Sign in

You're signed outSign in or to get full access.

QI

QUINSTREET, INC (QNST)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 delivered record revenue of $282.6M, up 130% YoY, with adjusted EBITDA of $19.4M and adjusted diluted EPS of $0.20; GAAP diluted EPS was $(0.03) .
  • Material upside versus Q1’s prior guidance for Q2 ($235–$245M revenue; $17.5–$18.5M adj. EBITDA) as actuals came in well above those ranges; management attributed strength to the unprecedented ramp in Auto Insurance demand and double-digit growth across non-Insurance verticals .
  • Guidance raised for FY2025 to revenue of $1.065–$1.105B and adjusted EBITDA of $80–$85M; Q3 FY2025 outlook set at $265–$275M revenue and $19.5–$20.0M adjusted EBITDA, with continued margin expansion expected from media/client optimization .
  • Key narrative drivers: continued broad-based Auto Insurance demand, margin expansion from optimization and higher-margin media sources, TCPA rule changes stayed (reducing near-term disruption), and management confidence in non-Insurance growth; tariff questions raised by analysts, but management has not heard client concerns .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly revenue and strong profitability: revenue $282.6M (+130% YoY), adjusted EBITDA $19.4M, adjusted diluted EPS $0.20; CEO: “Record fiscal Q2 revenue results were driven by the unprecedented ramp and broadening of Auto Insurance client demand and by double-digit growth in our other client verticals” .
  • Auto Insurance robustness and mix breadth: Financial Services revenue up 208% YoY to $219.9M, with Auto Insurance up 615% YoY; CFO: “We believe that we are getting within reach of our target 10% adjusted EBITDA margin” .
  • Raised full-year outlook, confidence in margin trajectory: “We expect Adjusted EBITDA margin to expand further on optimization efforts” and raised FY2025 revenue and adjusted EBITDA ranges .

What Went Wrong

  • Margins diluted by rapid Auto Insurance ramp and unoptimized media: management noted Q2 margins were lower than normalized mix due to surge-driven inefficiencies; optimization still in progress .
  • Operating expense growth with scale: Product development, sales and marketing, and G&A rose YoY/seq., reflecting growth investments; GAAP net loss remained at $(1.5)M in Q2 .
  • Estimates comparison unavailable: S&P Global consensus for revenue/EPS could not be retrieved due to API limit; this constrains external beat/miss assessment for Wall Street expectations.

Financial Results

MetricQ4 2024Q1 2025Q2 2025YoY (Q2 2024)
Revenue ($USD Millions)$198.3 $279.2 $282.6 $122.7
GAAP Net Income ($USD Millions)$(2.2) $(1.4) $(1.5) $(11.6)
GAAP Diluted EPS ($USD)$(0.04) $(0.02) $(0.03) $(0.21)
Adjusted EBITDA ($USD Millions)$11.0 $20.3 $19.4 $0.4
Adjusted Diluted EPS ($USD)$0.11 $0.22 $0.20 $(0.04)
Gross Profit ($USD Millions)$17.4 $28.4 $26.8 $6.9
Gross Margin (%)8.8% 10.2% 9.5% 5.6%
Adjusted EBITDA Margin (%)5.6% 7.3% 6.9% 0.3%

Segment revenue breakdown:

Segment ($USD Millions)Q4 2024Q1 2025Q2 2025YoY (Q2 2024)
Financial Services$136.9 $210.9 $219.9 $71.3
Home Services$59.3 $65.1 $59.6 $49.3
Other Revenue$2.1 $3.3 $3.1 $2.0

KPIs and cash flow:

KPI ($USD Millions)Q4 2024Q1 2025Q2 2025
Cash & Equivalents (End of Period)$50.5 $25.0 $57.9
Operating Cash Flow$16.6 $(13.7) $38.7
Free Cash Flow$12.9 $(16.3) $35.9
Normalized Free Cash Flow$7.2 $18.1 $16.5

Notes: Q2 FY2025 revenue materially exceeded Q1’s guidance for Q2 ($235–$245M) and adjusted EBITDA came in above the $17.5–$18.5M range .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025$235–$245 Actual $282.6 Beat vs prior guidance
Adjusted EBITDA ($USD Millions)Q2 2025$17.5–$18.5 Actual $19.4 Beat vs prior guidance
Revenue ($USD Millions)Q3 2025N/A$265–$275 New
Adjusted EBITDA ($USD Millions)Q3 2025N/A$19.5–$20.0 New
Revenue ($USD Billions)FY 2025$0.975–$1.025 $1.065–$1.105 Raised
Adjusted EBITDA ($USD Millions)FY 2025$75–$80 $80–$85 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Auto Insurance demandQ4 FY2024: Auto rev >200% YoY; optimization focus . Q1 FY2025: Auto +664% YoY; strong sequential ramp; seasonality noted .Auto +615% YoY; broader client base; many carriers spending 7-figures/month; capacity remains high .Sustained and broad-based strength; continued double-digit growth expected.
Margins and media optimizationQ4 FY2024: margin expansion expected . Q1: building higher-margin media (SEM, social/native via acquisition) .Q2: mix diluted margins; optimization ongoing; supply catching up; target 10% adj. EBITDA margin in reach .Improving; optimization and mix shifts support margin expansion.
TCPA regulatory changesQ1: preparing for January changes; transitional headwinds assumed; long-term positive .Stayed by courts; learnings applied; expect less disruptive replacements; Home Services better than feared .Near-term disruption reduced; structural benefits expected longer term.
Tariffs/macro uncertaintyNot highlighted in Q4/Q1.Management not hearing client concerns; later noted tariffs could widen FYQ4 outlook range (press release commentary in Q3) .Watching, but no current client caution indicated.
Expansion into agent-driven & business insuranceNot emphasized in Q4/Q1.Pursuing agent-driven carriers (margin accretive on incremental yield) and business insurance (target 25–30% margin at scale) .New growth vectors; potential margin uplift over time.
Non-Insurance verticalsQ4: Non-Insurance FS +13% YoY; Home +12% YoY . Q1: Non-Insurance FS +18%; Home +32% record .Non-Insurance grew 15% YoY; Home +21% YoY record cited in Q3 .Positive mix diversification continues.

Management Commentary

  • CEO: “Adjusted EBITDA remained strong. We expect Adjusted EBITDA margin to expand further on optimization efforts, and as we continue to make progress on a range of other growth and margin expansion initiatives.” .
  • CEO: “We expect strong demand in Auto Insurance to continue, and we expect continued strong growth in our non-Insurance client verticals.” .
  • CFO: “Our Financial Services client vertical represented 78% of Q2 revenue and grew 208% year-over-year to $219.9 million… record performance was largely driven by auto insurance, which grew 615% year-over-year.” .
  • CEO on TCPA: changes were stayed; learnings from preparation/testing will improve operations; expect any replacement rules to be less disruptive and consistent with current approach .

Q&A Highlights

  • Capacity and demand breadth: Management sees “a lot of capacity in front of us,” with a record number of carriers spending 7-figures/month and under-allocated to digital relative to consumer behavior; expanding into agent-driven carriers and business insurance .
  • Margin trajectory: Q2 margins were pressured by heavy Auto Insurance mix and rapid ramp; optimization of media sourcing/pricing underway; higher-margin channels (social/display/native via Aqua Vita Media) growing and accretive .
  • TCPA impact: Despite rules being stayed, early client-required implementations created some disruption; learnings will improve efficiencies without full-scale disruption from rule change .
  • Media supply: Supply catching up to demand as media partners pivot back to auto; owned-and-operated campaigns scaling; expectation that structural demand/supply mismatch will abate .
  • Tariffs: Management has not heard tariff-related concerns from clients; carriers have better pathways for rate adjustments if costs rise .

Estimates Context

  • Wall Street consensus for QNST revenue and EPS via S&P Global was unavailable due to API request limits at the time of analysis. As a result, we cannot quantify external beats/misses versus consensus for Q2 FY2025.
  • Where forward comparisons are made, they are versus prior company guidance and prior reported periods, not against Street estimates .

Key Takeaways for Investors

  • Revenue inflection is durable: multiple large carriers increasing digital allocations and engaging analytically in the performance channel; management expects sustained double-digit growth from the new higher base .
  • Margin expansion in sight: optimization of media mix, client targeting, and higher-margin channels (social/native/display) should lift adjusted EBITDA margin toward the 10% target over time; Q3 and FY guidance reflect confidence .
  • Regulatory risk moderated: TCPA changes stayed, reducing near-term disruption; QuinStreet’s preparation/testing likely improves conversion and client ROI regardless of eventual rule replacements .
  • Diversification momentum: Non-Insurance businesses continue to grow; Home Services remains strong, with expectations for better performance in the back half versus prior TCPA assumptions .
  • New vectors: Expansion into agent-driven carriers and business insurance broadens addressable market and can be margin accretive via incremental yield .
  • Balance sheet strengthened: Q2 operating cash flow of $38.7M, FCF of $35.9M, cash ended at $57.9M; no bank debt provides flexibility for optimization and investments .
  • Trading setup: Near-term catalysts are continued upside from Auto Insurance demand, visible margin expansion into Q4, and raised FY guide; watch for tariff headlines and any regulatory updates that could affect client spending patterns .