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QI

QUINSTREET, INC (QNST)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue was $269.8M, up 60% YoY, with GAAP diluted EPS $0.08 and adjusted diluted EPS $0.21; adjusted EBITDA was $19.4M . Versus consensus, adjusted EPS materially beat $0.056*, while revenue was essentially in line at $270.36M* (EPS estimates: 5, revenue estimates: 6)*.
  • Financial Services drove strength (+78% YoY to $199.7M) led by Auto Insurance (+165% YoY); Home Services set a quarterly record (+21% YoY to $65.4M) .
  • Maintained FY25 guidance: revenue $1.065–$1.105B and adjusted EBITDA $80–$85M; management flagged a wider implied Q4 range given tariff-related uncertainties and expects continued margin expansion in Q4 .
  • Auto Insurance was down a little over 10% sequentially from Q2’s unusually strong December quarter, but spend remained strong and broad-based (ex-largest client >150% YoY) .
  • Strong cash generation and balance sheet: operating cash flow of $30.1M in Q3 and $81.8M cash with no bank debt at quarter-end .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Financial Services momentum and breadth: “Financial Services client vertical revenue grew 78% year-over-year with Auto Insurance up 165%” . CFO added Financial Services represented 74% of Q3 revenue ($199.7M) .
  • Record Home Services quarter: “Home Services revenue grew 21% year-over-year to a new quarterly record” ($65.4M) .
  • Profitability and cash strength: Adjusted EBITDA rose to $19.4M and operating cash flow hit $30.1M; “ending the quarter with over $80 million in cash and no bank debt” .
  • Margin levers detailed: CEO cited proprietary media now ~half of Auto Insurance media margin at ~2x third-party margins, fee-based “private exchange” conversions, agency-focused products at ~2x margins vs direct click, and scaling QRP/360 Finance to breakeven+ .

What Went Wrong

  • Sequential normalization in Auto Insurance: Q3 Auto Insurance revenue “was down sequentially about a little over 10%,” reflecting an unusually strong Q2 and prudent budget pacing into the new calendar year .
  • Tariff uncertainty tempering ramps: Management “has seen no material reductions,” but noted carriers are in a “wait-and-see” mode before ramping more aggressively; similar pockets of concern in Home Services depending on import exposure .
  • Mix and optimization still in progress: December quarter (Q2) mix skewed to Auto Insurance with not-yet-optimized media compressed margins; margins expected to rise as media supply catches up and optimizations progress .

Financial Results

Headline P&L vs prior periods and estimates

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$168.6 $279.2 $282.6 $269.8
GAAP Diluted EPS ($)$(0.13) $(0.02) $(0.03) $0.08
Adjusted Diluted EPS ($)$0.06 $0.22 $0.20 $0.21
Gross Profit ($USD Millions)$14.3 $28.4 $26.8 $27.9
Adjusted EBITDA ($USD Millions)$7.9 $20.3 $19.4 $19.4
Revenue Consensus Mean ($USD Millions)—$223.8*$239.8*$270.4*
EPS Consensus Mean ($)—$0.033*$0.036*$0.056*

Values retrieved from S&P Global*

Segment Revenue Breakdown

Segment ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Financial Services$112.3 $210.9 $219.9 $199.7
Home Services$53.9 $65.1 $59.6 $65.4
Other Revenue$2.4 $3.3 $3.1 $4.7
Total Revenue$168.6 $279.2 $282.6 $269.8

KPIs and Cash Flow

KPI ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Operating Cash Flow$4.1 $(13.7) $38.7 $30.1
Free Cash Flow$0.4 $(16.3) $35.9 $27.1
Cash & Equivalents (end of period)$39.6 $25.0 $57.9 $81.8
Accounts Receivable (net)$111.8 $173.9 $150.4 $137.2
Total Debt (bank debt)None None None None

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025$265–$275M (Feb 6) Actual: $269.8M Met within range
Adjusted EBITDAQ3 2025$19.5–$20.0M (Feb 6) Actual: $19.4M Slight miss vs range low end
RevenueFY 2025$975–$1,025M (Nov 4) $1.065–$1.105B (Feb 6) Raised
Adjusted EBITDAFY 2025$75–$80M (Nov 4) $80–$85M (Feb 6) Raised
RevenueFY 2025$1.065–$1.105B (Feb 6) Maintained (May 7) Maintained
Adjusted EBITDAFY 2025$80–$85M (Feb 6) Maintained (May 7) Maintained
Implied Q4 YoY GrowthQ4 2025≥18% revenue YoY; ≥89% adj. EBITDA YoY Wider implied range due to tariffs Newly disclosed emphasis

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Tariffs/macroQ2: not hearing concerns yet; regulators and rate-setting backdrop discussed Tariffs could raise claim costs; no spend reductions yet; pockets of concern in Home Services; carriers in “wait-and-see” mode Uncertainty rising; spend stable, ramps tempered
Media supply/demandQ1: increasing supply via O&O and partnerships ; Q2: supply catching up after surge Proprietary media ~50% of Auto Insurance media margin at ~2x margins; converting low-margin partnerships to fee-based/private exchange Improving mix; margin optimization progressing
Auto Insurance demand breadthQ1: unprecedented ramp, broader client base ; Q2: record revenue, broad base Sequential down ~10% vs Q2; ex-largest client >150% YoY growth; more carriers spending 7 figures/month Normalizing sequentially; strong YoY breadth
Margin expansion pathQ1: targeting ~10% adj. EBITDA margin over time ; Q2: within reach in Q4 Multiple levers (proprietary media, fee-based exchanges, agency products, new verticals) Positive trajectory
TCPA/regulatoryQ1: anticipated changes; long-term positive ; Q2: rules stayed; impact less disruptive Not central in Q3 commentary; Home Services planning continues Regulatory headwind eased
Product expansionQ1: expanding across credit cards, banking, Home Services ; Q2: O&O social/display/native scaling via acquisition Scaling QRP, 360 Finance, agency-side products; early personal loans broadening Diversification advancing

Management Commentary

  • CEO: “We delivered strong results again… growing revenue 60% year-over-year, and adjusted EBITDA 145%… Financial Services… grew 78% year-over-year with Auto Insurance up 165%. Home Services… to a new quarterly record” .
  • Outlook and risk framing: “Maintaining our full fiscal year 2025 outlook… The implied outlook range for fiscal Q4 is wider… tariffs and tariff-related uncertainties introduce risk and potential volatility to client spending” .
  • CFO: “Financial Services… represented 74% of Q3 revenue… $199.7M… Home Services… 24%… $65.4M… Other revenue $4.7M… closed the quarter with $82M in cash and equivalents and no bank debt” .
  • Strategic levers: Proprietary media now ~half of Auto Insurance margin at ~2x third-party margins; converting some partnerships to fee-based “private exchange” model; agency-focused products more than doubled this year at ~2x margin vs direct-to-carrier click; QRP and 360 Finance expected better than breakeven this year .

Q&A Highlights

  • Tariffs and Auto Insurance economics: Management sees potential impact on loss ratios but noted carriers have “strongly positive combined ratios” and can absorb a wide range; current spend stable but ramps held back pending clarity .
  • Margin expansion vs investment: Multiple levers (proprietary media, fee-based model, agency products, new verticals) to expand margins while continuing aggressive investment in growth .
  • Auto sequential trends and breadth: Auto Insurance down a little over 10% sequentially from an extraordinary Q2; spend remains strong with broader carrier base; excluding largest client, Auto grew >150% YoY .
  • Home Services and tariffs: Pockets of concern depending on import exposure; company can lean into less impacted areas; soft macro can increase inquiry purchases by clients .
  • Capital allocation: Buybacks considered historically, but current focus on maintaining a strong balance sheet and funding growth (organic/M&A/partnerships) .

Estimates Context

  • Q3 2025: Adjusted EPS $0.21 vs consensus $0.056*; revenue $269.8M vs consensus $270.36M* (EPS est. count: 5; revenue est. count: 6)*.
  • Prior quarters: Q2 2025 adjusted EPS $0.20 vs $0.036*; revenue $282.6M vs $239.8M*; Q1 2025 adjusted EPS $0.22 vs $0.033*; revenue $279.2M vs $223.8M*.
MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)$223.8*$239.8*$270.4*
Revenue Actual ($USD Millions)$279.2 $282.6 $269.8
EPS Consensus Mean ($)$0.033*$0.036*$0.056*
Adjusted Diluted EPS Actual ($)$0.22 $0.20 $0.21

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Core strength intact: Q3 delivered 60% YoY revenue growth with strong adjusted EPS and EBITDA; breadth across Financial Services and record Home Services supports durability .
  • Sequential normalization from a peak is not a demand crack; Auto Insurance declined ~10% sequentially but remains broadly strong and diversified across carriers (ex-largest >150% YoY) .
  • Guidance confidence: FY25 revenue $1.065–$1.105B and adjusted EBITDA $80–$85M maintained; management expects margin expansion in Q4 despite tariff-related uncertainty .
  • Margin catalysts: Proprietary media mix shift, fee-based “private exchange” conversions, agency-side products, and scaling new offerings (QRP, 360 Finance) provide tangible margin levers into FY25/FY26 .
  • Cash/capacity to invest: $81.8M cash, no bank debt, and $30.1M operating cash flow position QNST to fund growth and weather macro/regulatory shifts .
  • Watch tariffs and carrier behavior: Near-term ramps may be tempered until tariff clarity; monitor Q4 delivery vs implied growth and any commentary on Auto claims trends and marketing budgets .
  • Near-term trading: Expect sensitivity to Q4 margin expansion and any tariff headlines; medium-term thesis rests on continued performance marketing share gains in Auto Insurance and scaled, higher-margin media/product mix .