QuinStreet likes the word “robust”

QuinStreet shared its Q1’24 financial results on November 1, 2023. The highlights:

  • Auto insurance clients are signaling increased spending from January 2024, with expectations of significant expansion. Despite challenges in predicting the overhaul’s exact scale, the company anticipates its average quarterly revenue to surpass $180 million in the second half of the fiscal year, with an adjusted EBITDA margin of 5% to 10% of revenue.
  • The company’s non-insurance businesses, now generating approximately $400 million in annual revenue, have continued to expand, showing an 18% year-over-year growth last quarter and a 19% compound annual growth rate over the past three years.
  • In the September quarter, total revenue reached $123.9 million, with an adjusted net loss of $1.4 million, or $0.03 per share, and adjusted EBITDA at $1 million.
  • Non-insurance revenue constituted 79% of Q1 revenue at $98.5 million, showing an 18% year-over-year increase.
  • The company’s highest auto insurance revenue in recent years was $90 million in a March quarter a few years ago. Last March quarter, the revenue from auto insurance was $63 million, and while current forecasts don’t anticipate reaching the peak in the upcoming March or June quarters, there is an expectation to return to those peak levels within the next few years, possibly sooner.
  • The company has opportunities to expand its footprint in various client verticals, including insurance. It primarily operates as a click-to-direct carrier model in the insurance sector and is a leading company in this channel. However, this model only covers half the market. The other half, primarily served by lead aggregator networks, involves leads and calls to agents rather than direct carriers. The company plans to continue expanding in this area, but not by copying the current lead aggregator model.
  • Additionally, the company is exploring other insurance sub-verticals, such as commercial insurance, which is a good fit for its capabilities and offers significant opportunities. This expansion aligns with the services provided by its large multiline carrier clients. The company is also focusing on enhancing its offerings to agencies through its QRP and rating platform, providing more comprehensive services than those available directly with carriers or their agent networks.
  • The first step in this strategy is revitalizing the insurance market, which appears imminent. The company is encouraged by the robust budget plans for next year reported by a large client, signaling further growth opportunities. “There was a large client that had a call today that described their plans for their budgets next year as robust, a great word. We like that word. And it’s consistent with what we’ve heard from them and what we know the plans are going into next year.” – QuinStreet CEO Douglas Valenti.
  • It views itself as a multibillion-dollar revenue opportunity company, with the potential to scale significantly across these large markets.