Quinstreet (QNST) AI Stock Analysis

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Quinstreet

(NASDAQ:QNST)

68Neutral

QuinStreet shows promise with record revenue growth and strong earnings call guidance, particularly in the auto insurance vertical. However, the negative profitability margins, bearish technical indicators, and high valuation concerns weigh down the overall score. Attention to improving operational efficiency and profitability will be crucial for long-term success.

Positive Factors

Earnings Forecast

Management raised its guidance for full-year fiscal 2025 to a midpoint of revenue of $1 billion, reflecting a recovery in insurance budgets.

Investment Rating

The reaffirmed OUTPERFORM investment rating is supported by a return to growth in insurance spend and increased budgets on digital advertising.

Revenue Growth

QuinStreet reported revenues of $282.6 million, topping the estimate of $239.5 million, with substantial improvement in insurer profitability supporting the solid revenue growth.

Negative Factors

Margin Pressure

The only nitpick in the quarter was some margin pressure from a confluence of a) supply constraints, b) media investments and c) TCPA volatility.

Regulatory Changes

Implementation of the FCC's new explicit consent rule under the Telephone Consumer Protection Act was postponed, but a more restrictive rule will eventually arrive.

Quinstreet (QNST) vs. S&P 500 (SPY)

Market Cap

$1.06B

Dividend YieldN/A

Average Volume (3M)567.30K

Price to Earnings (P/E)―

Beta (1Y)0.98

Revenue Growth68.99%

EPS Growth84.85%

CountryUS

Employees899

SectorCommunication Services

Sector Strength83

IndustryAdvertising Agencies

Share Statistics

EPS (TTM)-0.22

Shares Outstanding56,468,600

10 Day Avg. Volume439,578

30 Day Avg. Volume567,303

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.18

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit27.05

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$31.25

Price Target Upside64.82% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Quinstreet Business Overview & Revenue Model

Company DescriptionQuinStreet, Inc., an online performance marketing company, provides customer acquisition services for its clients in the United States and internationally. The company offers online marketing services, such as qualified clicks, leads, calls, applications, and customers through its websites or third-party publishers. It serves financial and home services industries. The company was incorporated in 1999 and is headquartered in Foster City, California.

How the Company Makes MoneyQuinstreet makes money through a revenue model based on performance marketing and lead generation. The company partners with businesses in various sectors to deliver targeted advertising campaigns that drive customer acquisitions. Revenue is primarily generated through cost-per-action (CPA) and cost-per-lead (CPL) models, where clients pay Quinstreet for each successful lead or customer action generated through its marketing efforts. Quinstreet's sophisticated data analytics and technology platforms enable it to provide high-quality leads and optimize marketing expenditures for its clients, ensuring strong performance outcomes and ongoing partnerships.

Quinstreet Financial Statement Overview

Summary

Quinstreet's financial performance is mixed, showing positive revenue growth and effective cash management, but struggling with negative profitability margins and returns. The balance sheet is strong with low leverage, providing a stable foundation.

Income Statement

Neutral

Quinstreet's income statement shows challenges with declining profitability and negative margins. The gross profit margin at TTM (Trailing-Twelve-Months) is approximately 9.36%, and the net profit margin is negative, reflecting ongoing struggles with cost management and inefficiencies. Revenue shows moderate growth over the years, with a TTM revenue of $928.7M compared to $613.5M in the previous year, indicating some positive momentum.

Balance Sheet

Positive

The balance sheet reflects a stable capital structure with a low debt-to-equity ratio of 0.03 in TTM, indicating conservative leverage. The equity ratio of 54.76% suggests a strong equity base. However, the return on equity remains negative due to persistent losses, highlighting challenges in generating returns for shareholders.

Cash Flow

Positive

Cash flow analysis shows improvement with a positive operating cash flow of $45.6M and a free cash flow of $37.4M in TTM. The operating cash flow to net income ratio is healthy, demonstrating effective cash management despite negative net income. The free cash flow growth rate has also improved significantly compared to previous years.

Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
613.51M	580.62M	582.10M	578.49M	490.34M
	Gross Profit
46.25M	48.52M	53.73M	70.53M	52.48M
	EBIT
-28.07M	-20.82M	-4.69M	30.72M	19.38M
	EBITDA
-5.76M	-2.50M	11.23M	46.01M	30.42M
	Net Income Common Stockholders
-31.33M	-68.87M	-5.25M	23.55M	18.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
50.49M	73.68M	96.44M	110.32M	107.51M
	Total Assets
368.55M	337.15M	419.91M	449.92M	358.41M
	Total Debt
10.97M	1.26M	3.86M	8.54M	8.69M
	Net Debt
-39.52M	-72.42M	-92.58M	-101.77M	-98.82M
	Total Liabilities
151.72M	107.35M	133.91M	154.37M	102.46M
	Stockholders Equity
216.82M	229.80M	286.00M	295.55M	255.94M
Cash Flow		Free Cash Flow
-4.69M	-3.17M	21.16M	45.52M	43.35M
	Operating Cash Flow
12.04M	11.84M	28.67M	50.62M	47.61M
	Investing Cash Flow
-22.73M	-15.13M	-9.22M	-36.46M	8.87M
	Financing Cash Flow
-12.51M	-19.46M	-33.31M	-11.31M	-11.63M

Quinstreet Technical Analysis

Technical Analysis Sentiment

Positive

Last Price18.96

Price Trends

50DMA

17.64

Positive

100DMA

20.20

Negative

200DMA

19.86

Negative

Market Momentum

MACD

0.17

Negative

RSI

64.63

Neutral

STOCH

88.50

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QNST, the sentiment is Positive. The current price of 18.96 is above the 20-day moving average (MA) of 16.46, above the 50-day MA of 17.64, and below the 200-day MA of 19.86, indicating a neutral trend. The MACD of 0.17 indicates Negative momentum. The RSI at 64.63 is Neutral, neither overbought nor oversold. The STOCH value of 88.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for QNST.

Quinstreet Risk Analysis

Quinstreet disclosed 43 risk factors in its most recent earnings report. Quinstreet reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Quinstreet Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NEXN	73 Outperform	$642.67M	18.72	6.60%	―	10.09%	―
IAS	70 Outperform	$1.17B	31.16	3.94%	―	11.75%	401.94%
MGNI	70 Neutral	$1.69B	86.09	3.10%	―	7.82%	―
CRTO	69 Neutral	$1.60B	15.42	10.43%	―	-1.22%	112.13%
QNST	68 Neutral	$1.06B	―	-5.52%	―	68.99%	84.85%
EEX	64 Neutral	$902.18M	―	1.62%	1.15%	4.87%	―
Sector *	59 Neutral	$13.76B	7.64	-1.94%	3.86%	2.38%	-36.56%

* Communication Services Sector Average

Performance Comparison

QNST

Quinstreet

18.96

0.06

0.32%

CRTO

Criteo SA

29.47

-8.30

-21.98%

MGNI

Magnite

12.11

2.86

30.92%

EEX

Emerald Expositions Events

4.58

-1.31

-22.24%

NEXN

Nexxen International

10.34

4.82

87.32%

IAS

Integral Ad Science

7.25

-2.70

-27.14%

Quinstreet Earnings Call Summary

Earnings Call Date:Feb 06, 2025

(Q2-2025)

% Change Since: -24.67%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Positive

QuinStreet's earnings call revealed a strong financial performance with record revenues and significant growth in key client verticals, particularly in auto insurance. The company also raised its full-year outlook, indicating confidence in continued growth. However, disruptions related to TCPA preparations and flat performance in the credit cards vertical presented challenges. Overall, the positives outweighed the negatives, highlighting a strong growth trajectory.

Q2-2025 Updates

Positive Updates

Record Revenue Achievement

QuinStreet achieved record revenue for fiscal Q2, driven by a 130% year-over-year increase to $282.6 million, surpassing typical sequential seasonality.

Significant Growth in Financial Services

The Financial Services client vertical represented 78% of Q2 revenue, growing 208% year-over-year to $219.9 million, largely due to a 615% year-over-year increase in auto insurance demand.

Strong Home Services Performance

The Home Services client vertical represented 21% of Q2 revenue, growing 21% year-over-year to $59.6 million.

Positive Financial Outlook

QuinStreet raised its full fiscal year 2025 revenue outlook to between $1.065 billion and $1.105 billion and adjusted EBITDA to between $80 million and $85 million.

Improvement in EBITDA Margins

Adjusted EBITDA was $19.4 million for Q2, with expectations of further margin expansion in the upcoming quarters due to media efficiencies and client optimizations.

Negative Updates

TCPA Regulation Disruption

Preparations for the now-stayed FCC TCPA regulations caused notable disruption, impacting margins and requiring significant resources for compliance testing.

Flat Performance in Credit Cards Vertical

Despite good performance, the credit cards vertical was closer to flat due to tough year-over-year comparisons.

Company Guidance

During QuinStreet's Fiscal Second Quarter 2025 earnings call, the company provided robust guidance, highlighting an expected fiscal Q3 revenue range of $265 million to $275 million and Q3 adjusted EBITDA between $19.5 million and $20 million. The company also raised its full fiscal year 2025 outlook, now anticipating revenue between $1.065 billion and $1.105 billion and adjusted EBITDA between $80 million and $85 million. This guidance reflects strong ongoing demand in the auto insurance sector, which saw a 615% year-over-year growth, and continued momentum in non-insurance client verticals, with an overall 15% year-over-year growth. QuinStreet remains optimistic about achieving a 10% adjusted EBITDA margin, driven by media efficiencies, client results, and various growth initiatives.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.