QuinStreet, Inc.

Good day and welcome to the Quinn Street third quarter fiscal 2022 financial results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Hayden Blair. Please go ahead, sir.

Thank you, Jenny. And thank you to everyone joining us as we report Quinn Street's third quarter fiscal year 2022 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 filing made today and our most recent 10 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. A reconciliation of GAAP to non-GAAP financial measures are 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.

Thank you, Hayden. Welcome, everyone. Increased claims costs continue to suppress insurance carrier marketing spend, and in turn, revenue in our auto insurance client vertical. The good news is that those effects on our insurance clients and their business economics are transitory. Further good news is that revenue in our insurance client vertical appears to be at or near a bottom. Carriers are working diligently through the well-honed process of re-rating or repricing their policy products to reflect the new environment. We now have a number of examples of successful client re-rating where they have re-established or increased marketing spend that had been previously paused or reduced. Is that another way? The environment in insurance remains generally complicated and dynamic, but the climb back out to the other side of this adjustment and transition period certainly appears to have begun. Importantly, we and carriers continue to expect strong marketing spend and consumer shopping on the other side of this re-rating cycle. Carrier economics will be renewed, and consumers are expected to shop aggressively in response to higher rates. As a reminder, our auto insurance revenue doubled within 12 months of the end of the last major re-rating cycle. In the meantime, revenue from our non-insurance client verticals continues to perform well. It represented 50% of total revenue and grew 35% year over year in the quarter. All in all, we remain highly enthusiastic about our business prospects and are focused on the projects and initiatives to achieve them. Overall, I'm really pleased with how our team and business are navigating and performing in this complicated environment. Strong trends in our non-insurance client verticals, combined with the eventual resurgence of insurance, bode well for the future. A return to insurance revenue just to the levels prior to current industry challenges would imply total annual company revenue of over $700 million per year, growing at 15% to 20% per year. Even with the current impact on insurance revenue, our financial position is strong, with no let-up in our investments in the future. We remain solidly cash flow and EBITDA positive. while continuing to invest aggressively in growth and product initiatives across the company. Our balance sheet is strong with over $100 million of cash and no bank debt. One of the important areas of investment in the future is, of course, QRP. Current insurance industry conditions have affected agent activity and therefore reduced the slope of the QRP revenue ramp. Despite those challenges, QRP quote volumes are still well up and to the right. The fundamental opportunity represented by QRP and our enthusiasm for that opportunity are as strong as ever. Yet another reason to be excited as we climb out of this insurance re-rating period. We are forecasting FYQ4 revenue to be between $138 and $142 million. We expect adjusted EBITDA to be between $4.5 and $5 million, continuing to demonstrate the resiliency and strength of our underlying business model and our diversification. Finally, The Board of Directors has approved a $40 million share repurchase program. The buyback reflects the expected transitory nature of insurance industry challenges, the strength of our underlying business model and financial position, and confidence in our long-term outlook for the business. With that, I will turn the call over to Greg.