QuinStreet, Inc. (QNST) Q2 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call indicates strong revenue growth in non-auto insurance and home services, positive traffic trends, and strategic AI initiatives. Despite a slight decline in financial services revenue, the guidance is optimistic with stable growth expectations. The new share repurchase program and strategic acquisitions further support a positive outlook. The Q&A session revealed no major concerns, and management's confidence in AI integration and market opportunities is evident. Although some responses were vague, the overall sentiment and strategic plans suggest a positive stock price movement.

Key Financial Performance

Total Revenue for Fiscal Q2 2026 $287.8 million, a record revenue for QuinStreet, driven by impressive execution across verticals. This is typically the seasonally lowest revenue quarter.

Adjusted Net Income for Fiscal Q2 2026 $14 million or $0.24 per share. No specific year-over-year change mentioned.

Adjusted EBITDA for Fiscal Q2 2026 $21 million. No specific year-over-year change mentioned.

Financial Services Client Vertical Revenue for Fiscal Q2 2026 $216.8 million, representing 75% of Q2 revenue. Declined 1% year-over-year due to comping against an unprecedented surge of insurance carrier spending in the year-ago period. Auto insurance grew 6% sequentially versus the September quarter but was down 2% year-over-year.

Noninsurance Financial Services Revenue for Fiscal Q2 2026 Grew 10% year-over-year. Includes personal loans, credit cards, and banking.

Home Services Client Vertical Revenue for Fiscal Q2 2026 $71 million, representing 25% of Q2 revenue. Grew 13% year-over-year.

Cash and Equivalents at the End of Fiscal Q2 2026 $107 million with no bank debt.

Onetime Tax Benefit in Fiscal Q2 2026 $48 million related to the reversal of a valuation allowance against deferred tax assets established in fiscal year 2023. This is a noncash item and excluded from non-GAAP results.

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Operating Highlights

HomeBuddy acquisition: QuinStreet completed the acquisition of HomeBuddy, which adds unique new products, media, and clients to its Home Services vertical. HomeBuddy specializes in auction-driven exclusive leads and large-scale campaigns in social and native channels.

AI integration: QuinStreet is applying AI across its business to thrive in a more AI-driven ecosystem, leveraging structured proprietary integrations and data.

Home Services market expansion: The Home Services vertical is growing at a compound annual growth rate of over 15%, with revenue now close to $300 million annually. The acquisition of HomeBuddy is expected to further expand QuinStreet's footprint in this market.

Auto insurance market: Auto insurance demand remains strong, with significant growth expected in revenue and margin due to expanding product, market, and media footprints.

Revenue growth: QuinStreet achieved record revenue of $287.8 million in Q2, with a strong performance across verticals. Full fiscal year revenue is expected to grow at least 10%, excluding HomeBuddy.

EBITDA growth: Adjusted EBITDA grew to $21 million in Q2, and full fiscal year adjusted EBITDA is expected to grow at least 20%, excluding HomeBuddy.

Cash and debt management: QuinStreet closed Q2 with $107 million in cash and no bank debt, funding the HomeBuddy acquisition with a mix of cash and a revolving credit facility.

Capital allocation priorities: QuinStreet is focusing on investing in new products, accretive acquisitions, and share repurchases to maximize shareholder value.

Margin expansion strategy: The company aims to achieve a 10% quarterly adjusted EBITDA margin this fiscal year by optimizing media capacity, growing higher-margin products, and capturing operating leverage.

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Risk or Challenges

Market Adaptation: The company is focused on adapting to changes in markets and ecosystems, including the application of AI. However, this adaptation requires significant effort and investment, and there is a risk of falling behind competitors or failing to fully capitalize on AI-driven opportunities.

Acquisition Integration: The recent acquisition of HomeBuddy involves integration challenges. While the acquisition is expected to be accretive, there is a risk of not achieving the anticipated synergies or financial benefits.

Revenue Dependence: A significant portion of revenue comes from the financial services client vertical, which declined 1% year-over-year. This dependency poses a risk if the financial services market faces downturns or reduced spending.

Debt and Financial Commitments: The acquisition of HomeBuddy was partially funded by drawing $70 million from a new $150 million revolving credit facility, along with $75 million in post-closing payments over four years. This increases financial obligations and could impact cash flow.

Seasonality and Market Trends: The company noted that auto insurance momentum outpaced typical seasonality, but there is a risk that market trends could reverse, impacting revenue.

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Guidance & Outlook

Auto Insurance Revenue and Margin: The company expects further significant growth in auto insurance revenue and margin in the coming quarters and years, driven by strong client and marketplace fundamentals and an expanding product, market, and media footprint.

Home Services Revenue: Home Services is expected to continue growing at double-digit rates, with revenue running close to $300 million per year, and between $400 million and $500 million per year with the addition of HomeBuddy.

AI Integration: The company anticipates increased opportunities in its markets due to AI advancements and expects to benefit disproportionately from AI due to its proprietary integrations and data.

Fiscal Year 2026 Revenue and Adjusted EBITDA: The company expects total revenue for fiscal year 2026 to be between $1.25 billion and $1.3 billion, and total adjusted EBITDA to be between $110 million and $115 million.

Fiscal Q3 2026 Revenue and Adjusted EBITDA: The company projects total revenue for fiscal Q3 2026 to be between $330 million and $340 million, and total adjusted EBITDA to be between $26.5 million and $30.5 million.

EBITDA Margin Goal: The company aims to achieve a 10% quarterly adjusted EBITDA margin within fiscal year 2026, excluding the impact of HomeBuddy.

HomeBuddy Acquisition Impact: HomeBuddy is expected to generate $30 million or more of adjusted EBITDA in the first 12 months post-acquisition, with potential synergies to drive this number higher.

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Shareholder Return Plan

share repurchases: We continue to have a rigorously disciplined approach to capital allocation and we'll continue to prioritize: one, investing in new products and initiatives for future growth and margin expansion; two, accretive acquisitions; and three, share repurchases at attractive levels. We will continue to be measured in our approach and remain focused on maximizing shareholder value.

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Key Q&A

Q:Can you talk about the traffic trends you've been seeing with your platform in recent months? Have you seen any meaningful changes in terms of channel or overall traffic volumes?

A:Traffic trends have been net positive with record volumes, particularly with Google. AI-based searches have created more opportunities for campaigns, and fears of negative impacts are unfounded.

Q:How can QuinStreet position itself to navigate the changes in the landscape as AI becomes more prevalent?

A:QuinStreet has been using AI in its core marketplace algorithms since 2008. The company sees AI as an opportunity to enhance its proprietary data and technologies rather than a threat. Disintermediation risks are minimal due to the complexity and proprietary nature of QuinStreet's business model.

Q:Can you give us a sense of the appetite and spending trends you've been hearing from your auto insurance clients?

A:Engagement and interest remain strong, with incremental growth stabilizing after a surge in spending. Clients are balancing profitability with potential rate reductions and external factors, but the outlook is stable with normalized growth rates of 10%-20% year-over-year expected.

Q:Can you talk about the cross-sell opportunities with HomeBuddy, particularly on the media side?

A:HomeBuddy brings expertise in scaling campaigns in social, display, and native media, which QuinStreet lacked. This acquisition allows QuinStreet to meet growing client demand in home services and scale its media capabilities effectively.

Q:How are R&D initiatives like QRP and Finance 360 tracking, and when will they scale to impact fundamentals?

A:QRP and Finance 360 are growing rapidly and expected to generate over $10 million in high-margin revenue this fiscal year. Other initiatives, such as expanding into agent-driven P&C and SMB markets, are also progressing well, with some already at significant scale.

Q:Is HomeBuddy growing at a similar rate to QuinStreet's legacy Home Services business?

A:HomeBuddy has been growing at a slightly faster rate than QuinStreet's legacy Home Services business. The combined business is expected to grow at an average compound rate of 15%-20%.

Q:Is there any abnormal seasonality in the Home Services business or HomeBuddy?

A:Yes, the Home Services business, including HomeBuddy, experiences significant seasonality. The March quarter is weaker due to weather, while the June and September quarters are the strongest.

Q:Can you discuss the environment for other financial service verticals like personal loans and credit cards?

A:The environment is good but not great. Personal loans and related services are solid, with growing demand for debt settlement and credit repair. Credit cards, particularly premium travel cards, are performing well with strong client demand. Banking services like CDs and savings accounts are early-stage but show strong potential.

Q:Are you facing any difficulty in attracting or retaining talent due to AI investments?

A:No, QuinStreet is not facing difficulties in attracting or retaining talent, including in its tech and AI groups.

Q:Are you seeing any changes in traffic patterns, particularly from Google?

A:Traffic from SEM around AI-based searches is increasing, providing more opportunities for targeted campaigns. SEO traffic has been stable but is not a significant focus for QuinStreet.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing the potential risks of AI disintermediation by providing lengthy explanations without concrete evidence. They also used vague language when discussing the potential impact of external factors on auto insurance trends and the broader financial services environment.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

QNST Transcript

QuinStreet, Inc. (QNST) Q2 2026 Earnings Call Transcript

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QuinStreet, Inc. (QNST) Q1 2026 Earnings Call Transcript

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The earnings call reflects strong financial performance, with record revenue and profitability improvements. There is optimism in the auto insurance segment and strategic investments in media and products. The Q&A highlights healthy spending trends and margin expansion, though tariff uncertainties persist. Share repurchase completion and a strong cash position further support a positive outlook. Overall, the company's guidance and strategic initiatives suggest a positive market reaction.

QuinStreet, Inc. (QNST) Q4 2025 Earnings Call Transcript

Positive8-8

The earnings call summary highlights strong financial performance with significant revenue and EBITDA growth, a robust cash position, and no debt. The Q&A section provides additional insights into market trends and strategic initiatives, with management expressing confidence in continued growth despite some uncertainties. Positive factors such as strong financial metrics, optimistic guidance, and shareholder returns outweigh any concerns, suggesting a positive stock price reaction over the next two weeks.

QuinStreet, Inc. (NASDAQ:QNST) Q3 2025 Earnings Call Transcript

Positive5-9

The earnings call reveals strong financial performance with significant revenue and EBITDA growth, especially in financial and home services. Despite concerns over tariffs, the company maintains a robust cash position and no debt. The Q&A highlights management's focus on growth and margin expansion, with optimism in new verticals. However, lack of a share repurchase program and tariff uncertainties slightly temper the outlook. Overall, the positive growth metrics and strategic focus on high-margin areas suggest a positive stock price movement in the near term.

QNST Report

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