QuinStreet, Inc.

Thank you for joining Quinn Street's second quarter fiscal 2023 earnings call. Today's call will be recorded. Today we're joined by Quinn Street CEO Doug Valente and Quinn Street CFO Greg Wong. Following the prepared remarks, there will be a Q&A session. To ask a question, please press star 1 on your telephone keypad. And with that, I'll pass it over to Lane Younger.

Thank you everyone for joining us as we report Quinn Street's second quarter fiscal 2023 financial results. Joining me on the call today are CEO Doug Valenti and CFO Greg Wong. Before I 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 8K filing made today and our upcoming 10Q. 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. Our 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.

Thank you, Lane. Welcome, everyone. Well, first the headline. The anticipated sharp re-ramp of auto insurance client marketing spending has begun. And it looks like it's up and to the right from here. Our auto insurance revenue is expected to jump by over 60% this quarter. the March quarter, versus the December quarter. So we are seeing the significant positive inflection we anticipated. Excitingly, though, even with the January surge and its immediate positive impact on our results, we are still early in the full recovery and re-ramp of auto insurance. We expect much more to come. We've been predicting this significant positive inflection in auto insurance, our biggest client vertical, for some time, and we have been preparing for it. We believe that we are at the beginning of the ramp that over coming quarters will lead back to auto insurance client spending levels seen prior to the inflation challenges of the past couple of years, and then to further strong growth from there as the shared marketing budgets and consumer shopping, represented by digital media, continues its relentless march up and to the right. The return of auto insurance marketing spending is due mainly to carrier progress adjusting their products and increasing their rates to offset higher costs, and to the resetting of carrier combined ratio targets as of January 1st. Consumer shopping traffic online fraud insurance is also up, as expected, spurred largely by the rate increases. Quinn Street revenue and margins are increasing rapidly as growth in insurance combines with already strong momentum in our other two nine-figure annual revenue client verticals, those, of course, being home services and credit-driven financial services. As a result, we expect record total company revenue in the current March quarter and a significant jump in adjusted EBITDA. We expect record revenue again and a further jump in adjusted EBITDA in the June quarter. Looking back at the December quarter, which was our fiscal Q2, results were good, especially given conditions in auto insurance and the shifting macroeconomic environment in the quarter. Our business model once again demonstrated its resilience, and we once again demonstrated our ability to successfully and profitably navigate even the most complicated environment. We grew revenue year-over-year in Q2 and generated positive EBITDA in what is our softest seasonal quarter and despite facing both the bottom of the auto insurance market and the shifting macroeconomic environment. December quarter results also included continued investment spending on exciting long-term growth initiatives and capabilities as promised. And as our positive results demonstrate, we are making those investments with the efficiency and margin and cost discipline you have come to expect from Quinn Street. Our commitment to continue our disciplined investment and long-term initiatives through the transitory challenges in the insurance market is paying off. Revenue and margins are rebounding quickly. We expect them to continue to ramp in coming quarters and that our long-term prospects have never been better. I wanted to make some brief comments about the macroeconomic environment, which we continue to assess and that we believe is reflected in our outlook. Most importantly, we expect the re-ramp of auto insurance client spending to be the dominant driver of our performance trends in FYQ3, or the March quarter, and likely in quarters to come as carrier spending continues to re-ramp. Related and in addition, consumer shopping for auto insurance typically increases during periods of economic uncertainty. We would expect that to be another net positive for our insurance results, especially given rate increases. As for our non-insurance client verticals, the majority of our business there is leveraged to homeowners and to prime and near prime consumers. As you have heard from the banks and credit card companies, the balance sheets, credit, and spending levels of those consumers continue to be in good shape. Turning to our outlook, we expect total revenue in fiscal Q3 to be between $160 and $170 million, a company record. We expect adjusted EBITDA in fiscal Q3 to be between $7 and $8 million, reflecting the immediate, significant, but still early impact of top-line leverage from re-ramping insurance revenue. For full fiscal year 2023, ending in June, we expect revenue to be between $610 and $630 million, and we expect full fiscal year adjusted EBITDA to be between $25 and $30 million. Our financial position remains excellent. We have a strong balance sheet with almost $80 million of cash and no bank debt. And we are entering a period that we believe will be represented by ramping revenues, expanding margins, and strong cash flows. With that, I'll turn the call over to Greg.