EX-99.1 2 qnst-ex991_6.htm EX-99.1 qnst-ex991_6.htm

 

Exhibit 99.1

 

QuinStreet Reports Second Quarter Fiscal Year 2021 Results

 

Reports record fiscal Q2 revenue of $135.0 million

 

Grows revenue excluding divested businesses 36% year-over-year

 

Delivers Auto Insurance revenue growth of 57% year-over-year

 

Outperforms expectations for Modernize Home Services acquisition

 

Expects momentum and strong performance to continue

 

Guides to all-time record quarterly revenue in fiscal Q3

 

FOSTER CITY, CA – February 03, 2021 – QuinStreet, Inc. (Nasdaq: QNST), a leader in performance marketplace technologies and services for the financial services and home services industries, today announced financial results for the fiscal second quarter ended December 31, 2020.

 

For the second quarter, the Company reported revenue of $135.0 million.

 

Revenue excluding divested businesses grew 36% year-over-year.

 

GAAP net income was $0.5 million, or $0.01 per diluted share. Adjusted net income was $7.0 million, or $0.13 per diluted share.

 

Adjusted EBITDA was $10.0 million.

 

The Company generated $5.6 million in operating cash flow and $7.5 million in normalized free cash flow, and closed the quarter with $102.6 million in cash and equivalents.

 

“Our strong momentum continued in fiscal Q2, driven by Insurance and Home Services, our two largest businesses,” commented Doug Valenti, QuinStreet CEO. “Auto Insurance revenue once again grew 57% year-over-year as we continued to see unprecedented and broadening demand from clients, growth in consumer activity in digital media, and good progress with growth initiatives. Home Services growth accelerated year-over-year to 165% due to continued successful execution of initiatives, and ahead-of-schedule integration and synergies with the Modernize acquisition.”

“Trends in credit-driven businesses, specifically Personal Loans and Credit Cards, continued to improve in fiscal Q2.”

Looking ahead to the current quarter or fiscal Q3, we expect continued strong momentum and revenue growth in Insurance and Home Services, and continued improvement in Personal Loans and Credit Cards. We expect continued strong overall Company performance as a result. We expect revenue in fiscal Q3 to be between $145 and $150 million which, at the midpoint of the range, represents 34% year-over-year growth in revenue excluding divested businesses. We expect adjusted EBITDA to be between $13 and $14 million,” concluded Valenti.

Conference Call Today at 2:00 p.m. PT

The Company will host a conference call and corresponding live webcast at 2:00 p.m. PT. To access the conference call dial +1 866-248-8441 (domestic) or +1 323-289-6576 (international callers) using passcode #1730393. A replay of the conference call will be available beginning approximately two hours after the completion of the call by dialing  +1 888-203-1112 (domestic) or +1 719-457-0820 (international callers) and using passcode #1730393. The webcast of the conference call will be available live and via replay on the investor relations section of the Company's website at http://investor.quinstreet.com. 

About QuinStreet

QuinStreet, Inc. (Nasdaq: QNST) is a leader in performance marketplace technologies and services for the financial services and home services industries. QuinStreet is a pioneer in delivering online marketplace solutions to match searchers with brands in digital media, and is committed to providing consumers with the information and tools they need to research, find and select the products and brands that meet their needs.  

 

Non-GAAP Financial Measures and Definitions of Client Verticals

This release and the accompanying tables include a discussion of adjusted EBITDA, adjusted net income, adjusted diluted net income per share and free cash flow and normalized free cash flow, all of which are non-GAAP financial measures that are provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "adjusted EBITDA" refers to a financial measure that we define as net income less (benefit from) provision for income taxes, depreciation expense, amortization expense, stock-based compensation expense, interest and other expense, net, acquisition and divestiture costs, gain on divestitures of businesses, net, strategic review costs, contingent consideration adjustment, litigation settlement expense, and restructuring costs. The term "adjusted net income" refers to a financial measure that we define as net income adjusted for amortization expense, stock-based compensation expense, acquisition and divestiture costs, gain on divestitures of businesses, net, strategic review costs, contingent consideration adjustment,

 


 

litigation settlement expense, and restructuring costs, net of estimated taxes. The term "adjusted diluted net income per share" refers to a financial measure that we define as adjusted net income divided by weighted average diluted shares outstanding. The term “free cash flow” refers to a financial measure that we define as net cash provided by operating activities, less capital expenditures and internal software development costs. The term “normalized free cash flow” refers to free cash flow less changes in operating assets and liabilities. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, our definition of adjusted EBITDA, adjusted net income, adjusted diluted net income per share and free cash flow and normalized free cash flow may not be comparable to the definitions as reported by other companies.

 

We believe adjusted EBITDA, adjusted net income and adjusted diluted net income per share are relevant and useful information because they provide us and investors with additional measurements to analyze the Company's operating performance.

 

Adjusted EBITDA is useful to us and investors because (i) we seek to manage our business to a level of adjusted EBITDA as a percentage of net revenue, (ii) it is used internally by us for planning purposes, including preparation of internal budgets; to allocate resources; to evaluate the effectiveness of operational strategies and capital expenditures as well as the capacity to service debt, (iii) it is a key basis upon which we assess our operating performance, (iv) it is one of the primary metrics investors use in evaluating Internet marketing companies, (v) it is a factor in determining compensation, (vi) it is an element of certain financial covenants under our historical borrowing arrangements, and (vii) it is a factor that assists investors in the analysis of ongoing operating trends. In addition, we believe adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other interested parties in our industry as a measure of financial performance, debt-service capabilities and as a metric for analyzing company valuations.

We use adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact of changes in effective tax rates or fluctuations in permanent differences or discrete quarterly items), non-recurring charges, certain other items that we do not believe are indicative of core operating activities (such as litigation settlement expense, acquisition and divestiture costs, gain or loss on divestitures of businesses, contingent consideration adjustment, strategic review costs, restructuring costs and other income and expense) and the non-cash impact of depreciation expense, amortization expense and stock-based compensation expense.

 

With respect to our Adjusted EBITDA guidance, the Company is not able to provide a quantitative reconciliation without unreasonable efforts to the most directly comparable GAAP financial measure due to the high variability, complexity and low visibility with respect to certain items such as taxes, and income and expense from changes in fair value of contingent consideration from acquisitions. We expect the variability of these items to have a potentially unpredictable and potentially significant impact on future GAAP financial results, and, as such, we also believe that any reconciliations provided would imply a degree of precision that would be confusing or misleading to investors.

 

Adjusted net income and adjusted diluted net income per share are useful to us and investors because they present an additional measurement of our financial performance, taking into account depreciation, which we believe is an ongoing cost of doing business, but excluding the impact of certain non-cash expenses (stock-based compensation, amortization of intangible assets, and contingent consideration adjustment), non-recurring charges and certain other items that we do not believe are indicative of core operating activities. We believe that analysts and investors use adjusted net income and adjusted diluted net income per share as supplemental measures to evaluate the overall operating performance of companies in our industry.

 

Free cash flow is useful to investors and us because it represents the cash that our business generates from operations, before taking into account cash movements that are non-operational, and is a metric commonly used in our industry to understand the underlying cash generating capacity of a company’s financial model. Normalized free cash flow is useful as it removes the fluctuations in operating assets and liabilities that occur in any given quarter due to the timing of payments and cash receipts and therefore helps investors understand the underlying cash flow of the business as a quarterly metric and the cash flow generation potential of the business model. We believe that analysts and investors use free cash flow multiples as a metric for analyzing company valuations in our industry.

 

We intend to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. A reconciliation of these non-GAAP measures to GAAP is provided in the accompanying tables.

 

FY2020 results in our Education Client Vertical include revenue from US, (historically) Brazil, and India. Revenue in our Financial Services Client Vertical includes Auto Insurance (auto, home, motorcycle, and small business), Life Insurance, Health Insurance,

 


 

Personal Loans, Credit Cards, Banking, and (historically) Mortgage. Revenue in our Other Client Vertical includes Home Services and (historically) B2B. In fiscal Q3 2020, we divested our B2B client vertical and Brazil operations. In fiscal Q4 2020, we divested our Mortgage business. In fiscal Q1 2021, we divested our Education business.

Legal Notice Regarding Forward Looking Statements

This press release and its attachments contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Words such as "estimate", "will”, "believe", “expect”, "intend", “outlook”, "potential", “promises” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include the statements in quotations from management in this press release, as well as any statements regarding the Company's anticipated financial results, growth and strategic and operational plans. The Company's actual results may differ materially from those anticipated in these forward-looking statements. Factors that may contribute to such differences include, but are not limited to: the impact from risks and uncertainties relating to the COVID-19 pandemic; the impact of changes in industry standards and government regulation including, but not limited to investigation or enforcement activities of the Federal Trade Commission and other regulatory agencies; the Company’s ability to maintain and increase client marketing spend; the Company's ability, whether within or outside the Company’s control, to maintain and increase the number of visitors to its websites and to convert those visitors and those to its third-party publishers' websites into client prospects in a cost-effective manner; the impact from risks relating to counterparties on the Company's business; the Company's ability to compete effectively against others in the online marketing and media industry both for client budget and access to third-party media; the impact of changes in our business, our industry, and the current economic and regulatory climate on the Company’s quarterly and annual results of operations; the Company's exposure to data privacy and security risks; and the Company’s ability to protect our intellectual property rights. More information about potential factors that could affect the Company's business and financial results are contained in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission ("SEC"). Additional information will also be set forth in the Company's quarterly report on Form 10-Q for the quarter ended December 31, 2020, which will be filed with the SEC. The Company does not intend and undertakes no duty to release publicly any updates or revisions to any forward-looking statements contained herein.

 

Investor Contact:

Hayden Blair

(650) 578-7824

 


 

hblair@quinstreet.com

QUINSTREET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

December 31,

 

 

June 30,

 

 

 

2020

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,647

 

 

$

107,509

 

Accounts receivable, net

 

 

71,277

 

 

 

64,472

 

Prepaid expenses and other assets

 

 

7,455

 

 

 

13,591

 

Total current assets

 

 

181,379

 

 

 

185,572

 

Property and equipment, net

 

 

6,650

 

 

 

5,657

 

Operating lease right-of-use assets

 

 

12,672

 

 

 

9,118

 

Goodwill

 

 

110,109

 

 

 

80,677

 

Other intangible assets, net

 

 

55,690

 

 

 

28,174

 

Deferred tax assets, noncurrent

 

 

45,209

 

 

 

48,673

 

Other assets, noncurrent

 

 

3,348

 

 

 

536

 

Total assets

 

$

415,057

 

 

$

358,407

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

37,748

 

 

$

36,759

 

Accrued liabilities

 

 

47,802

 

 

 

42,271

 

Deferred revenue

 

 

394

 

 

 

73

 

Other liabilities

 

 

11,841

 

 

 

6,734

 

Total current liabilities

 

 

97,785

 

 

 

85,837

 

Operating lease liabilities, noncurrent

 

 

10,782

 

 

 

8,692

 

Other liabilities, noncurrent

 

 

27,084

 

 

 

7,934

 

Total liabilities

 

 

135,651

 

 

 

102,463

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

53

 

 

 

52

 

Additional paid-in capital

 

 

313,017

 

 

 

304,650

 

Accumulated other comprehensive loss

 

 

(290

)

 

 

(237

)

Accumulated deficit

 

 

(33,374

)

 

 

(48,521

)

Total stockholders' equity

 

 

279,406

 

 

 

255,944

 

Total liabilities and stockholders' equity

 

$

415,057

 

 

$

358,407

 

 


 

 

QUINSTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue

 

$

134,968

 

 

$

118,101

 

 

$

274,237

 

 

$

244,715

 

Cost of revenue (1)

 

 

120,437

 

 

 

105,318

 

 

 

242,668

 

 

 

218,507

 

Gross profit

 

 

14,531

 

 

 

12,783

 

 

 

31,569

 

 

 

26,208

 

Operating expenses: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product development

 

 

4,980

 

 

 

3,399

 

 

 

9,871

 

 

 

6,955

 

Sales and marketing

 

 

2,892

 

 

 

2,592

 

 

 

5,535

 

 

 

4,955

 

General and administrative

 

 

6,890

 

 

 

5,498

 

 

 

13,471

 

 

 

11,323

 

Operating (loss) income

 

 

(231

)

 

 

1,294

 

 

 

2,692

 

 

 

2,975

 

Interest income

 

 

12

 

 

 

54

 

 

 

34

 

 

 

126

 

Interest expense

 

 

(307

)

 

 

(177

)

 

 

(646

)

 

 

(389

)

Other income (expense), net

 

 

34

 

 

 

(9

)

 

 

16,723

 

 

 

(266

)

(Loss) income before income taxes

 

 

(492

)

 

 

1,162

 

 

 

18,803

 

 

 

2,446

 

Benefit from (provision for) income taxes

 

 

958

 

 

 

387

 

 

 

(3,656

)

 

 

235

 

Net income

 

$

466

 

 

$

1,549

 

 

$

15,147

 

 

$

2,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

0.03

 

 

$

0.29

 

 

$

0.05

 

Diluted

 

$

0.01

 

 

$

0.03

 

 

$

0.28

 

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,055

 

 

 

51,414

 

 

 

52,774

 

 

 

51,129

 

Diluted

 

 

55,163

 

 

 

53,489

 

 

 

54,716

 

 

 

53,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Cost of revenue and operating expenses include stock-based compensation expense as follows:

 

Cost of revenue

 

$

2,544

 

 

$

2,347

 

 

$

4,745

 

 

$

4,837

 

Product development

 

 

643

 

 

 

518

 

 

 

1,192

 

 

 

1,002

 

Sales and marketing

 

 

765

 

 

 

558

 

 

 

1,312

 

 

 

979

 

General and administrative

 

 

1,603

 

 

 

1,277

 

 

 

3,086

 

 

 

2,530

 

 


 

 

QUINSTREET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

466

 

 

$

1,549

 

 

$

15,147

 

 

$

2,681

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,003

 

 

 

2,854

 

 

 

8,136

 

 

 

5,666

 

(Benefit from) provision for sales returns and doubtful accounts receivable

 

 

(12

)

 

 

21

 

 

 

(107

)

 

 

150

 

Stock-based compensation

 

 

5,555

 

 

 

4,700

 

 

 

10,335

 

 

 

9,348

 

Non-cash lease expense

 

 

(195

)

 

 

342

 

 

 

(364

)

 

 

166

 

Deferred income taxes

 

 

(1,019

)

 

 

(427

)

 

 

3,506

 

 

 

(311

)

Gain on divestitures of businesses

 

 

 

 

 

 

 

 

(16,615

)

 

 

 

Other adjustments, net

 

 

41

 

 

 

57

 

 

 

380

 

 

 

269

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,863

)

 

 

4,982

 

 

 

(3,159

)

 

 

5,866

 

Prepaid expenses and other assets

 

 

6,101

 

 

 

1,265

 

 

 

6,082

 

 

 

628

 

Accounts payable

 

 

(9,979

)

 

 

(5,608

)

 

 

(997

)

 

 

(2,610

)

Accrued liabilities

 

 

3,425

 

 

 

(176

)

 

 

712

 

 

 

(2,781

)

Deferred revenue

 

 

56

 

 

 

329

 

 

 

81

 

 

 

407

 

Net cash provided by operating activities

 

 

5,579

 

 

 

9,888

 

 

 

23,137

 

 

 

19,479

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(604

)

 

 

(404

)

 

 

(1,041

)

 

 

(948

)

Internal software development costs

 

 

(703

)

 

 

(607

)

 

 

(1,399

)

 

 

(1,114

)

Business acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

(40,304

)

 

 

 

Proceeds from divestitures of businesses

 

 

730

 

 

 

 

 

 

21,460

 

 

 

 

Purchases of equity investment

 

 

(2,000

)

 

 

 

 

 

(2,000

)

 

 

 

Other investing activities

 

 

 

 

 

25

 

 

 

 

 

 

25

 

Net cash used in investing activities

 

 

(2,577

)

 

 

(986

)

 

 

(23,284

)

 

 

(2,037

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of common stock options

 

 

1,791

 

 

 

1,325

 

 

 

2,958

 

 

 

3,153

 

Payment of withholding taxes related to release of restricted stock, net of share settlement

 

 

(1,706

)

 

 

(1,828

)

 

 

(4,580

)

 

 

(4,186

)

Post-closing payments and contingent consideration related to acquisitions

 

 

(2,672

)

 

 

(2,816

)

 

 

(3,020

)

 

 

(2,866

)

Net cash used in financing activities

 

 

(2,587

)

 

 

(3,319

)

 

 

(4,642

)

 

 

(3,899

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(12

)

 

 

23

 

 

 

(73

)

 

 

59

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

403

 

 

 

5,606

 

 

 

(4,862

)

 

 

13,602

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

102,258

 

 

 

70,532

 

 

 

107,523

 

 

 

62,536

 

Cash, cash equivalents and restricted cash at end of period

 

$

102,661

 

 

$

76,138

 

 

$

102,661

 

 

$

76,138

 

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,647

 

 

$

76,124

 

 

$

102,647

 

 

$

76,124

 

Restricted cash included in other assets, noncurrent

 

 

14

 

 

 

14

 

 

 

14

 

 

 

14

 

Total cash, cash equivalents and restricted cash

 

$

102,661

 

 

$

76,138

 

 

$

102,661

 

 

$

76,138

 

 


 

 

QUINSTREET, INC.

RECONCILIATION OF NET INCOME TO

ADJUSTED NET INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

466

 

 

$

1,549

 

 

$

15,147

 

 

$

2,681

 

Amortization of intangible assets

 

 

2,929

 

 

 

1,933

 

 

 

6,057

 

 

 

3,868

 

Stock-based compensation

 

 

5,555

 

 

 

4,700

 

 

 

10,335

 

 

 

9,348

 

Acquisition and divestiture costs

 

 

330

 

 

 

16

 

 

 

606

 

 

 

311

 

Gain on divestitures of businesses

 

 

 

 

 

 

 

 

(16,615

)

 

 

 

Strategic review costs

 

 

 

 

 

199

 

 

 

 

 

 

199

 

Restructuring costs

 

 

375

 

 

 

 

 

 

766

 

 

 

 

Tax impact of non-GAAP items

 

 

(2,608

)

 

 

(2,061

)

 

 

(404

)

 

 

(3,827

)

Adjusted net income

 

$

7,047

 

 

$

6,336

 

 

$

15,892

 

 

$

12,580

 

Adjusted diluted net income per share

 

$

0.13

 

 

$

0.12

 

 

$

0.29

 

 

$

0.24

 

Weighted average shares used in computing adjusted diluted net income per share

 

 

55,163

 

 

 

53,489

 

 

 

54,716

 

 

 

53,407

 

 


 

 

QUINSTREET, INC.

RECONCILIATION OF NET INCOME TO

ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

466

 

 

$

1,549

 

 

$

15,147

 

 

$

2,681

 

Interest and other expense, net

 

 

261

 

 

 

132

 

 

 

504

 

 

 

529

 

(Benefit from) provision for income taxes

 

 

(958

)

 

 

(387

)

 

 

3,656

 

 

 

(235

)

Depreciation and amortization

 

 

4,003

 

 

 

2,854

 

 

 

8,136

 

 

 

5,666

 

Stock-based compensation

 

 

5,555

 

 

 

4,700

 

 

 

10,335

 

 

 

9,348

 

Acquisition and divestiture costs

 

 

330

 

 

 

16

 

 

 

606

 

 

 

311

 

Gain on divestitures of businesses

 

 

 

 

 

 

 

 

(16,615

)

 

 

 

Strategic review costs

 

 

 

 

 

199

 

 

 

 

 

 

199

 

Restructuring costs

 

 

375

 

 

 

 

 

 

766

 

 

 

 

Adjusted EBITDA

 

$

10,032

 

 

$

9,063

 

 

$

22,535

 

 

$

18,499

 

 


 

 

QUINSTREET, INC.

RECONCILIATION OF CASH PROVIDED BY

OPERATING ACTIVITIES TO FREE CASH FLOW

AND NORMALIZED FREE CASH FLOW

(In thousands)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operating activities

 

$

5,579

 

 

$

9,888

 

 

$

23,137

 

 

$

19,479

 

Capital expenditures

 

 

(604

)

 

 

(404

)

 

 

(1,041

)

 

 

(948

)

Internal software development costs

 

 

(703

)

 

 

(607

)

 

 

(1,399

)

 

 

(1,114

)

Free cash flow

 

$

4,272

 

 

$

8,877

 

 

$

20,697

 

 

$

17,417

 

Changes in operating assets and liabilities

 

 

3,260

 

 

 

(792

)

 

 

(2,719

)

 

 

(1,510

)

Normalized free cash flow

 

$

7,532

 

 

$

8,085

 

 

$

17,978

 

 

$

15,907

 

 

 

 

 


 

QUINSTREET, INC.

DISAGGREGATION OF REVENUE

(In thousands)

(Unaudited)

 

In the first quarter of fiscal year 2021, the Company completed the acquisition of Modernize, Inc. to increase the scale and capabilities in the home services client vertical. In addition, in fiscal year 2020 and in the first quarter of fiscal year 2021, the Company completed the divestitures of its education client vertical, business-to-business technology client vertical, its mortgage business, as well as its wholly owned subsidiaries, QuinStreet Brasil Online Marketing e Midia Ltda, and VEMM, LLC along with its interests in Euro-Demand Do Brasil Serviços de Geração de Leads Ltda to narrow its focus to the best performing businesses and market opportunities.

As a result of these activities, in the second quarter of fiscal year 2021, the Company updated its reporting structure which resulted in two client verticals: financial services and home services, which was applied on a retrospective basis. All remaining businesses that are not significant enough for separate reporting are included in other revenue. The following table presents the Company’s net revenue disaggregated by vertical:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Services

 

$

104,154

 

 

$

88,150

 

 

$

198,367

 

 

$

179,014

 

Home Services

 

 

29,190

 

 

 

11,016

 

 

 

62,563

 

 

 

24,027

 

Other Revenue

 

 

1,624

 

 

 

 

 

 

1,720

 

 

 

 

Divested Businesses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

 

 

 

 

14,532

 

 

 

11,587

 

 

 

31,930

 

Business-to-Business Technology

 

 

 

 

 

3,457

 

 

 

 

 

 

6,783

 

Mortgage Business

 

 

 

 

 

719

 

 

 

 

 

 

2,466

 

Brazil Businesses

 

 

 

 

 

227

 

 

 

 

 

 

495

 

Total net revenue

 

$

134,968

 

 

$

118,101

 

 

$

274,237

 

 

$

244,715