Quinstreet Q2 2026 QuinStreet Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 QuinStreet Inc Earnings Call
Operator: ... One. Good day, and welcome to QuinStreet's fiscal second quarter 2026 financial results conference call. Today's conference is being recorded. Following prepared remarks, there will be a Q&A 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 Vice President of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin.
Operator: ... One. Good day, and welcome to QuinStreet's fiscal second quarter 2026 financial results conference call. Today's conference is being recorded. Following prepared remarks, there will be a Q&A 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 Vice President of Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may begin.
Speaker #2: conference call. Today's conference is being recorded. Following One. prepared remarks, there will be a Q&A session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker #2: the conference over to Vice President of At this time, I would like to turn Investor Relations and Finance, Robert Amparo. Mr. Amparo, you may
Speaker #2: begin.
Speaker #3: Thank joining us as we report QUINSTREET's you, Operator. And thank you, everyone, for fiscal second quarter 2026 financial results. Joining me on the call today are Chief Executive Officer Doug Valenti, and Chief Financial Officer Greg Wong.
Robert Amparo: Thank you, operator, and thank you everyone for joining us as we report QuinStreet's fiscal second quarter 2026 financial results. Joining me on the call today are Chief Executive Officer, Doug Valenti, and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q filing. 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 measures.
Robert Amparo: Thank you, operator, and thank you everyone for joining us as we report QuinStreet's fiscal second quarter 2026 financial results. Joining me on the call today are Chief Executive Officer, Doug Valenti, and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q filing. 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 measures.
Speaker #3: Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements, and are not guarantees of future performance.
Speaker #3: Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 8-K filing made today and our most recent 10-Q Q filing.
Speaker #3: 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 measures.
Speaker #3: reconciliation of GAAP to non-GAAP financial A measures is included in today's earnings press release, which is available on our Investor Relations website at investor.quinstreet.com.
Robert Amparo: A reconciliation of GAAP to Non-GAAP financial measures is included in today's earnings press release, which is available on our investor relations website at investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead, sir.
Robert Amparo: A reconciliation of GAAP to Non-GAAP financial measures is included in today's earnings press release, which is available on our investor relations website at investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead, sir.
Speaker #3: With that, I will turn the call over to Doug Valenti. Please go ahead,
Speaker #3: sir.
Speaker #4: Thank you, Rob. everyone. Fiscal Q2 was another productive Welcome, and successful quarter. We exceeded our outlook for both revenue and adjusted EBITDA. And even more progress on needle-moving importantly, we continued to make good business.
Doug Valenti: Thank you, Rob. Welcome, everyone. Fiscal Q2 was another productive and successful quarter. We exceeded our outlook for both revenue and Adjusted EBITDA, and even more importantly, we continued to make good progress on needle-moving initiatives across the business. We see the setup for continued long-term revenue growth and margin performance as better than ever. Auto insurance demand remains strong again in fiscal Q2, with sequential performance besting historical seasonality trends. We continue to expect further significant growth in auto insurance revenue and margin in coming quarters and years due to strong client and marketplace fundamentals and to our rapidly expanding product, market, and media footprints. Home services continues to grow at double-digit rates and is now running at close to $300 million per year in revenue, between $400 and $500 million per year with the addition of HomeBuddy.
Doug Valenti: Thank you, Rob. Welcome, everyone. Fiscal Q2 was another productive and successful quarter. We exceeded our outlook for both revenue and Adjusted EBITDA, and even more importantly, we continued to make good progress on needle-moving initiatives across the business. We see the setup for continued long-term revenue growth and margin performance as better than ever. Auto insurance demand remains strong again in fiscal Q2, with sequential performance besting historical seasonality trends. We continue to expect further significant growth in auto insurance revenue and margin in coming quarters and years due to strong client and marketplace fundamentals and to our rapidly expanding product, market, and media footprints. Home services continues to grow at double-digit rates and is now running at close to $300 million per year in revenue, between $400 and $500 million per year with the addition of HomeBuddy.
Speaker #4: initiatives across the for continued long-term revenue growth We see the setup and margin performance as better than insurance demand remained ever. Auto strong again in fiscal Q2.
Speaker #4: With sequential performance, besting historical seasonality trends. We continue to expect further significant growth in auto insurance revenue and margin in coming quarters and years.
Speaker #4: Due to strong client and marketplace fundamentals, and to our rapidly expanding product, market, and media footprints, home services continue to grow at double-digit rates.
Speaker #4: at close to $300 million per year in And is now running revenue. Between $400 and $500 million per year, with the addition of home buddy.
Doug Valenti: Our outlook for that business, what we believe to be our largest addressable market, remains strongly positive, short and long term. I just mentioned HomeBuddy. Subsequent to quarter end, and as previously announced, we completed the acquisition of HomeBuddy, adding unique new product, media, and clients to home services. HomeBuddy has mastered the technology and execution of auction-driven exclusive leads, a product in high demand by large segments of the home services client market, and one that we did not yet have. Also, their focus and success building big scale campaigns in social and native channels brings vast new sources of media, helping us meet fast-growing client demand. We expect HomeBuddy to extend our long history of successful M&A. Most recently, that history includes Modernize Home Services and Aquavita Media.
Doug Valenti: Our outlook for that business, what we believe to be our largest addressable market, remains strongly positive, short and long term. I just mentioned HomeBuddy. Subsequent to quarter end, and as previously announced, we completed the acquisition of HomeBuddy, adding unique new product, media, and clients to home services. HomeBuddy has mastered the technology and execution of auction-driven exclusive leads, a product in high demand by large segments of the home services client market, and one that we did not yet have. Also, their focus and success building big scale campaigns in social and native channels brings vast new sources of media, helping us meet fast-growing client demand. We expect HomeBuddy to extend our long history of successful M&A. Most recently, that history includes Modernize Home Services and Aquavita Media.
Speaker #4: That business, what we believe to be our largest addressable market, remains strongly positive, short and long term. I just mentioned Home Buddy.
Speaker #4: Subsequent to quarter end, and as previously announced, we completed the acquisition of home buddy, adding unique new product, media, and clients to home services.
Speaker #4: Home buddy has mastered the technology and execution of auction-driven exclusive leads, a product in high demand by large segments of the home services client market.
Speaker #4: And one that we did not yet have. Also, their focus and success building big-scale campaigns in social and native channels brings vast new sources of media, helping us meet fast-growing client demand.
Speaker #4: We expect Home Buddy to extend our long history of successful M&A. Most recently, that history includes Modernized Home Services and Aquavita Media. Modernized is now the core business of our home services client vertical.
Doug Valenti: Modernize is now the core business of our home services client vertical, where our revenue has grown about 150% since the acquisition in 2020. Aquavita Media is now our core social, native, and display media platform. Those channels have grown about 300% in revenue just since the acquisition in 2024. We are even more excited about the potential for HomeBuddy than we were about these highly successful transactions. Our total addressable market opportunity is enormous and growing, and we continue to deliberately, continuously, and successfully expand our footprint. We still estimate that we are less than 10% penetrated in our current addressable market footprint. We are also focused on continuing to adapt aggressively and successfully to changes in our markets and ecosystem.
Doug Valenti: Modernize is now the core business of our home services client vertical, where our revenue has grown about 150% since the acquisition in 2020. Aquavita Media is now our core social, native, and display media platform. Those channels have grown about 300% in revenue just since the acquisition in 2024. We are even more excited about the potential for HomeBuddy than we were about these highly successful transactions. Our total addressable market opportunity is enormous and growing, and we continue to deliberately, continuously, and successfully expand our footprint. We still estimate that we are less than 10% penetrated in our current addressable market footprint. We are also focused on continuing to adapt aggressively and successfully to changes in our markets and ecosystem.
Speaker #4: Where our revenue has grown about 150% since the acquisition in 2020. Aquavita media is now our core social, native, and display media platform. Those channels have grown about 300% in revenue just since the acquisition in 2024.
Speaker #4: We are even more excited about the potential for home buddy than we were about these highly successful transactions. Our total addressable market opportunity is enormous and growing.
Speaker #4: And we continue to deliberately contiguously and footprint. We still estimate that we are less than 10% penetrated in our current addressable market footprint. We are also focused on continuing to adapt aggressively and successfully to changes in our markets and ecosystem most prominently our progress applying AI across the business and thriving in a more AI-driven ecosystem has already been strong.
Doug Valenti: Most prominently, our progress applying AI across the business and thriving in a more AI-driven ecosystem has already been strong, and we are continuing to increase those efforts. We expect AI to lead to increased opportunities in our already big and fast-growing markets, and we expect to disproportionately benefit from AI due to our structured proprietary integrations and data, and to our long history of successfully applying AI as a competitive advantage. Overall, we expect total company revenue growth and margin expansion in coming quarters and years. We continue to expect full fiscal year revenue, excluding HomeBuddy, to grow at least 10% and full fiscal year adjusted EBITDA, excluding HomeBuddy, to grow at least 20%, both consistent with our previous outlook. We also expect to achieve our next milestone margin goal to reach 10% quarterly adjusted EBITDA margin in this fiscal year, even excluding HomeBuddy.
Doug Valenti: Most prominently, our progress applying AI across the business and thriving in a more AI-driven ecosystem has already been strong, and we are continuing to increase those efforts. We expect AI to lead to increased opportunities in our already big and fast-growing markets, and we expect to disproportionately benefit from AI due to our structured proprietary integrations and data, and to our long history of successfully applying AI as a competitive advantage. Overall, we expect total company revenue growth and margin expansion in coming quarters and years. We continue to expect full fiscal year revenue, excluding HomeBuddy, to grow at least 10% and full fiscal year adjusted EBITDA, excluding HomeBuddy, to grow at least 20%, both consistent with our previous outlook. We also expect to achieve our next milestone margin goal to reach 10% quarterly adjusted EBITDA margin in this fiscal year, even excluding HomeBuddy.
Speaker #4: efforts. We expect AI And we are continuing to increase those to lead to increased opportunities in our already big and fast-growing markets. And we expect to disproportionately benefit from AI due to our structured proprietary integrations and data and to our long history of successfully applying AI as a competitive advantage.
Speaker #4: Overall, we expect total company revenue growth and margin expansion in coming quarters and years. We continue to expect full fiscal year revenue, excluding Home Buddy, to grow at least 10%, and full fiscal year adjusted EBITDA, excluding Home Buddy, to grow at least 20%.
Speaker #4: Both consistent with our previous outlook. We also expect to achieve our next milestone margin goal to reach 10% quarterly adjusted EBITDA margin in this fiscal year.
Speaker #4: Even excluding HomeBuddy, yet another business remains way our core strong, and HomeBuddy is purely additive and accretive to our previous outlook. Turning now to our new outlook, which of course includes HomeBuddy.
Doug Valenti: Said another way, our core business remains strong, and HomeBuddy is purely additive and accretive to our previous outlook. Turning now to our new outlook, which of course includes HomeBuddy. We expect total revenue in fiscal Q3 between $330 and $340 million, and total adjusted EBITDA to be between $26.5 and $30.5 million. We expect total revenue in full fiscal year 2026, which, as a reminder, ends in June, to be between $1.25 and $1.3 billion. The total full fiscal year adjusted EBITDA to be between $110 and $115 million. With that, I call over to Greg.
Doug Valenti: Said another way, our core business remains strong, and HomeBuddy is purely additive and accretive to our previous outlook. Turning now to our new outlook, which of course includes HomeBuddy. We expect total revenue in fiscal Q3 between $330 and $340 million, and total adjusted EBITDA to be between $26.5 and $30.5 million. We expect total revenue in full fiscal year 2026, which, as a reminder, ends in June, to be between $1.25 and $1.3 billion. The total full fiscal year adjusted EBITDA to be between $110 and $115 million. With that, I call over to Greg.
Speaker #4: We expect total revenue in fiscal Q3 between $330 and $340 million and total adjusted EBITDA to be between $26.5 and $30.5 million. We expect total revenue in full fiscal year 2026, which as a reminder ends in June, to be between $1.25 and $1.3 billion.
Speaker #4: Total full fiscal year adjusted EBITDA to be between $110 and $115 million. With that, the call would be great.
Speaker #1: Thank you, Doug. Hello and thanks to everyone for joining us today. Fiscal Q2 was another productive and successful quarter as Doug noted. It was the second consecutive quarter of record revenue for QUINSTREET in what is typically our seasonally lowest revenue quarter.
Greg Wong: Thank you, Doug. Hello, and thanks to everyone for joining us today. Fiscal Q2 was another productive and successful quarter, as Doug noted. It was the second consecutive quarter of record revenue for QuinStreet in what is typically our seasonally lowest revenue quarter. The strong performance was driven by impressive execution across our verticals. For the December quarter, total revenue was $287.8 million. Adjusted net income was $14 million, or 24 cents per share, and adjusted EBITDA was $21 million. Looking at revenue by client vertical, our financial services client vertical represented 75% of Q2 revenue and declined 1% year-over-year to $216.8 million. Auto insurance momentum continued in the quarter, growing 6% sequentially versus the September quarter, significantly outpacing typical seasonality.
Greg Wong: Thank you, Doug. Hello, and thanks to everyone for joining us today. Fiscal Q2 was another productive and successful quarter, as Doug noted. It was the second consecutive quarter of record revenue for QuinStreet in what is typically our seasonally lowest revenue quarter. The strong performance was driven by impressive execution across our verticals. For the December quarter, total revenue was $287.8 million. Adjusted net income was $14 million, or 24 cents per share, and adjusted EBITDA was $21 million. Looking at revenue by client vertical, our financial services client vertical represented 75% of Q2 revenue and declined 1% year-over-year to $216.8 million. Auto insurance momentum continued in the quarter, growing 6% sequentially versus the September quarter, significantly outpacing typical seasonality.
Speaker #1: The strong performance was driven by impressive execution across our verticals. For the December quarter, total revenue was $287.8 million. Adjusted net income was $14 million or 24 cents per share.
Speaker #1: And adjusted EBITDA was $21 million. Looking at revenue by client vertical, our financial services client vertical represented 75% of Q2 revenue and declined 1% year over year to $216.8 million.
Speaker #1: Auto insurance momentum continued in the quarter growing 6% sequentially versus the September quarter significantly outpacing typical seasonality. From a year-over-year standpoint, we were down 2% as we were comping against an unprecedented surge of insurance carrier spending in the year-ago period.
Greg Wong: From a year-over-year standpoint, we were down 2% as we were comping against an unprecedented surge of insurance carrier spending in the year-ago period. Non-insurance financial services, which includes personal loans, credit cards, and banking, grew 10% year over year. Our home services client vertical represented 25% of Q2 revenue and grew 13% year over year to $71 million. Turning to the balance sheet, we closed the quarter with $107 million of cash and equivalents and no bank debt. Moving to the tax front. Our provision this quarter includes a one-time benefit of $48 million related to the reversal of our valuation allowance against our deferred tax assets that we established in fiscal year 2023.
Greg Wong: From a year-over-year standpoint, we were down 2% as we were comping against an unprecedented surge of insurance carrier spending in the year-ago period. Non-insurance financial services, which includes personal loans, credit cards, and banking, grew 10% year over year. Our home services client vertical represented 25% of Q2 revenue and grew 13% year over year to $71 million. Turning to the balance sheet, we closed the quarter with $107 million of cash and equivalents and no bank debt. Moving to the tax front. Our provision this quarter includes a one-time benefit of $48 million related to the reversal of our valuation allowance against our deferred tax assets that we established in fiscal year 2023.
Speaker #1: Non-insurance financial services which includes personal loans, credit cards, and banking grew 10% year over year. Our home services client vertical represented 25% of Q2 revenue and grew 13% year over year to $71 million.
Speaker #1: Turning to the balance sheet, we closed the quarter with $107 million of cash in equivalence and no bank debt. Moving to the tax front, our provision this quarter includes a one-time benefit of $48 million related to the reversal of our valuation allowance against our deferred tax assets that we established in fiscal year 2023.
Speaker #1: We expect to return to a three-year cumulative profit position by the end of this fiscal year so this entry was a required by gap.
Greg Wong: We expect to return to a three-year cumulative profit position by the end of this fiscal year, so this entry was required by GAAP. To be clear, this one-time benefit is a non-cash item and is excluded from non-GAAP results. Moving on from our Q2 results, I'd like to spend some time discussing our recent acquisition of HomeBuddy and our capital allocation priorities. Starting with HomeBuddy. HomeBuddy expands our product, media, and client footprints for growth at scale in what we believe is our largest addressable market, home services. While our home services vertical has been growing at a compound annual growth rate of over 15%, even combined with HomeBuddy, we serve less than 1% of a massive market that we estimate spends more than $70 billion on marketing. We closed the acquisition of HomeBuddy about a month ago in early January.
Greg Wong: We expect to return to a three-year cumulative profit position by the end of this fiscal year, so this entry was required by GAAP. To be clear, this one-time benefit is a non-cash item and is excluded from non-GAAP results. Moving on from our Q2 results, I'd like to spend some time discussing our recent acquisition of HomeBuddy and our capital allocation priorities. Starting with HomeBuddy. HomeBuddy expands our product, media, and client footprints for growth at scale in what we believe is our largest addressable market, home services. While our home services vertical has been growing at a compound annual growth rate of over 15%, even combined with HomeBuddy, we serve less than 1% of a massive market that we estimate spends more than $70 billion on marketing. We closed the acquisition of HomeBuddy about a month ago in early January.
Speaker #1: To be clear, this one-time benefit is a non-cash item and is excluded from non-gap results. Moving on from our Q2 results, I'd like to spend some time to discussing our recent acquisition of home buddy and our capital allocation priorities.
Speaker #1: Starting with Home Buddy, Home Buddy expands our product, media, and client footprints for growth at scale in what we believe is our largest addressable market—home services.
Speaker #1: While our Home Services vertical has been growing at a compound annual growth rate of over 15%, even combined with Home Buddy, we serve less than 1% of a massive market that we estimate spends more than $70 billion on marketing.
Speaker #1: We closed the acquisition of home buddy about a month ago in early January. As a reminder, the terms of the acquisition include $115 million at closing, we funded this amount with $45 million of cash from our balance sheet, and $70 million drawn from our new $150 million revolving credit facility.
Greg Wong: As a reminder, the terms of the acquisition include $115 million at closing. We funded this amount with $45 million of cash from our balance sheet, and $70 million drawn from our new $150 million revolving credit facility. In terms of the acquisition also include $75 million in post-closing payments, payable equally over 4 years. As previously communicated, when we announced the acquisition, we expect HomeBuddy to generate $30 million or more of adjusted EBITDA in the first 12 months after closing. Although early in our integration of HomeBuddy, we are working on capturing synergies to drive that number even higher. Overall, QuinStreet remains at a strong financial position, and we expect to generate strong cash flows in the coming quarters.
Greg Wong: As a reminder, the terms of the acquisition include $115 million at closing. We funded this amount with $45 million of cash from our balance sheet, and $70 million drawn from our new $150 million revolving credit facility. In terms of the acquisition also include $75 million in post-closing payments, payable equally over 4 years. As previously communicated, when we announced the acquisition, we expect HomeBuddy to generate $30 million or more of adjusted EBITDA in the first 12 months after closing. Although early in our integration of HomeBuddy, we are working on capturing synergies to drive that number even higher. Overall, QuinStreet remains at a strong financial position, and we expect to generate strong cash flows in the coming quarters.
Speaker #1: In terms of the acquisition, also include $75 million in post-closing payments payable equally over four years. As previously communicated when we announced the acquisition, we expect home buddy to generate $30 million or more of adjusted EBITDA in the first 12 months after closing.
Speaker #1: And although early in our integration of home buddy, we are working on capturing synergies to drive that number even higher. Overall, QUINSTREET remains at a strong financial position.
Speaker #1: And we expect to generate strong cash flows in the coming quarters. We continue to have a rigorously disciplined approach to capital allocation and will continue to prioritize one investing in new products and initiatives for future growth and market expansion.
Greg Wong: We continue to have a rigorously disciplined approach to capital allocation and will continue to prioritize, one, investing in new products and initiatives for future growth and margin expansion. Two, accretive acquisitions, and three, share repurchases at attractive levels. We will continue to be measured in our approach and remain focused on maximizing shareholder value. Overall, our long-term outlook has never been better. We expect strong revenue growth and margin expansion to continue in coming quarters and years, with our near-term next milestone goal still to reach 10% quarterly adjusted EBITDA margin in this fiscal year, even excluding the expected accretive impact of HomeBuddy. As a reminder, we have three key levers to expand EBITDA margin. One, growing and optimizing new higher margin media capacity to meet auto insurance market demand.
Greg Wong: We continue to have a rigorously disciplined approach to capital allocation and will continue to prioritize, one, investing in new products and initiatives for future growth and margin expansion. Two, accretive acquisitions, and three, share repurchases at attractive levels. We will continue to be measured in our approach and remain focused on maximizing shareholder value. Overall, our long-term outlook has never been better. We expect strong revenue growth and margin expansion to continue in coming quarters and years, with our near-term next milestone goal still to reach 10% quarterly adjusted EBITDA margin in this fiscal year, even excluding the expected accretive impact of HomeBuddy. As a reminder, we have three key levers to expand EBITDA margin. One, growing and optimizing new higher margin media capacity to meet auto insurance market demand.
Speaker #1: Accretive to acquisitions and three, share repurchases at attractive levels. We will continue to be measured in our approach and remain focused on maximizing shareholder value.
Speaker #1: Overall, our long-term outlook has never been better. We expect strong revenue growth and margin expansion to continue in coming quarters and years. With our near-term next milestone goal still to reach 10% quarterly adjusted EBITDA margin in this fiscal year, even excluding the expected accretive impact of home buddy.
Speaker #1: As a reminder, we have three key levers to expand EBITDA margin. One, growing and optimizing new higher margin media capacity to meet auto insurance market demand.
Speaker #1: Two, growing higher margin products and businesses in insurance and in non-insurance client verticals to represent a higher percentage of our overall business mix. And three, capturing operating leverage from top-line growth through scale and from efficiency and productivity initiatives.
Greg Wong: Two, growing higher-margin products and businesses in insurance and in non-insurance client verticals to represent a higher percentage of our overall business mix. And three, capturing operating leverage from top-line growth through scale and from efficiency and productivity initiatives. In other words, growing revenue and media margin dollars significantly faster than operating expenses. Turning to our outlook, which includes HomeBuddy, we expect total revenue in fiscal Q3 to be between $330 and 340 million, and total adjusted EBITDA to be between $26.5 and 30.5 million. We expect total full fiscal year 2026 revenue to be between $1.25 and 1.3 billion, and total full fiscal year adjusted EBITDA to be between $110 and 115 million.
Greg Wong: Two, growing higher-margin products and businesses in insurance and in non-insurance client verticals to represent a higher percentage of our overall business mix. And three, capturing operating leverage from top-line growth through scale and from efficiency and productivity initiatives. In other words, growing revenue and media margin dollars significantly faster than operating expenses. Turning to our outlook, which includes HomeBuddy, we expect total revenue in fiscal Q3 to be between $330 and 340 million, and total adjusted EBITDA to be between $26.5 and 30.5 million. We expect total full fiscal year 2026 revenue to be between $1.25 and 1.3 billion, and total full fiscal year adjusted EBITDA to be between $110 and 115 million.
Speaker #1: In other words, growing revenue and media margin dollars significantly faster than operating expenses. Turning to our outlook, which includes home buddy, we expect total revenue in fiscal Q3 to be between $330 and $340 million.
Speaker #1: EBITDA to be between $26.5 and $30.5 And total adjusted million. We expect total full fiscal year 2026 revenue to be between $1.25 and $1.3 billion.
Speaker #1: And total full fiscal year adjusted EBITDA to be between $110 and $115 million. With that, I'll turn it over to the operator for
Greg Wong: With that, I'll turn it over to the operator for Q&A.
Greg Wong: With that, I'll turn it over to the operator for Q&A.
Speaker #1: Q&A. Thank
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star key 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 the star key followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, while we assemble the queue. Your first question comes from Zach Cummins of B. Riley. Please go ahead.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star key 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 the star key followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, while we assemble the queue. Your first question comes from Zach Cummins of B. Riley. Please go ahead.
Speaker #2: you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star key followed by the number one on your touchstone phone.
Speaker #2: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number two.
Speaker #2: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, while we assemble the queue. Your first question comes from Zach Cumins of B Riley.
Speaker #2: Please go ahead.
Speaker #3: Yeah. Thanks for taking my
Zach Cummins: Yeah, thanks for taking my questions and, and congrats on a strong quarter, Doug and Greg. Doug, I just wanted to start off, asking about, just AI in particular. I know that's been a big worry in the market here in, in recent weeks. But first, can you talk about the traffic trends you've been seeing with your platform in recent months? Have you seen any meaningful changes, in terms of channel or overall traffic volumes? And then second, I know you touched on this a little bit in your script, but can you just speak to how QuinStreet can position itself, to navigate the changes in the landscape as AI becomes more prevalent?
Zach Cummins: Yeah, thanks for taking my questions and, and congrats on a strong quarter, Doug and Greg. Doug, I just wanted to start off, asking about, just AI in particular. I know that's been a big worry in the market here in, in recent weeks. But first, can you talk about the traffic trends you've been seeing with your platform in recent months? Have you seen any meaningful changes, in terms of channel or overall traffic volumes? And then second, I know you touched on this a little bit in your script, but can you just speak to how QuinStreet can position itself, to navigate the changes in the landscape as AI becomes more prevalent?
Speaker #3: questions and congrats on a strong quarter. Doug and Greg, Doug, I just wanted to start off asking about just AI in particular. I know that's been a big worry in the market here in recent weeks, but first, can you talk about the traffic trends you've been seeing with your platform in recent months?
Speaker #3: Have you seen any meaningful changes in terms of channel or overall traffic volumes? And then second, I know you touched on this a little bit in your script, but can you just speak to how QUINSTREET can position itself to navigate the changes in the landscape as AI becomes more prevalent?
Speaker #4: Yeah, Zach, thank you for the question. In terms of traffic trends only positive, we haven't seen no negative trends or let me say this, we have seen only net positive twins trends in the traffic.
Greg Wong: Yeah, Zach, thank you for, thank you for the question. In terms of traffic trends, only positive. We have seen no negative trends. Or let me say this, we have seen only net positive trends in the traffic, and we expect that, that will continue to be the case. I think we have a record amount of volume with, say, Google on that platform, on. And mostly, most of the searches now, as you know, involve AI-based answers and searches. It's only created more opportunity for us to get deeper and have more places to, to run our campaigns. So, short answer, net positive, and it's strongly net positive. You can see it in our performance trends, you can see it in our forecast, and we're seeing it in the data.
Doug Valenti: Yeah, Zach, thank you for, thank you for the question. In terms of traffic trends, only positive. We have seen no negative trends. Or let me say this, we have seen only net positive trends in the traffic, and we expect that, that will continue to be the case. I think we have a record amount of volume with, say, Google on that platform, on. And mostly, most of the searches now, as you know, involve AI-based answers and searches. It's only created more opportunity for us to get deeper and have more places to, to run our campaigns. So, short answer, net positive, and it's strongly net positive. You can see it in our performance trends, you can see it in our forecast, and we're seeing it in the data.
Speaker #4: And we expect that that will continue to be the case. I think we have a record amount of volume with, say, Google on that platform, and mostly the searches now, as you know, involve AI-based answers and searches.
Speaker #4: It's only created more opportunity for us to get deeper and have more places to run our campaigns. So, short answer: net positive, and strongly net positive.
Speaker #4: You can see it in our performance trends. You can see it in our forecast. And we're seeing it in the data. So fear is there would be unfounded.
Greg Wong: So, fears there would be unfounded. In terms of the overall AI landscape, which is obviously on, apparently, on everybody's mind right now, you know, there seem to be, if we step back, there are kind of two big concerns. One is the AI bubble, and the other is the AI disruption or disintermediation. I think we can all agree that the bubble concerns don't really apply to us, given, you know, where we're now trading relative to our strong performance and scale, as we've traded down, with the sector broadly defined.
Doug Valenti: So, fears there would be unfounded. In terms of the overall AI landscape, which is obviously on, apparently, on everybody's mind right now, you know, there seem to be, if we step back, there are kind of two big concerns. One is the AI bubble, and the other is the AI disruption or disintermediation. I think we can all agree that the bubble concerns don't really apply to us, given, you know, where we're now trading relative to our strong performance and scale, as we've traded down, with the sector broadly defined.
Speaker #4: In terms of the overall AI landscape, which is obviously apparently on everybody's mind right now, there seem to be if we step back, there are kind of two big concerns.
Speaker #4: One is the AI bubble, and the other is the AI disruption or disintermediation. I think we can all agree that the bubble concerns don't really apply to us, given where we're now trading relative to our strong performance and scale.
Speaker #4: As we've traded down with the sector broadly defined. With respect to fears of disruption and disintermediation, existing business models, that's pretty clearly overblown across and has been pretty indiscriminate, of course, as it's kind of pulled in software, SaaS, information services, performance marketing, and all of those things.
Greg Wong: With respect to fears of disruption and disintermediation of existing business models, that's pretty clearly overblown across, and has been pretty indiscriminate, of course, as it's kind of pulled in software, SaaS, information services, performance marketing, and all of those things.
Doug Valenti: With respect to fears of disruption and disintermediation of existing business models, that's pretty clearly overblown across, and has been pretty indiscriminate, of course, as it's kind of pulled in software, SaaS, information services, performance marketing, and all of those things.
Speaker #4: And it's not surprising it's been overblown and indiscriminate. It's kind of what happens early in these big risk interpreted as risk cycles. But pretty clearly overblown.
Doug Valenti: ... and it's not surprising it's been overblown and indiscriminate. That's kind of what happens early in these big risk cycles, you know, interpreted as risk cycles, but pretty clearly overblown. And don't take my word for it, obviously. I mean, Jensen Huang, who knows more about AI than any of us will ever, you know, will ever know, is quoted, as you know, in the past couple of days, talking about it and saying it's just illogical to him. It doesn't make sense. AI is much more likely to enhance or utilize the value add business models and tools, software, and otherwise out there, than it is to replace them.
Doug Valenti: ... and it's not surprising it's been overblown and indiscriminate. That's kind of what happens early in these big risk cycles, you know, interpreted as risk cycles, but pretty clearly overblown. And don't take my word for it, obviously. I mean, Jensen Huang, who knows more about AI than any of us will ever, you know, will ever know, is quoted, as you know, in the past couple of days, talking about it and saying it's just illogical to him. It doesn't make sense. AI is much more likely to enhance or utilize the value add business models and tools, software, and otherwise out there, than it is to replace them.
Speaker #4: And don't take my word for it, obviously. I mean, Jensen Huang, who knows more about AI than any of us will ever know, is quoted, as you know, in the past couple of days talking about it and saying it's just illogical to him.
Speaker #4: It doesn't make sense. AI is much more likely to enhance or utilize the value-add business models and tools, software, and otherwise out there than it is to replace them.
Doug Valenti: And the CEO of Google just said basically the same thing yesterday, and certainly that would be our view from the trenches as we actually do this stuff day-to-day. And I would add, historically, most of the value of these big technology disruptions eventually accrues to the incumbents after the big platform and infrastructure companies are built, which is a phase, of course, we're going through now. So that's exactly what we're also seeing on the ground, in the trenches, applying and competing and working these businesses day-to-day. And as I think I've indicated before, we have a lot. We've always had a lot of AI going on in our core marketplace algorithms function.
Speaker #4: And CEO of Google just said basically the same thing yesterday and certainly that would be our view from the trenches as we actually do this stuff day to day.
Doug Valenti: And the CEO of Google just said basically the same thing yesterday, and certainly that would be our view from the trenches as we actually do this stuff day-to-day. And I would add, historically, most of the value of these big technology disruptions eventually accrues to the incumbents after the big platform and infrastructure companies are built, which is a phase, of course, we're going through now. So that's exactly what we're also seeing on the ground, in the trenches, applying and competing and working these businesses day-to-day. And as I think I've indicated before, we have a lot. We've always had a lot of AI going on in our core marketplace algorithms function.
Speaker #4: And I would add, historically, most of the value of these big technology disruptions eventually accrues to the incumbents after the big platform and infrastructure companies are built, which is a phase, of course, we're going through now.
Speaker #4: So that's exactly what we're also seeing on the ground in the trenches applying and competing and working these businesses day to day. And as I think I've indicated before, we have a lot we've always had a lot of AI going on in our core marketplace algorithms function since 2008.
Doug Valenti: Since 2008, that's been our core technology, and we've only added to that, of course, and we have activities across the business and applications of AI. So we certainly see ourselves as something that's gonna be an example of that. Now, the fears of people being disintermediated, disruptive, aren't completely unfounded. I mean, to the extent there are businesses that rely on commodity data or commerce and commodity products, or that are doing simple aggregation, simple manipulation, or simple intermediation of those areas, commodity data, commodity products, then they are certainly at risk from AI. But that is not what most successful software companies broadly defined, or certainly not what QuinStreet is or does. We at QuinStreet have literally billions of dollars of proprietary data.
Doug Valenti: Since 2008, that's been our core technology, and we've only added to that, of course, and we have activities across the business and applications of AI. So we certainly see ourselves as something that's gonna be an example of that. Now, the fears of people being disintermediated, disruptive, aren't completely unfounded. I mean, to the extent there are businesses that rely on commodity data or commerce and commodity products, or that are doing simple aggregation, simple manipulation, or simple intermediation of those areas, commodity data, commodity products, then they are certainly at risk from AI. But that is not what most successful software companies broadly defined, or certainly not what QuinStreet is or does. We at QuinStreet have literally billions of dollars of proprietary data.
Speaker #4: That's been our core technology. And we've only added to that, of course. And we have activities across the business and applications of AI. So we certainly see ourselves as something that's going to be an example of that.
Speaker #4: Now, the fears of people being disintermediated, disruptive, aren't completely unfounded. I mean, if they're to the extent there are businesses that rely on commodity data or commerce and commodity products or that are doing simple aggregation and simple manipulation or simple intermediation of those areas, commodity data, commodity products, then they are certainly at risk from AI.
Speaker #4: But that is not what most successful software companies broadly defined or certainly not what QUINSTREET is or does. We at QUINSTREET have literally billions of dollars of proprietary data.
Speaker #4: We have spent billions of dollars generating that data. Through Media Campaigns that are extraordinarily complex with permutations into the billions. When you combine all the variables.
Doug Valenti: We have spent billions of dollars generating that data, through media campaigns that are extraordinarily complex, with permutations into the billions when you combine all the variables. We have proprietary integrations and access to data, and that, to that data that allows us to continuously generate more of it, refresh it, and build on it. And we have proprietary technologies, including AI, since 2008, as I mentioned, that we utilize to optimize that data for the benefits of our consumers and of our marketing clients. And we also do that in a regulatory compliant and brand compliant way, which are highly, highly complex. So clearly, what we do is uniquely complex. It's not commodity, it is value add, it's proprietary. And clearly, we've been successful.
Doug Valenti: We have spent billions of dollars generating that data, through media campaigns that are extraordinarily complex, with permutations into the billions when you combine all the variables. We have proprietary integrations and access to data, and that, to that data that allows us to continuously generate more of it, refresh it, and build on it. And we have proprietary technologies, including AI, since 2008, as I mentioned, that we utilize to optimize that data for the benefits of our consumers and of our marketing clients. And we also do that in a regulatory compliant and brand compliant way, which are highly, highly complex. So clearly, what we do is uniquely complex. It's not commodity, it is value add, it's proprietary. And clearly, we've been successful.
Speaker #4: We have proprietary integrations and access to data, and access to that data allows us to continuously generate more of it, refresh it, and build on it.
Speaker #4: And we have proprietary technologies including AI since 2008, as I mentioned, that we utilize to optimize that data for the benefits of our consumers and of our marketing clients.
Speaker #4: And we also do that in a regulatory compliant and brand compliant way. Which are highly, highly complex. So clearly, what we do is uniquely complex.
Speaker #4: It's not commodity. It is value-add. It's proprietary. And clearly, we've been successful. We're good at it because if you look at our age and our size and our profitability, by definition, we're quite successful at it.
Doug Valenti: We're good at it, because if you look at our age, our size, and our profitability, then by definition, we're quite successful at it. So we see, as AI comes, we see rather than the negatives and the disruption, what we see is a field of, you know, more, better, higher capabilities that is net additive in a very, very meaningful way to our business and to our company. We do not view it as a big threat. And in terms of the disintermediation, by the way, if our business model could have been disintermediated, there are some big players that already exist with massive capabilities that have done that a long time ago.
Doug Valenti: We're good at it, because if you look at our age, our size, and our profitability, then by definition, we're quite successful at it. So we see, as AI comes, we see rather than the negatives and the disruption, what we see is a field of, you know, more, better, higher capabilities that is net additive in a very, very meaningful way to our business and to our company. We do not view it as a big threat. And in terms of the disintermediation, by the way, if our business model could have been disintermediated, there are some big players that already exist with massive capabilities that have done that a long time ago.
Speaker #4: So we see as AI comes, we see rather than the negatives and the disruption, what we see is a field of more better, higher capabilities that is net additive in a very, very meaningful way to our business and to our company.
Speaker #4: We do not view it as a big threat. In terms of disintermediation, by the way, if our business model could have been disintermediated, there are some big players that already exist with massive capabilities that have done that a long time ago.
Speaker #4: The question we always ask, we have always asked because we take our moats quite seriously, is if someone were to try to disintermediate us with AI or otherwise, how would they do it?
Doug Valenti: The question we always ask, we have always asked, because we take our moats quite seriously, is: If someone were to try to disintermediate us with AI or otherwise, how would they do it? Who would be able to do it, and how would they make money? And we just don't see. We can't, and again, so we, as an executive team and with our product engineering team, ask this question all the time, and the answers are, you know, nigh on impossible, extraordinarily difficult. First of all, who would have the incentive? Because they got to be able to make money. How would they get access to or replicate the data, which, again, would take enormous amounts of time and money.
Doug Valenti: The question we always ask, we have always asked, because we take our moats quite seriously, is: If someone were to try to disintermediate us with AI or otherwise, how would they do it? Who would be able to do it, and how would they make money? And we just don't see. We can't, and again, so we, as an executive team and with our product engineering team, ask this question all the time, and the answers are, you know, nigh on impossible, extraordinarily difficult. First of all, who would have the incentive? Because they got to be able to make money. How would they get access to or replicate the data, which, again, would take enormous amounts of time and money.
Speaker #4: Who would be able to do it? And how would they make money? And we just don't—again, we do this ourselves as an executive team and with our product engineering team, ask this question all the time.
Speaker #4: And the answers are nigh on impossible. Extraordinarily difficult. First of all, who would have the incentive? Because they got to be able to make money.
Speaker #4: How would they get access to or replicate the data which, again, would take enormous amounts of time and money? It's not something you could just turn AI on and expect that the data is going to come.
Doug Valenti: It's not something you could just turn AI on and expect that the data is gonna come. How would they access the data? Because, again, they can't get access to the proprietary integrations, because the clients, among others, won't give it to them. And how would they make money? The money comes from the marketers. So disintermediation would include not just disintermediating, say, a QuinStreet, but it would really mean disintermediating the client brands, which represent hundreds of billions of dollars of value and tens of billions of dollars of annual spend. So the money is in the marketing, which means the money's not in the disintermediation. So we see, again, we don't see the risk that others see. We take it seriously. We look for it, we test against it, we ask ourselves, we question others in the industry.
Doug Valenti: It's not something you could just turn AI on and expect that the data is gonna come. How would they access the data? Because, again, they can't get access to the proprietary integrations, because the clients, among others, won't give it to them. And how would they make money? The money comes from the marketers. So disintermediation would include not just disintermediating, say, a QuinStreet, but it would really mean disintermediating the client brands, which represent hundreds of billions of dollars of value and tens of billions of dollars of annual spend. So the money is in the marketing, which means the money's not in the disintermediation. So we see, again, we don't see the risk that others see. We take it seriously. We look for it, we test against it, we ask ourselves, we question others in the industry.
Speaker #4: How would they access the data? Again, they can't get access to the proprietary integrations because the clients among others don't give it to them.
Speaker #4: And how would they make money? The money comes from the marketers. So disintermediation would include not just a disintermediation, say, a QuinStreet, but it would really mean disintermediating the client brands.
Speaker #4: Which represent hundreds of billions of dollars of value, and tens of billions of dollars of annual spend. So, the money is in the marketing, which means the money is not in the disintermediation.
Speaker #4: So we see, again, we don't see the risk that others see. We take it seriously. We look for it. We test against it. We ask ourselves.
Speaker #4: We question others in the industry. Nobody, by the way, has been able to counter any of what I just said. But we see more opportunity, not less, going forward.
Doug Valenti: No, nobody, by the way, has been able to counter any of what I just said. But we see more opportunity, not less, going forward. And it clearly and hopefully, that's reflected in our performance, you know, recently, and in the past, and in our, you know, in the forecast that we've given. So probably a longer you signed up for, but I think in this environment, something that is worthy of that.
Doug Valenti: No, nobody, by the way, has been able to counter any of what I just said. But we see more opportunity, not less, going forward. And it clearly and hopefully, that's reflected in our performance, you know, recently, and in the past, and in our, you know, in the forecast that we've given. So probably a longer you signed up for, but I think in this environment, something that is worthy of that.
Speaker #4: And clearly and hopefully, that's reflected in our performance recently and in the past and in our in the forecast that we've given. So probably a longer you signed up for, but I think in this environment, something
Speaker #4: That is worthy of that. Absolutely.
Zach Cummins: Absolutely. Thank you so much for the color, Doug. I'll keep it to just one more follow-up question. In terms of auto insurance trends, nice to see the sequential increase here, in what is seasonally a slower quarter on the auto insurance side. As we lap into calendar year 2026, I mean, can you give us a sense of just the appetite and spending trends you've been hearing from your clients? I know premiums are likely to moderate, but seems like profitability is in a great spot for many of these carriers. So just curious to hear conversations and trends you've been seeing across your auto insurance carrier base.
Zach Cummins: Absolutely. Thank you so much for the color, Doug. I'll keep it to just one more follow-up question. In terms of auto insurance trends, nice to see the sequential increase here, in what is seasonally a slower quarter on the auto insurance side. As we lap into calendar year 2026, I mean, can you give us a sense of just the appetite and spending trends you've been hearing from your clients? I know premiums are likely to moderate, but seems like profitability is in a great spot for many of these carriers. So just curious to hear conversations and trends you've been seeing across your auto insurance carrier base.
Speaker #1: Thank you so much for the color, Doug. I'll keep it to just one more follow-up question. In terms of auto insurance trends, nice to see the sequential increase here in what is seasonally a slower quarter on the auto insurance side.
Speaker #1: As we lap into calendar year '26, can you give us a sense of just the appetite and spending trends you've been hearing from your clients?
Speaker #1: I know premiums are likely to moderate, but it seems like profitability is in a great spot for many of these carriers. So just curious to hear conversations and trends you've been seeing across your auto insurance carrier base.
Speaker #2: Sure. Very strong engagement, very strong interest, a lot of focus on the channel, a lot of focus on how to do better in eventually bigger in the channel.
Doug Valenti: Sure. Very strong engagement, very strong interest, a lot of focus on the channel, a lot of focus on how to do better and eventually bigger in the channel. On the other side, you know, there's been an unprecedented surge in their spend, overall, and certainly in the channel over the past year or so, and they're still digesting that. And they're kind of on this new plateau that's growing incrementally, but not growing at high rates from here, while they sort out how that worked for them and what they want to do to optimize further and what risks lie ahead, including, you know, having enough. And by the way, you're right, their economics are in great shape, their financials are in great shape, so they have great capacity.
Doug Valenti: Sure. Very strong engagement, very strong interest, a lot of focus on the channel, a lot of focus on how to do better and eventually bigger in the channel. On the other side, you know, there's been an unprecedented surge in their spend, overall, and certainly in the channel over the past year or so, and they're still digesting that. And they're kind of on this new plateau that's growing incrementally, but not growing at high rates from here, while they sort out how that worked for them and what they want to do to optimize further and what risks lie ahead, including, you know, having enough. And by the way, you're right, their economics are in great shape, their financials are in great shape, so they have great capacity.
Speaker #2: On the other side, there's been an unprecedented surge in their spend overall, and certainly in the channel, over the past year or so. And they're still digesting that.
Speaker #2: And they're kind of kind of on this new plateau that's growing incrementally, but not growing at high rates from here. While they sort out how that worked for them and what they want to do to optimize further and what risks lie ahead including having enough and by the way, you're right.
Speaker #2: Their economics are in great shape. Their financials are in great shape. So they have great capacity. But based on what we observe, it appears that they're weighing that against—are there places where they should now be reducing rates?
Doug Valenti: But I, you know, based on what we observe, it appears that they're weighing that against, you know, are there places where they should now be reducing rates? What are going to be the eventual full effects of tariffs, and many other factors. So I would say that strong engagement, very stable, incremental growth. I'd say that returning to a more normalized growth rate, which we would consider to be between 10% and 20% year-over-year, is probably on the not too distant horizon, as long as there's not some big externality impact from something that nobody expects. But, you know, these guys, these, the carriers are extraordinarily sophisticated. They're balancing a lot of different things. They're adapting as they go.
Doug Valenti: But I, you know, based on what we observe, it appears that they're weighing that against, you know, are there places where they should now be reducing rates? What are going to be the eventual full effects of tariffs, and many other factors. So I would say that strong engagement, very stable, incremental growth. I'd say that returning to a more normalized growth rate, which we would consider to be between 10% and 20% year-over-year, is probably on the not too distant horizon, as long as there's not some big externality impact from something that nobody expects. But, you know, these guys, these, the carriers are extraordinarily sophisticated. They're balancing a lot of different things. They're adapting as they go.
Speaker #2: What are going to be the eventual full effects of tariffs? And many other factors. So I would say that strong engagement, very stable, incremental growth.
Speaker #2: I’d say that returning to a more normalized growth rate, which we would consider to be between 10 and 20 percent year-over-year, is probably on the not-too-distant horizon, as long as there’s not some big externality impact from something that nobody expects.
Speaker #2: But these guys the carriers are extraordinarily sophisticated. They're balancing a lot of different things. They're adapting as they go. I know there's been some concern out there about rates and what happened in New York.
Doug Valenti: I know there's been some concern out there about rates and what happened in New York, people fearing that there'd be impact on rates. That's just normal course for the auto insurance industry. This is the stuff that goes on all the time. You know, different states having different points of view about the rates and where they are. And these companies, our clients, these sophisticated auto insurance carriers, are extraordinarily adept at adapting, adjusting, navigating, and moving forward. So we don't see any of that as being a material risk to what we're likely to see from them going forward.
Doug Valenti: I know there's been some concern out there about rates and what happened in New York, people fearing that there'd be impact on rates. That's just normal course for the auto insurance industry. This is the stuff that goes on all the time. You know, different states having different points of view about the rates and where they are. And these companies, our clients, these sophisticated auto insurance carriers, are extraordinarily adept at adapting, adjusting, navigating, and moving forward. So we don't see any of that as being a material risk to what we're likely to see from them going forward.
Speaker #2: be impact on rates. That's just normal People fearing that there'd course for the auto insurance industry. This is the stuff that goes on all the time.
Speaker #2: Different states having different points of view about the rates and where they are. And these companies, our clients, these sophisticated auto insurance carriers are extraordinarily adept at adapting and adjusting and navigating and moving forward.
Speaker #2: So, we don't see any of that as being a material risk to what we're likely to see from them going forward.
Speaker #1: Understood. Well, thanks again, Doug, for taking my questions and best of luck with the rest of the quarter.
Zach Cummins: Understood. Well, thanks again, Doug, for taking my questions, and best of luck with the rest of the quarter.
Zach Cummins: Understood. Well, thanks again, Doug, for taking my questions, and best of luck with the rest of the quarter.
Speaker #2: Thank you,
Doug Valenti: Thank you, Scott.
Doug Valenti: Thank you, Scott.
Speaker #3: Your next question
Operator: Your next question comes from Jason Kreyer of Craig-Hallum. Please go ahead.
Operator: Your next question comes from Jason Kreyer of Craig-Hallum. Please go ahead.
Speaker #3: comes from Jason Krayer of Craig Hallam. Please go Scott.
Speaker #3: ahead. Great.
Speaker #2: Thank you. So just wanted to touch on Homebody and kind of the cross-sell opportunity there. Specifically on the media side of things, I think Homebody opens up a lot more reach in terms of media.
Jason Kreyer: Great, thank you. So just wanted to touch on HomeBuddy and kind of the cross-sell opportunity there. Specifically on the media side of things, I think HomeBuddy opens up a lot more reach in terms of media. So maybe if you can just talk a little bit about what that cross-sell can look like. Thank you.
Jason Kreyer: Great, thank you. So just wanted to touch on HomeBuddy and kind of the cross-sell opportunity there. Specifically on the media side of things, I think HomeBuddy opens up a lot more reach in terms of media. So maybe if you can just talk a little bit about what that cross-sell can look like. Thank you.
Speaker #2: So maybe if you can just talk a little bit about what that cross-sell can look like. Thank you.
Speaker #4: You bet, Jason. It's a great question. And that's probably the most exciting part of the homebody combination. We are really despite the great success of Aquavita, which was kind of our toe in the water in what is the place where there's the most tumor traffic on the internet, which is the combination of social display and native.
Doug Valenti: You bet, Jason. It's a great question, and that's probably the most exciting part of the HomeBuddy combination. We are really... Despite the great success of Aquavita, which was kind of our toe in the water, in what is the place where there's the most consumer traffic on the internet, which is the combination of social, display, and native, we are kind of nowhere in that overall ecosystem, because the traffic is quite different in terms of its intent than the search ecosystem that we have grown up in and that we are so good at. And so what HomeBuddy does is it brings, you know, demonstrated ability to build these campaigns at scale in that biggest media footprint on the internet. They already do $140-ish million in revenue.
Doug Valenti: You bet, Jason. It's a great question, and that's probably the most exciting part of the HomeBuddy combination. We are really... Despite the great success of Aquavita, which was kind of our toe in the water, in what is the place where there's the most consumer traffic on the internet, which is the combination of social, display, and native, we are kind of nowhere in that overall ecosystem, because the traffic is quite different in terms of its intent than the search ecosystem that we have grown up in and that we are so good at. And so what HomeBuddy does is it brings, you know, demonstrated ability to build these campaigns at scale in that biggest media footprint on the internet. They already do $140-ish million in revenue.
Speaker #4: We are kind of nowhere. In that overall ecosystem. Because the traffic is quite different in terms of its intent than the search ecosystem that we have grown up in and that we are so good at.
Speaker #4: And so what homebody does is it brings demonstrated ability to build these campaigns at scale in that biggest media footprint on the internet. They already do 140-ish million dollars in revenue there all in that media.
Doug Valenti: They're all in that media, and they do it very successfully in terms of client results and very successfully in terms of economics. And so they figured that out. And so we could have continued to spend a lot of money figuring it out and climbing that learning curve ourselves, but, you know, we were able to acquire HomeBuddy on very attractive terms and in a way that gives us that, that access and that capability immediately, so we can now scale it rather than, you know, continue to work our way up that scale learning curve. And the cross-sell there is enormously important because if you look at our home services business today, our GM there just recently said, Every client wants more. Every client. And so that's the demand side of the marketplace, if you will.
Doug Valenti: They're all in that media, and they do it very successfully in terms of client results and very successfully in terms of economics. And so they figured that out. And so we could have continued to spend a lot of money figuring it out and climbing that learning curve ourselves, but, you know, we were able to acquire HomeBuddy on very attractive terms and in a way that gives us that, that access and that capability immediately, so we can now scale it rather than, you know, continue to work our way up that scale learning curve. And the cross-sell there is enormously important because if you look at our home services business today, our GM there just recently said, Every client wants more. Every client. And so that's the demand side of the marketplace, if you will.
Speaker #4: And they do it very successfully in terms of quiet client results and very successfully in terms of economics and so they figured that out.
Speaker #4: And so we could have continued to spend a lot of money figuring it out and climbing that learning curve ourselves. But we were able to acquire homebody on very attractive terms and in a way that gives us that access and that capability immediately so we can now scale it rather than continue to work our way.
Speaker #4: Up that scale learning curve. And the cross-sell there is enormously important, because if you look at our Home Services business today, our GM there just recently said every client wants more.
Speaker #4: Every client. And so that's the demand side of the marketplace, if you will. The supply side is media. And so having now the ability to be to scale dramatically in a very predictable expert way that homebody brings to us in that media ecosystem to continue to feed the growing demand for digital performance marketing from our growing footprint of home services clients is enormous.
Doug Valenti: The supply side is media. So having now the ability to be to scale dramatically in a very predictable, expert way that HomeBuddy brings to us in that media ecosystem, to continue to feed the growing demand for digital performance marketing from our growing footprint of home services clients is enormous. It's just I can't say enough about how exciting and what a big deal that is for us. So that, and then the other side of it, as I indicated in my prepared remarks, is they also have a unique product that works great in their ecosystem, but also works in our ecosystem, which is this option-based exclusively. A product that's fairly complex in its technology and implementation and execution. It's their core. It is their only product, basically.
Doug Valenti: The supply side is media. So having now the ability to be to scale dramatically in a very predictable, expert way that HomeBuddy brings to us in that media ecosystem, to continue to feed the growing demand for digital performance marketing from our growing footprint of home services clients is enormous. It's just I can't say enough about how exciting and what a big deal that is for us. So that, and then the other side of it, as I indicated in my prepared remarks, is they also have a unique product that works great in their ecosystem, but also works in our ecosystem, which is this option-based exclusively. A product that's fairly complex in its technology and implementation and execution. It's their core. It is their only product, basically.
Speaker #4: It's just I can't say enough about how exciting and what a big deal that is for us. So that and then the other side of it is I indicated in my referring marks, preparative marks, is they also have a unique product that works great in their ecosystem, but also works in our ecosystem, which is this auction-based exclusively a product that's fairly complex and is technology and implementation and execution.
Speaker #4: It's their core; it is their only product, basically. And so, taking that product and selling that into our client footprint is also a big opportunity.
Doug Valenti: And so taking that product and selling that into our client footprint is also a big opportunity. So both are big, but if you made me pick one, I'd pick the media side, like you appropriately pointed out. That's a big deal.
Doug Valenti: And so taking that product and selling that into our client footprint is also a big opportunity. So both are big, but if you made me pick one, I'd pick the media side, like you appropriately pointed out. That's a big deal.
Speaker #4: So, both are big, but if you made me pick one, I'd pick the media side, like you appropriately pointed out. That's a big deal.
Speaker #2: Wonderful. I’m going to pivot on the follow-up here. So the last couple of quarters, Doug, you’ve highlighted some R&D initiatives that you think can drive accelerated growth, drive improved profitability.
Jason Kreyer: Wonderful. I'm gonna pivot on the follow-up here. So the last couple of quarters, Doug, you've highlighted some R&D initiatives that you think can, can drive accelerated growth, drive improved profitability. I, I think embedded in there are things like QRP, things like 360 Finance. I know you have others in there. Curious, you know, how are these tracking? And, and when do you think these initiatives can get to the point of scale where they become more noticeable to fundamentals?
Jason Kreyer: Wonderful. I'm gonna pivot on the follow-up here. So the last couple of quarters, Doug, you've highlighted some R&D initiatives that you think can, can drive accelerated growth, drive improved profitability. I, I think embedded in there are things like QRP, things like 360 Finance. I know you have others in there. Curious, you know, how are these tracking? And, and when do you think these initiatives can get to the point of scale where they become more noticeable to fundamentals?
Speaker #2: I think embedded in there are things like QRP, things like Q3, Q6. I know you have others in there. Curious, how are these tracking?
Speaker #2: And when do you think these initiatives can get to the point of scale where they become more noticeable to
Speaker #2: fundamentals? That's a great question.
Doug Valenti: That's a great question. You named a couple of them. Others include new media and auto insurance to meet demand at a higher margin, and expanding our insurance footprint into places other than just auto insurance clicks, which would include leads, calls, and selling more into the agent-driven models. We historically were dominated in our insurance business for clicks to direct carriers, great carriers like Progressive, Allstate, and GEICO, and pretty much all the major carriers. But that's only half the market in terms of marketing spend.
Doug Valenti: That's a great question. You named a couple of them. Others include new media and auto insurance to meet demand at a higher margin, and expanding our insurance footprint into places other than just auto insurance clicks, which would include leads, calls, and selling more into the agent-driven models. We historically were dominated in our insurance business for clicks to direct carriers, great carriers like Progressive, Allstate, and GEICO, and pretty much all the major carriers. But that's only half the market in terms of marketing spend.
Speaker #4: You named a couple of them. Others include new media and auto insurance to meet demand at a higher margin and expanding our insurance footprint into places other than just auto insurance clicks, which would calls, and selling more into the We historically were dominated in our insurance business for clicks to direct carriers.
Speaker #4: A great carrier is like Progressive, and Allstate, and Geico, and pretty much all the major carriers. But that's only half the market in terms of marketing spend.
Speaker #4: The other half is in the agent-driven carriers. And that's a place that we're spending a lot of time and money, and that comes to us because of our abilities at very attractive margins, and a place where we see hundreds and hundreds of millions of dollars of new revenue opportunity.
Doug Valenti: The other half is in the agent-driven carriers, and that's a place that we're spending a lot of time and money, and it comes to us because of our abilities at very attractive margins and a place that we're, you know, we see hundreds and hundreds of millions of dollars of new revenue opportunity, and we're up to about a $100 million revenue run rate there now. So we're getting that one to pretty good scale, but there's a heck of a lot more to come. And then there's the whole commercial or small business side, which has enormous demand from our clients and represents...
Doug Valenti: The other half is in the agent-driven carriers, and that's a place that we're spending a lot of time and money, and it comes to us because of our abilities at very attractive margins and a place that we're, you know, we see hundreds and hundreds of millions of dollars of new revenue opportunity, and we're up to about a $100 million revenue run rate there now. So we're getting that one to pretty good scale, but there's a heck of a lot more to come. And then there's the whole commercial or small business side, which has enormous demand from our clients and represents...
Speaker #4: And we're up to about $100 million revenue run rate there now. So we're getting that one to pretty good scale, but there's a heck of a lot more to come.
Speaker #4: And then there's the whole commercial or small business side, which has enormous demand from our clients and represents if you look at overall demand to or P&C, if you will, and then insurance for consumers and insurance to small businesses, that's kind of half and half of the overall market.
Doug Valenti: You know, if you look at overall demand from, you know, auto insurance to consumers and in insurance to or P&C, if you will, for consumers and insurance to small businesses, that's kind of half and half of the overall market. So, you know, we're currently concentrated in about a quarter of the overall addressable market. Still a lot of opportunity in that quarter, but we're expanding our footprint into, you know, another one of the quarters, which is the agent-driven side of P&C, and in the other half, which is the SMB and consumer-driven. So we're further along in the agent-driven P&C, but we're making good progress on the SMB and commercial side, and we have a lot of runway in front of us. So those are also components of that.
Doug Valenti: You know, if you look at overall demand from, you know, auto insurance to consumers and in insurance to or P&C, if you will, for consumers and insurance to small businesses, that's kind of half and half of the overall market. So, you know, we're currently concentrated in about a quarter of the overall addressable market. Still a lot of opportunity in that quarter, but we're expanding our footprint into, you know, another one of the quarters, which is the agent-driven side of P&C, and in the other half, which is the SMB and consumer-driven. So we're further along in the agent-driven P&C, but we're making good progress on the SMB and commercial side, and we have a lot of runway in front of us. So those are also components of that.
Speaker #4: So we're currently concentrating about a quarter of the overall adjustable market, still a lot of opportunity in that quarter, but we're expanding our footprint into another one of the quarters, which is the agent-driven side of P&C and then the other half, which is the SMB and consumer-driven side.
Speaker #4: We're further along in the agent-driven P&C, but we are making good progress on the SMB and commercial side, and we have a lot of runway in front of us.
Speaker #4: So those are also components of that. So I would say that some already a good scale. Leads and calls. Into P&C consumer agent-driven is, like I said, running $100 million a year.
Doug Valenti: So I, I would say that some are already at good scale, leads and calls into P&C consumer. Agent-driven is, you know, like I said, running $100 million a year or so, and, and very strong performance there. Others are getting to better scale, 360 and QRP are both growing very rapidly, and together will represent north of $10 million, well north of $10 million in revenue, high margin, high variable margin revenue this fiscal year. We're getting near the tail end of our heavy lift in R&D spending for those products, and are really much more into the scale and profitability era for those products.
Doug Valenti: So I, I would say that some are already at good scale, leads and calls into P&C consumer. Agent-driven is, you know, like I said, running $100 million a year or so, and, and very strong performance there. Others are getting to better scale, 360 and QRP are both growing very rapidly, and together will represent north of $10 million, well north of $10 million in revenue, high margin, high variable margin revenue this fiscal year. We're getting near the tail end of our heavy lift in R&D spending for those products, and are really much more into the scale and profitability era for those products.
Speaker #4: So and very strong performance. There's others are getting to better scale, 360 very rapidly and together and QRP, are both growing will represent north of $10 million well north of $10 million in revenue high margin, high variable margin revenue this fiscal year, we're getting near the tail end of our heavy lift in R&D spending for those products.
Speaker #4: And we're really much more into the scale and profitability era for those products. And so, I could probably name five or six or seven other initiatives in the various businesses across the company, including owned and operated media, broader insurance, and owned and operated media for credit cards, which are two areas that we've spent a lot of money developing. We're much further up those learning curves, both in terms of scale but also in terms of profitability, than we were a couple of months ago—let alone six or twelve months ago.
Doug Valenti: I could probably name 5 or 6 or 7 other initiatives in the various businesses across the company, including pre-owned and operated media for auto insurance, owned and operated media for credit cards, which are two areas that we've spent a lot of money developing. And we're much further up those learning curves, both in terms of scale, but it's also in terms of profitability than we were, you know, a couple of months ago, let alone 6, 12 months ago. Yeah, so big initiatives across the business. I think in terms of your answer, in terms of when you're going to see their effects, you're seeing the effects now. You know, we have forecasted pretty significant increase in our Adjusted EBITDA margin this quarter and next quarter.
Doug Valenti: I could probably name 5 or 6 or 7 other initiatives in the various businesses across the company, including pre-owned and operated media for auto insurance, owned and operated media for credit cards, which are two areas that we've spent a lot of money developing. And we're much further up those learning curves, both in terms of scale, but it's also in terms of profitability than we were, you know, a couple of months ago, let alone 6, 12 months ago. Yeah, so big initiatives across the business. I think in terms of your answer, in terms of when you're going to see their effects, you're seeing the effects now. You know, we have forecasted pretty significant increase in our Adjusted EBITDA margin this quarter and next quarter.
Speaker #4: Yeah, so big initiatives across the business. I think in terms of the answer, in terms of when you're going to see their effects, you're seeing the effects now.
Speaker #4: We have forecast a pretty significant increase in our adjusted EBITDA margin this quarter and next quarter. And Greg alluded to the various components of what's driving that.
Doug Valenti: Greg alluded to the various components of what's driving that. You know, one being, you know, new capacity, better margin media and auto insurance, our own media, auto insurance, and other media, higher margin media and auto insurance. Another one being growing these new higher margin initiatives and businesses, some of which I just talked about. And the third leg being just, you know, leverage from greater scale on a slower growing, semi-fixed cost base. So, you have seen it lately, as we've ramped Adjusted EBITDA margin back up after the effects of the initial surge in auto insurance, and you're going to see it this quarter, the existing current quarter, and you're gonna see it grow significantly and incrementally yet again in fiscal Q4.
Doug Valenti: Greg alluded to the various components of what's driving that. You know, one being, you know, new capacity, better margin media and auto insurance, our own media, auto insurance, and other media, higher margin media and auto insurance. Another one being growing these new higher margin initiatives and businesses, some of which I just talked about. And the third leg being just, you know, leverage from greater scale on a slower growing, semi-fixed cost base. So, you have seen it lately, as we've ramped Adjusted EBITDA margin back up after the effects of the initial surge in auto insurance, and you're going to see it this quarter, the existing current quarter, and you're gonna see it grow significantly and incrementally yet again in fiscal Q4.
Speaker #4: One being new capacity, better margin media and auto insurance, O&O media, auto insurance, and other media—higher margin media and auto insurance. I know one being growing these new, higher margin initiatives and businesses, some of which I just talked about.
Speaker #4: And the third leg being just leverage from greater scale on a slower growing semi-fixed cost base. So you are going to you have seen it lately, as we've ramped adjusted EBITDA margin back up after the effects of the initial surge in auto insurance.
Speaker #4: And you're going to see it this quarter—the current quarter—and you're going to see it grow significantly and incrementally yet again in fiscal Q4.
Speaker #4: Because again, we've said, "Listen, we fully expect that we're going to hit that 10% adjusted EBITDA margin number from the 7.3% we just did last quarter." In this fiscal year, on a quarterly basis, even without Homebody, and Homebody's accreted to that.
Doug Valenti: Because, because again, we've said, "Listen, we fully expect that we're gonna hit that 10% Adjusted EBITDA margin number, from the 7.3% we just did last quarter, in this fiscal year on a quarterly basis, even without HomeBuddy, and HomeBuddy's accretive to that." So, you know, those are kind of some of the moving parts, and hopefully, that gives you a good view of it.
Doug Valenti: Because, because again, we've said, "Listen, we fully expect that we're gonna hit that 10% Adjusted EBITDA margin number, from the 7.3% we just did last quarter, in this fiscal year on a quarterly basis, even without HomeBuddy, and HomeBuddy's accretive to that." So, you know, those are kind of some of the moving parts, and hopefully, that gives you a good view of it.
Speaker #4: So those are kind of some of the moving parts, and hopefully that gives you a good view of it.
Speaker #2: Yeah, really good color in that answer. Thank you, Doug. Appreciate it.
Jason Kreyer: Yeah, really good color in that answer. Thank you, Doug. Appreciate it.
Jason Kreyer: Yeah, really good color in that answer. Thank you, Doug. Appreciate it.
Speaker #2: it. Thank you,
Doug Valenti: Thank you, Jason.
Doug Valenti: Thank you, Jason.
Speaker #4: Jason. Your next
Operator: Your next question comes from Eric Martinuzzi of Lake Street. Please go ahead.
Operator: Your next question comes from Eric Martinuzzi of Lake Street. Please go ahead.
Speaker #1: The question comes from Eric Martinuzzi of Lake Street. Please go ahead.
Speaker #1: Ahead. Yeah, the growth rate on—
Eric Martinuzzi: Yeah, the growth rate on the home services business, kind of the legacy side here, the last couple of quarters has been about mid-teens. What is HomeBuddy growing at a similar rate?
Eric Martinuzzi: Yeah, the growth rate on the home services business, kind of the legacy side here, the last couple of quarters has been about mid-teens. What is HomeBuddy growing at a similar rate?
Speaker #5: the home services business, kind of the legacy side here, last couple of quarters has been about mid-teens. What is Homebody growing at a similar rate?
Speaker #6: Homebody's been growing at a little bit faster rate lately. So net Eric, we still, as we've said before, we expect the average compound growth rate of our home services business going forward to be between 15 and 20 percent.
Doug Valenti: HomeBuddy's been growing at a little bit faster rate lately. So, you know, net, net, Eric, we still, as we've said before, we expect the average compound growth rate of our home services business going forward to be between 15% and 20%.
Doug Valenti: HomeBuddy's been growing at a little bit faster rate lately. So, you know, net, net, Eric, we still, as we've said before, we expect the average compound growth rate of our home services business going forward to be between 15% and 20%.
Speaker #5: Okay. And then the, as I looked at the kind of implied math for Q4 based on the Q3 guide, at least in my model, I've got a little bit more of a hockey stick in Q4 than I had, as I'm revising the model.
Eric Martinuzzi: Okay. And then, as I looked at the kind of implied math for Q4 based on the Q3 guide, at least in my model, I've got a little bit more of a hockey stick in Q4 than I had as I'm revising the model. Just wondering if there was any abnormal seasonality, either in the legacy business or in the HomeBuddy acquired business, as you look out to Q3 and Q4?
Eric Martinuzzi: Okay. And then, as I looked at the kind of implied math for Q4 based on the Q3 guide, at least in my model, I've got a little bit more of a hockey stick in Q4 than I had as I'm revising the model. Just wondering if there was any abnormal seasonality, either in the legacy business or in the HomeBuddy acquired business, as you look out to Q3 and Q4?
Speaker #5: Just wondering if there was any abnormal seasonality either in the legacy business or in the Homebody acquired business as you look out to Q3 and
Speaker #5: Q4. That's a
Doug Valenti: That's a good catch, and in fact, there is a seasonality in the home services business, both our legacy business as well as in HomeBuddy, and a pretty significant seasonality. The March quarter's one of the weakest. Not surprising, right? There's snow and ice everywhere, so people aren't doing a lot of gutter replacements or things like that. But then the activity grows pretty dramatically, and the two strongest quarters are the June and the September quarter. And so predominantly, what you're seeing there, Eric, is that effect from a now combined, as I indicated earlier, home services business that represents between $400 and 500 million of our total revenue. So pretty significant seasonality. Weak quarter, Mark. Weakest quarter, one of the two weakest quarters, December and March quarters.
Doug Valenti: That's a good catch, and in fact, there is a seasonality in the home services business, both our legacy business as well as in HomeBuddy, and a pretty significant seasonality. The March quarter's one of the weakest. Not surprising, right? There's snow and ice everywhere, so people aren't doing a lot of gutter replacements or things like that. But then the activity grows pretty dramatically, and the two strongest quarters are the June and the September quarter. And so predominantly, what you're seeing there, Eric, is that effect from a now combined, as I indicated earlier, home services business that represents between $400 and 500 million of our total revenue. So pretty significant seasonality. Weak quarter, Mark. Weakest quarter, one of the two weakest quarters, December and March quarters.
Speaker #6: good catch. And in fact, there is a seasonality in the home services business, both our legacy business as well as in Homebody. And a pretty significant seasonality the March quarters one of the weakest quarter, not surprising, right?
Speaker #6: There's snow and ice everywhere, so people aren't doing a lot of gutter replacements or things like that. And then the activity grows pretty dramatically, and the two strongest quarters are the June and the September quarters.
Speaker #6: And so, you're dominantly—what you're seeing there, Eric—is that effect from a now combined, as I indicated earlier, home services business that represents between $400 and $500 million of our total revenue.
Speaker #6: So, pretty significant seasonality. Weakest quarter, one of the two weakest quarters—the December and March quarters—and then you’re seeing the June quarter, which is our fiscal Q4, being one which is historically the strongest quarter in the home services industry.
Doug Valenti: And then you're seeing the June quarter, which is our fiscal Q4, which is historically the strongest quarter in the home services industry. So that's the impact or effect you're seeing.
Doug Valenti: And then you're seeing the June quarter, which is our fiscal Q4, which is historically the strongest quarter in the home services industry. So that's the impact or effect you're seeing.
Speaker #6: So, that's the impact or effect you're seeing.
Speaker #5: Got it. Thanks for taking my question.
Eric Martinuzzi: Got it. Thanks for taking my questions.
Eric Martinuzzi: Got it. Thanks for taking my questions.
Speaker #5: questions. You
Doug Valenti: You bet.
Doug Valenti: You bet.
Speaker #1: Just a reminder, if you wish to ask a question, please press star from Patrick Scholl of Barrington. Please go ahead.
Operator: A reminder, if you wish to ask a question, please press star one. Your next question comes from Patrick Sholl of Barrington. Please go ahead.
Operator: A reminder, if you wish to ask a question, please press star one. Your next question comes from Patrick Sholl of Barrington. Please go ahead.
Speaker #7: Hi, thanks for taking the question. On the other financial service verticals, I think you mentioned that those were up year over year. I think you had talked about kind of just the difficult comp and credit cards and the last quarter.
Patrick Sholl: Hi, thanks for taking the question. On the other financial service verticals, I think you mentioned that those were up year over year. I think you had talked about kind of like just the difficult comp in credit cards in the last quarter. So can you maybe just sort of like just talk about the environment for those services right now, just in the current macro environment?
Patrick Sholl: Hi, thanks for taking the question. On the other financial service verticals, I think you mentioned that those were up year over year. I think you had talked about kind of like just the difficult comp in credit cards in the last quarter. So can you maybe just sort of like just talk about the environment for those services right now, just in the current macro environment?
Speaker #7: So, can you maybe just sort of talk about the environment for those services right now, just in the current macro?
Speaker #7: environment?
Speaker #6: Sure, Pat. I
Doug Valenti: Sure, Pat. I would say the environment is good, not great. We still have tons of growth opportunity even in a good or less than good environment, because we're still pretty early and relatively small in our footprint in all of those businesses. Those businesses are what we'd generically call personal loans, should probably more specifically, internally, we refer to it as financial solutions, because it includes not just personal loans, but HELOC, debt settlement, credit repair, and a lot of other services to consumers. So, still early in our overall growth planning and strategy there. Those markets are in pretty good shape.
Doug Valenti: Sure, Pat. I would say the environment is good, not great. We still have tons of growth opportunity even in a good or less than good environment, because we're still pretty early and relatively small in our footprint in all of those businesses. Those businesses are what we'd generically call personal loans, should probably more specifically, internally, we refer to it as financial solutions, because it includes not just personal loans, but HELOC, debt settlement, credit repair, and a lot of other services to consumers. So, still early in our overall growth planning and strategy there. Those markets are in pretty good shape.
Speaker #6: would say the environment is good, not great. We still have tons of growth a good or less than good environment because we're still pretty in our footprint in all of those businesses.
Speaker #6: Those businesses are what we generically call personal loans. Should probably be more specific. Internally, we refer to it as financial solutions. Because it includes not just personal loans, the HELOC, debt settlement, credit repair, and a lot of other services to consumers.
Speaker #6: So still early in our overall growth planning and strategy there. Those markets are in pretty good shape. Unfortunately, unfortunately, debt settlement and credit repair have been in pretty strong demand.
Doug Valenti: Unfortunately, debt settlement and credit repair have been in pretty strong demand over the past number of quarters, and are likely to look like they're just getting stronger, as the consumer cohort faces more and more pressure. The personal loans business is solid and doing better. Most of the lenders have been opening up their demand and their filters. And then we have other newer components there, like I said, HELOC and others, that we are super early in, but are showing very good signs. So I would say it's a good environment. It's not a great environment because there is some concern among clients that the consumer, or at least the working consumer, is under a lot of stress.
Doug Valenti: Unfortunately, debt settlement and credit repair have been in pretty strong demand over the past number of quarters, and are likely to look like they're just getting stronger, as the consumer cohort faces more and more pressure. The personal loans business is solid and doing better. Most of the lenders have been opening up their demand and their filters. And then we have other newer components there, like I said, HELOC and others, that we are super early in, but are showing very good signs. So I would say it's a good environment. It's not a great environment because there is some concern among clients that the consumer, or at least the working consumer, is under a lot of stress.
Speaker #6: Over the past number of quarters and are likely to and look like they're just getting stronger. As the debt consumer cohort faces more and more pressure.
Speaker #6: The personal loans business is solid. And doing better most of the lenders have been opening up their demand and their filters. And then we have other newer components there.
Speaker #6: Like I said, HELOC and others that we are super early in but are showing very good signs. So I would say it's a good environment.
Speaker #6: It's not a great environment because there is some concern among clients that the consumer, or at least the working consumer, is under a lot of stress.
Speaker #6: Again, that's not bad for some of what we offer, like debt settlement. In terms of—just to get to a couple of the other pieces of it—credit cards, we serve premium consumers pretty much only.
Doug Valenti: Again, that's not bad for some of what we offer, like debt settlement. In terms of, and just to get to a couple of the other pieces of it. Credit cards, we serve premium consumers pretty much only. We're dominantly the high-end credit cards, the travel points credit cards. So that's, that business is in great shape. There's a ton of competition among the banks, as you probably know, if you're exposed to any media. We're trying to sign up customers for their premium travel credit cards. That's, there's a lot of money in that and a lot of interest in that. There's been a little bit of concern lately about the notion of somebody trying to impose a 10% limit on credit card interest.
Doug Valenti: Again, that's not bad for some of what we offer, like debt settlement. In terms of, and just to get to a couple of the other pieces of it. Credit cards, we serve premium consumers pretty much only. We're dominantly the high-end credit cards, the travel points credit cards. So that's, that business is in great shape. There's a ton of competition among the banks, as you probably know, if you're exposed to any media. We're trying to sign up customers for their premium travel credit cards. That's, there's a lot of money in that and a lot of interest in that. There's been a little bit of concern lately about the notion of somebody trying to impose a 10% limit on credit card interest.
Speaker #6: We're dominantly the high-end credit cards, the travel points credit cards. So that business is in great shape. There's a ton of competition among the banks, as you probably know if you expose to any media.
Speaker #6: We're trying to sign up customers for their premium travel credit cards. That's there's a lot of money in that, a lot of interest in that.
Speaker #6: There's been a little bit of concern lately about the notion of somebody trying to impose a 10% limit on credit card interest. What we've heard from the industry and from the clients is that that is extraordinarily unlikely.
Doug Valenti: What we've heard from the industry and from the clients is that that is extraordinarily unlikely, and the clients are not behaving as if that is going to happen, so that they're not changing their appetite, their spending habits. We have the unique position of being one of only a couple of companies that can run third-party media networks for all the major credit card issuers. We're very good at that. That's a great competitive advantage and a great opportunity. We are aggressively building on top of that a lot of owned and operated media, which has been something we've been investing in, and that we're super excited about continuing to scale in that market, and our clients only want more from us.
Doug Valenti: What we've heard from the industry and from the clients is that that is extraordinarily unlikely, and the clients are not behaving as if that is going to happen, so that they're not changing their appetite, their spending habits. We have the unique position of being one of only a couple of companies that can run third-party media networks for all the major credit card issuers. We're very good at that. That's a great competitive advantage and a great opportunity. We are aggressively building on top of that a lot of owned and operated media, which has been something we've been investing in, and that we're super excited about continuing to scale in that market, and our clients only want more from us.
Speaker #6: And the clients are not behaving as if that is going to happen, so they're not changing their appetite or their spending habits. We have the unique position of being one of only a couple of companies that can run third-party media networks for all the major credit card issuers.
Speaker #6: We're very good at that. That's a great competitive advantage and a great opportunity. We're aggressively building on top of that a lot of owned and operated media, which has been something we've been investing in and that we're super excited about continuing to scale in that market.
Speaker #6: And our clients only want more from us. It's another one of those verticals where the only complaint we typically get from a client is, 'We need more from you.'
Doug Valenti: It's another one of those verticals where the only complaint we typically get from a client is: "We need more from you. We want more." So we're aggressively working to build that out into a good appetite. And then the banking side was kind of the smallest of the three of those pieces, which is where we really deal with source of funds accounts, the CDs, savings, high-yield savings, more and more brokerage accounts. We're just super early. The demand is strong. We're not seeing, you know, macro effect-wise, we're not seeing anything that I think is notable, given how early we are in our penetration. It's a massive market opportunity. We're super early. It's a very, very good business for us, and I think we feel like we're, you know, we're gonna continue to do well.
Doug Valenti: It's another one of those verticals where the only complaint we typically get from a client is: "We need more from you. We want more." So we're aggressively working to build that out into a good appetite. And then the banking side was kind of the smallest of the three of those pieces, which is where we really deal with source of funds accounts, the CDs, savings, high-yield savings, more and more brokerage accounts. We're just super early. The demand is strong. We're not seeing, you know, macro effect-wise, we're not seeing anything that I think is notable, given how early we are in our penetration. It's a massive market opportunity. We're super early. It's a very, very good business for us, and I think we feel like we're, you know, we're gonna continue to do well.
Speaker #6: We want more. So we're aggressively working to build that out into a good appetite. And then the banking side, which is kind of the smallest of the three of those pieces, which is where we really deal with source of funds accounts.
Speaker #6: The CDs, savings, high-yield savings, more and more brokerage accounts. We're just super early. The demand is strong. We're not seeing macro effect-wise we're not seeing anything that I think is notable given how early we are in our penetration to massive market opportunity.
Speaker #6: We're super early. It's a very, very good business for us, and I think we feel like we're going to continue to do well, though we've seen a little bit of—there's been some clients that have kind of been in and out of the CD market.
Doug Valenti: Though we've seen a little bit of... There's been some clients that have kind of been in and out of the CD market. You know, every time there's a big threat of interest rates coming down faster than anybody expected, you'll see them pull back a little bit because they don't want to commit to CD consumers if the rates are going to come down immediately. And so there's been a little bit of choppiness, but I would say I wouldn't say enough that I would, you know, call any kind of big macro effect. I would say that it's just kind of part of the volatility we're seeing generally in the current economy, some associated with what I might say is, what I might call, unpredictable government intervention, so.
Doug Valenti: Though we've seen a little bit of... There's been some clients that have kind of been in and out of the CD market. You know, every time there's a big threat of interest rates coming down faster than anybody expected, you'll see them pull back a little bit because they don't want to commit to CD consumers if the rates are going to come down immediately. And so there's been a little bit of choppiness, but I would say I wouldn't say enough that I would, you know, call any kind of big macro effect. I would say that it's just kind of part of the volatility we're seeing generally in the current economy, some associated with what I might say is, what I might call, unpredictable government intervention, so.
Speaker #6: Every time there's a big threat of interest rates coming down faster than anybody expected, you'll see them pull back a little bit because they don't want to commit to CD consumers if the rates are going to come down immediately.
Speaker #6: And so there's been a little bit of choppiness, but I would say I wouldn't say enough that I big macro would call any kind of effect I would say that it's just kind of part of the volatility we're seeing generally in the current economy.
Speaker #6: Some associated with what I might say is what I might call unpredictable government intervention.
Speaker #7: Okay. And then maybe just a couple of questions related to AI. Just maybe with all the capital being committed to AI investments, are you seeing any difficulty in attracting or retaining talent?
Patrick Sholl: Okay. And then maybe just, like, a couple of questions related to, to AI. Just maybe, with all the, the capital, like, being committed to AI investments, are you seeing, like, any, you know, difficulty in attracting or retaining talent? And then you, you kind of talked about, like, just the, the sources of traffic. Are you seeing, specifically, you highlighted the, the Google Search results and the incorporation of AI there. Can you maybe sort of talk about, like, if you're seeing, like, any change in... If, if what you're seeing, a little bit more detail on what you're seeing on the, the traffic patterns of whether it's coming from, SEO versus your pa- your partners and your other sources there. Thank you.
Patrick Sholl: Okay. And then maybe just, like, a couple of questions related to, to AI. Just maybe, with all the, the capital, like, being committed to AI investments, are you seeing, like, any, you know, difficulty in attracting or retaining talent? And then you, you kind of talked about, like, just the, the sources of traffic. Are you seeing, specifically, you highlighted the, the Google Search results and the incorporation of AI there. Can you maybe sort of talk about, like, if you're seeing, like, any change in... If, if what you're seeing, a little bit more detail on what you're seeing on the, the traffic patterns of whether it's coming from, SEO versus your pa- your partners and your other sources there. Thank you.
Speaker #7: And then you kind of talked about just the sources of traffic. Are you seeing specifically—you highlighted the Google search results and the incorporation of AI there.
Speaker #7: Can you maybe sort of talk about if you're seeing any change in what you're seeing—a little bit more detail on what you're seeing in the traffic patterns, whether coming from SEO versus your partners and your other sources there?
Speaker #7: Thank you.
Speaker #1: Yeah, sure. We are not seeing a loss of, or difficulty in, recruiting. I would point out—and this is an interesting fact—that the Chief Strategy Officer at OpenAI is a former QuinStreet employee.
Doug Valenti: Yeah, sure. We are not seeing a loss of or difficulty recruiting. I would point out, and this is an interesting fact, that the chief strategy officer at OpenAI is a former QuinStreet employee. For, you know, if anybody wants to understand, you know, how QuinStreet is integrated into the overall market. But, no, we're not seeing problems attracting or retaining talent anywhere in the company, let alone in our tech group and our AI group. We are. There's a lot of good talent out there, and we have a lot of projects, and we're able to keep those folks and attract those folks. In terms of Google traffic, more and more traffic does come from SEM, which is paid traffic, around GEO searches, you know, generative engine optimization searches.
Doug Valenti: Yeah, sure. We are not seeing a loss of or difficulty recruiting. I would point out, and this is an interesting fact, that the chief strategy officer at OpenAI is a former QuinStreet employee. For, you know, if anybody wants to understand, you know, how QuinStreet is integrated into the overall market. But, no, we're not seeing problems attracting or retaining talent anywhere in the company, let alone in our tech group and our AI group. We are. There's a lot of good talent out there, and we have a lot of projects, and we're able to keep those folks and attract those folks. In terms of Google traffic, more and more traffic does come from SEM, which is paid traffic, around GEO searches, you know, generative engine optimization searches.
Speaker #1: For if anybody wants to understand how QuinStreet is integrated into the overall market. But no, we're not seeing problems attracting or retaining talent. Anywhere in the company, let alone in our tech group and our AI group, we are there's a lot of good talent out there, and we have a lot of projects that we're able to keep those folks and attract those folks.
Speaker #1: In terms of Google traffic, more and more traffic does come from SEM, which is paid traffic, around GEO, searches, generative engine optimization, searches. And we're very, very successful in the SEM component.
Doug Valenti: And we're very, very successful in the SEM component. We always have been, and we're only getting more opportunities to do that at greater scale in the current Google format, and we are seeing pretty good progress in GEO. We don't have much by way of SEO. It's never, you know, we de-emphasized that years ago. And so, the SEO, our SEO has actually been fairly stable, not declining any kind of significant rates, but it's not material anyway. So it's, again, it's not something that... We made the decision a number of years ago not to focus on it because we knew that Google did not want people to focus on it. They want to, they want to build partnerships with folks like us, where we pay for media.
Doug Valenti: And we're very, very successful in the SEM component. We always have been, and we're only getting more opportunities to do that at greater scale in the current Google format, and we are seeing pretty good progress in GEO. We don't have much by way of SEO. It's never, you know, we de-emphasized that years ago. And so, the SEO, our SEO has actually been fairly stable, not declining any kind of significant rates, but it's not material anyway. So it's, again, it's not something that... We made the decision a number of years ago not to focus on it because we knew that Google did not want people to focus on it. They want to, they want to build partnerships with folks like us, where we pay for media.
Speaker #1: We always have been, and we're only getting more opportunities to do that at greater scale. In the current Google format, and we are seeing pretty good progress in GEO.
Speaker #1: We don't have much by way of SEO. It's never we de-emphasize that years ago. And so the SEO our SEO is actually fairly stable.
Speaker #1: Not declining at any kind of significant rates, but it's not material anyway. So it's, again, it's not something that we made the decision a number of years ago not to focus on it because we need a Google did not want people to focus on it.
Speaker #1: They want to build partnerships with folks like us where we pay for media. They're not really that interested in sending us free traffic.
Doug Valenti: They don't really, they're not that interested in sending us free traffic. So again, we made that strategic decision a long time ago. It's not a significant component of either our traffic nor really of our third-party media, and that transition has happened over a number of years. So, the mix has shifted to more SEM around AI-based searches, and that's good. You know, we again see that as providing us with even more opportunity to be even more targeted and segmented in our spending. We're very, very good at that.
Doug Valenti: They don't really, they're not that interested in sending us free traffic. So again, we made that strategic decision a long time ago. It's not a significant component of either our traffic nor really of our third-party media, and that transition has happened over a number of years. So, the mix has shifted to more SEM around AI-based searches, and that's good. You know, we again see that as providing us with even more opportunity to be even more targeted and segmented in our spending. We're very, very good at that.
Speaker #1: So again, we made that strategic decision a long time ago. It's not a significant component of either our traffic, nor really of our third-party media.
Speaker #1: And that transition has happened over a number of years. So yeah, the mix is—yeah, the mix has shifted to more SEM around AI-based searches.
Speaker #1: And that's good. Again, we see that as providing us with even more opportunity to be even more targeted and segmented in our spend. And we're very, very good at
Speaker #1: And that's good. Again, we see that as providing us with even more opportunity to be even more targeted and segmented in our spend. And we're very, very good at that.
Speaker #7: Okay. Thank
Patrick Sholl: Okay. Thank you.
Patrick Sholl: Okay. Thank you.
Speaker #7: you. Thank you,
Doug Valenti: Thank you, Pat. Oh, yeah, Pat.
Doug Valenti: Thank you, Pat. Oh, yeah, Pat.
Speaker #1: Pat. Oh, yeah, Pat.
Speaker #4: 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.
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 call. Thank you.
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 call. Thank you.
