QuinStreet NASDAQ: QNST reported record fiscal third-quarter revenue and adjusted EBITDA, with executives pointing to strength in auto insurance, home services and expanded use of artificial intelligence across the company’s platform.
Chief Executive Officer Doug Valenti said revenue rose 28% year over year to $346 million, while adjusted EBITDA increased 53% to $29.6 million. Chief Financial Officer Greg Wong reported total revenue of $346.1 million, adjusted EBITDA of $29.6 million, and adjusted net income of $17.8 million, or $0.31 per share.
Valenti said the quarter marked “another quarter of strong performance and progress” and described the company’s market and financial position as “exceptionally strong.” Wong said it was QuinStreet’s third consecutive quarter of record revenue and also a record quarter for adjusted EBITDA.
Auto Insurance and Home Services Drive Growth
QuinStreet’s Financial Services client vertical accounted for 67% of fiscal third-quarter revenue, growing 16% year over year to $231.8 million, according to Wong. Within that category, auto insurance revenue reached a record level and grew 27% year over year.
Valenti said carrier demand remained strong and consumer shopping activity stayed high. In response to an analyst question, he said strength was broadening across the client base, with demand increasing among major carriers as well as outside the largest client relationships.
Valenti also said carriers continue to report healthy results and that QuinStreet believes its auto insurance opportunity is “still in its early innings.” He cited expansion in media, client relationships and products as areas supporting continued growth in the vertical.
Home Services represented 33% of fiscal third-quarter revenue and grew 63% year over year to $114.3 million, Wong said. Valenti said the business delivered record quarterly revenue, with revenue run rates now approaching $500 million annually.
The company is integrating HomeBuddy, which QuinStreet acquired for $190 million, with its Modernize brand. Valenti said the integration is “going extremely well” and that the company generated revenue during the quarter from sharing media between the two platforms. He said QuinStreet is ahead of schedule in integrating the organizations and moving toward a “one-platform approach” to media.
AI Initiatives Expand Across the Business
Executives repeatedly emphasized QuinStreet’s use of artificial intelligence, both in internal operations and media channels. Valenti said the company has used AI algorithms since 2008 and is now applying AI across “dozens of active projects” involving proprietary data, technology systems, integrations, workflows, media campaigns and consumer interactions.
Valenti gave several examples of AI applications, including:
- Using AI to integrate new and updated carrier rates faster into QuinStreet’s insurance rating platform, which he said is increasing productivity by an estimated 50%.
- Using AI to generate more and better advertisements and creative, improving productivity in that function by an estimated 400%.
- Applying AI-enabled natural language analytics to help frontline employees access proprietary data and generate insights with less analyst support.
- Improving software coding productivity across the company’s business and technology stack.
Valenti also said QuinStreet is seeing revenue opportunities tied to AI-driven media. He said revenue from the company’s proprietary Google campaigns has grown by more than 100% over the past year as AI Overviews have expanded to an estimated 50%-plus of Google searches.
In the Q&A session, Valenti said QuinStreet is an early participant in OpenAI’s advertising platform and is already live in both insurance and home services. He said the company has generated its first revenues there and is helping OpenAI pilot and evolve the platform.
Valenti said he expects large language models to become “a new entry point for consumers” and described them as another opportunity for QuinStreet to connect consumers with service providers. He compared the opportunity to the company’s early work with Google’s advertising platform.
Balance Sheet and Capital Allocation
QuinStreet ended the quarter with $102 million in cash and equivalents and net debt of $54 million, according to Wong. Valenti said net debt was around $50 million, including bank debt and seller notes, and was well below 0.5 times annualized adjusted EBITDA even after accounting for the HomeBuddy acquisition.
Valenti said the company expects to generate well over $100 million in free cash flow over the next 12 months. Wong said QuinStreet remains in a strong financial position and expects to generate strong cash flows in coming quarters and years.
Wong said the company’s capital allocation priorities remain investing in new products and growth initiatives, pursuing accretive acquisitions and repurchasing shares at attractive levels. He said QuinStreet will remain measured and focused on maximizing shareholder value.
Fourth-Quarter Outlook and Early Fiscal 2027 View
For fiscal fourth quarter, QuinStreet expects revenue of $350 million to $370 million, which executives said would represent at least 34% year-over-year growth and another quarterly record. The company expects adjusted EBITDA of $37 million to $43 million, implying at least 67% year-over-year growth and continued margin expansion.
Valenti said the company expects revenue growth to accelerate and margins to expand further in fiscal Q4. Looking ahead to fiscal 2027, which begins July 1, Valenti said QuinStreet’s early view is for revenue and adjusted EBITDA to again grow at strong double-digit rates year over year.
In response to an analyst question, Valenti said the preliminary fiscal 2027 outlook does not include new acquisitions. He said the company is seeing strong double-digit revenue growth across its businesses, with margins in most cases expected to grow faster than revenue.
Valenti cited several drivers for the coming year, including strength in home services, continued client demand and media capacity growth in insurance, and opportunities in credit cards, banking, personal loans and debt solutions. He said the AmONE business has focused on improving revenue quality and margins and is expected to resume more aggressive growth in the next fiscal year at higher margins.
On margins, Valenti said three factors are supporting expansion: a more normalized revenue mix as auto insurance becomes less dominant, continued improvement in auto insurance margins and operating leverage from revenue growth against a semi-fixed cost base.
About QuinStreet NASDAQ: QNST
QuinStreet, Inc operates a technology-based performance marketing platform that connects companies with prospective customers across multiple verticals. The company specializes in data-driven lead generation for financial services, education, insurance, healthcare, and home services firms. By leveraging proprietary targeting algorithms and real-time analytics, QuinStreet manages customized digital marketing campaigns to optimize customer acquisition and retention for its clients.
Through a portfolio of consumer-facing websites and comparison platforms, QuinStreet delivers targeted visitors who are actively researching products and services.
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