and right price that media to the right carrier in the right way, we just haven't caught up. And that's a huge part of what we do to add value and create an extract surplus from the media. And so we have not had, we just haven't had time to do all of that yet. So those two dimensions are things that we will be doing and they were hard at work doing right now.

Jason Kreyer: Great. Thank you very much.

James Goss: Thank you Jason. Your next question comes from the line of James Goss from Barrington Research. Your line is now open. All right. Thank you. I was wondering if any M&A opportunity seemed to be on the horizon, either tuck in or otherwise. I know you made a couple that has been material on both the financial and home services side of your business. Yeah, we're always looking. I would say nothing imminent, but we are a natural consolidator of these small to midsize players on the media client or technology side of our industry.

James Goss: And we will continue to be so we've had very, very good results from our acquisitions, both small and large, including some of the smaller ones likely. But I would say we'll be, we'll stay in market. We'll continue to be opportunistic. That's the number one thing we expect to use capital for over time. And it's, you know, it's just, but there's nothing imminent.

Douglas Valenti: Okay. And if we move, as we move toward the time when interest rate cuts seem likely to begin to materialize, are there certain verticals you expect our businesses even you expect will benefit more than others either in financial or on services. And are there any new verticals to potentially target? I don't, I think all the businesses are in pretty good position relative to interest rate cuts and by the way relative to a recession would, you know, we, we're very well positioned.

Douglas Valenti: If in fact there is a recession, I think, you know, latest estimates are 25 to 35% of that. I'd love to go business by business. I think we're in phenomenal shape relative to that. We've grown through every past recession. So I think we're very well positioned for that in terms of interest rates. I don't expect that there's going to be a huge impact on any of our businesses from interest rates coming down here, here are some of the dynamics though in our personal loans business.

Douglas Valenti: We will likely see a resurgence of lending relative to debt and credit management was, you know, that had shifted the other way when interest rates went up. We'll see that go back. We're ready for that. We have great client coverage. We will, we'll show just as I think flexible and faster response as we did the one way when we go the other way, but that will be a dynamic. I think in home services, you'll go from, you'll still have people that won't revive because I think 70% of mortgage holders are still have a still under 5% mortgage.

Douglas Valenti: So there won't be a lot of refi action going on. We're not that busy, but it may loosen up moving. So more people may move if they do that usually does generate some home services activity. If they don't move or if they don't want to move because they're in too low of mortgage, that usually generates some home services activity because they want to nest. And they want to get their home ready for lots of things, including aging and we are slightly leverage to aging in place as in several of our trades in home services.

Douglas Valenti: I don't think it will have much of an effect in credit cards and probably keep the industry healthy or because today the rates on balances are prohibited, even though that the credit card industry is very, very healthy right now as you heard from the banks and. And you would hear from us. I think in our banking business, which is our smallest independent client vertical if you will, there'll be a shift around the different kinds of products, but I don't think that business will go away because it's you know we're not going back to zero.

Douglas Valenti: And if it goes back to three, four percent, there's still going to be a place for CDs and savings accounts and money market funds and those kinds of things in the consumer mix. So you know as I and an insurance, I just can't expect part of the any effect. I don't know that I can't think of any way that it would meaningfully impact in the range of likely happens. Anything, I remind her though going back to the recession, auto insurance shopping typically in priesthood during recession. So I think because I think we know we've done a lot of scenario planning. We really like the setup for us and in whatever scenario you look.

James Goss: Thank you for taking that.

Douglas Valenti: Okay, maybe one last one. I wonder if you've talked sometimes of states that are avoiding adding new policies. Is there any exposure of note in your area, especially among larger states that could be important to you that are very negative and some of the new auto insurance that would be more appropriate to you? I don't think so. We don't see anything like that that would be material at all. And by the way, I forgot to answer part of your last question, Jim and I apologize.

Douglas Valenti: You asked about new verticals and not explicit new verticals, but what we will do when we have plans to do is continue to add new trades and home services. And some of those trades are, you know, many lanes of dollars a year. So it's the effect is almost a new vertical. We expect to add new segments and banking, including trading platforms and and other ways that people put their money to work in credit cards.

Douglas Valenti: We expect to add new segments of cards. We're really, really leveraged to a promotional miles based cards now and there are a lot of other areas of cards where we can get a lot bigger. We're in insurance where we're growing and we'll continue to grow a new new areas of insurance, including V2B and commercial insurance, which is a big initiative for us. So we want and not none that we would at the at the big name level necessarily get into though, you know, we didn't expect to end the personal loans when we did. So certainly will remain opportunistic. But we will continue to add big chunky legs to the business that create more footprint for growth in the future.

James Goss: All right, thanks for all your elaboration. Thank you, Jim.

Christopher Sakai: Your last question comes from the line of Chris Sakai from singular research. Please go ahead. And yes, I do. And Greg. So on your experience with these with prior auto insurance sort of turn around like we're seeing. How high and how much can it keep growing before it tails off? Hey, Chris, it's a massive market and most of the spend is still offline. As far as I know, we still only have one significant one of the majors progressive just a couple of years ago by the start of spending more than half their marketing media budget online.

Christopher Sakai: If you look at the consumer shopping patterns and you allocate budget based on that. Most carriers most clients of any type should be spending 70 or more percent other budgets online. So the most advanced most penetrated carrier still isn't there and most of the others. None of the others that we know of expect except for some of the upstarts which aren't that significant are way, way, way below where they should be.

Christopher Sakai: So that's going to be there that's you know billions of dollars still to come in terms of just the natural shift over to digital. And they find their way to digital performance marketplaces like ours when they do that because that's where you want to be and obviously right. I don't think that's arguable anymore. When you look at the patterns and you look at people like progressive. And so that could last us for many, many years to come and then you got.

Christopher Sakai: You got commercial insurance which is super early and it's half the industry. And you got other areas of insurance that you can tuck in. And so we we ourselves. Participate in just really mainly clicks to direct carriers, which is one half with a pretty much one half of the overall P and C market. We have and we have and we have clicks. And we have more clicks to more carriers because because the budget moving online.

Christopher Sakai: We have calls and leads which are very early stages for us that apply to the market that we're wrapping up very aggressively growing, very aggressively. We have the more agency driven clients which have not represented much for us historically and the will as we add the other products. And then we get to go into the agency side as I indicated which is half P and C market and the other half of the overall market is commercial.

Christopher Sakai: So, you know, we will be growing at good rates and insurance. Long past my leaving Quinn Street and I have any near term bachelor equestrian. Okay, thanks for that answer. One question as well. I know there's a lot of fires in the west coast and storms and the east coast. Are you seeing an increase in revenue and online searching for different insurances because of that? Not necessarily because we're seeing a lot of searching and shopping in California, but not a lot of carriers willing to cover California, both because of the risk and because California won't allow insurance to raise the rates big enough fast enough.

Christopher Sakai: So, there's a lot of wasted shopping if you were going on in California because consumers just aren't finding results. But more broadly, the main thing we're seeing relative to shopping and activity is record shopping levels because of inflation and consumers trying to find ways to save money and because of the increase in rates that they've seen over the past few years. As you know, insurance rates, you probably know yourself about a 30 to 50% after multiple come years of compound rate increases.

Christopher Sakai: So there's a big surge in shopping nationwide because the rate increases and because of inflation. And that's only going to, that's going to get bigger we think with as if an as economy softens more, so consumers are more consumers are going to want to save money. So, you know, we expect consumers shopping to be eye for a long time to come and should be a tailwind to the industry and for quite a while.

Christopher Sakai: And the rate down cycle, if it starts happening, then you're going to get more shopping again because that people are going to want to go see who's lower the rates first, where so changes are good for us in insurance and there's a lot of change right now. Okay, great. Thanks for the answer. Thank you, Chris. There are no further questions at this time. Thank you, everyone, for taking the time to join Queen Street's earning school. Replay information is available on the earnings press release issued this afternoon. This concludes today's conference call. Thank you.