QuinStreet, Inc. (NASDAQ:QNST) Q1 2018 Earnings Conference Call - Final Transcript

Oct 30, 2017 • 05:00 pm ET

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QuinStreet, Inc. (NASDAQ:QNST) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the QuinStreet First Quarter Fiscal 2018 Financial Results Conference Call. Today's conference is being recorded.

I would now like to turn the conference over to Ms. Erica Abrams. Please go ahead, ma'am.

Executive
Erica Abrams

Thank you, Kathryn. Good afternoon, ladies and gentlemen. Thank you for joining us today to report QuinStreet's first quarter of fiscal year 2018 financial results.

Joining me on the call today are Doug Valenti, CEO; and Greg Wong, CFO of QuinStreet.

This call is being simultaneously webcast on the Investor Relations section of our website at www.quinstreet.com.

(Forward-Looking Cautionary 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.

Now I will turn the call over to Doug, CEO of QuinStreet. Please go ahead.

Executive
Doug Valenti

Thank you, Erica, and thank you all for joining us today.

Results were strong in the fiscal first quarter. Revenue was up 19% year-over-year and adjusted EBITDA margin was about 8%. Improved performance continues to be driven by our new product and media strategies and by the long-term trend of clients shifting more spending to digital media and to performance marketing.

Our marketplaces allow consumers that are in research-and-compare mode to quickly and effectively find solution providers. And our model and technologies make digital performance media measurably more effective and affordable for clients in these high-consideration market verticals.

We are still relatively early in the implementation of our new products and media strategies across the business. We are also still relatively early in the shifting of client budgets to digital and in the digital channel to our model of best-in-class performance marketing.

In addition to the strong year-over-year growth, this was the highest-revenue quarter since March of 2012 and the highest-EBITDA quarter since September of 2013. Strong momentum in our financial services and home services businesses, which combined now represent about 75% of company revenue, continues to be the primary driver of improved performance. Those businesses grew 28% year-over-year in the quarter.

Trends in our education client vertical continue to improve, and revenue there grew year-over-year for the first time in two years. A small decline in US education revenue was offset by strong growth in our international business. About 30% of our education revenue is now either with not-for-profit or international clients.

Given our strong performance in the first quarter and the momentum we are carrying into Q2, we now expect full fiscal year revenue growth to be in the range of 10% to 15% and that adjusted EBITDA margin will be about 8%. We'll update our full-year outlook again after reporting fiscal Q2 results.

With that, I'll turn the call over to Greg.

Executive
Greg Wong

Thanks, Doug. Hello. Thanks to everyone for joining us today.

We had a strong first quarter overall and are pleased with our momentum and continued improvements in performance, driven by our new product and media strategies. We delivered