QuinStreet, Inc. (Nasdaq:QNST), a leader in performance marketing
online, today announced financial results for the first quarter
ended September 30, 2015.
For the first quarter, the Company reported total revenue of
$72.4 million, an increase of 5% compared to the same quarter last
year. Adjusted EBITDA for the quarter was $1.1 million, or 2% of
revenue. Adjusted net loss for the first quarter was $0.9 million,
or ($0.02) per share, and GAAP net loss was $6.1 million, or
($0.14) per share.
The Company generated $3.2 million in operating cash flow and
closed the first quarter with $61 million in cash and $46 million
in net cash.
"We extended our year-over-year revenue growth
trend in fiscal Q1," commented Doug Valenti, QuinStreet CEO. "We
continued to see strong growth from the new product, market and
media initiatives that are revitalizing our business and that are
representing an ever-larger share of our mix. Auto Insurance
revenue continued to grow at a double-digit pace, despite
well-publicized industry headwinds in the quarter. Education
revenue benefited from not-for-profit client growth and new media
partnerships. Adjusted EBITDA margin came in on plan, reflecting
important investments in growth initiatives and new media
partnerships."
"We are reiterating our outlook for approximately
10% revenue growth in fiscal year 2016, with acceleration in the
second half of the year as initiatives and partnerships,
particularly in the Financial Services client vertical, continue to
ramp," concluded Valenti.
Reconciliations of adjusted net loss and adjusted EBITDA to GAAP
net loss are included in the accompanying tables.
Conference Call Today at 1:15 p.m.
PT
QuinStreet will host a conference call and
corresponding live webcast at 1:15 p.m. PT today. To access the
conference call, dial (888) 359.3627 for the U.S. and Canada or +1
(719) 457.2645 for international callers. The webcast will be
available live on the investor relations section of the Company's
website at http://investor.quinstreet.com and via replay beginning
approximately two hours after the completion of the call until the
Company's announcement of its financial results for the next
quarter. An audio replay of the call will also be available to
investors beginning at approximately 5:00 p.m. PT on November 9,
2015 by dialing (888) 203.1112 in the U.S. and Canada or +1 (719)
457.0820 for international callers, using passcode 9741166#. This
press release and the financial tables are also available on the
investor relations section of the Company's website at
http://investor.quinstreet.com.
Non-GAAP Financial Measures
This release and the accompanying tables include a discussion of
adjusted EBITDA, adjusted net (loss) income and adjusted diluted
net (loss) income per share, all of which are non-GAAP financial
measures that are provided as a complement to results provided in
accordance with accounting principles generally accepted in the
United States of America ("GAAP"). The term "adjusted EBITDA"
refers to a financial measure that we define as net loss less
provision for taxes, depreciation expense, amortization expense,
stock-based compensation expense, interest and other (expense)
income, net, impairment of goodwill, and restructuring. The term
"adjusted net (loss) income" refers to a financial measure that we
define as net loss adjusted for amortization expense, stock-based
compensation expense, restructuring expense, impairment of goodwill
and tax valuation allowance, and debt restructuring costs, net of
estimated taxes. The term "adjusted diluted net (loss) income per
share" refers to a financial measure that we define as adjusted net
(loss) income divided by weighted average diluted shares
outstanding. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
In addition, our definition of adjusted EBITDA, adjusted net (loss)
income and adjusted diluted net (loss) income per share may not be
comparable to the definitions as reported by other companies.
We believe adjusted EBITDA, adjusted net (loss) income and
adjusted diluted net (loss) income per share are relevant and
useful information because they provide us and investors with
additional measurements to analyze the Company's operating
performance.
Adjusted EBITDA is part of our internal management reporting and
planning process and one of the primary measures used by our
management to evaluate the operating performance of our business,
as well as potential acquisitions. Adjusted EBITDA is useful to us
and investors because it provides information related to the
Company's ability to provide cash flow for acquisitions, capital
expenditures and working capital requirements. Internally, adjusted
EBITDA is used by management for planning purposes, including
preparation of internal budgets; to allocate resources; to evaluate
the effectiveness of operational strategies; and to evaluate the
Company's capacity to fund acquisitions and capital expenditures as
well as the capacity to service debt. Adjusted EBITDA is used as a
key financial metric in senior management's annual incentive
compensation program. The Company believes that analysts and
investors use adjusted EBITDA as a supplemental measurement to
evaluate the overall operating performance of companies in its
industry and use adjusted EBITDA multiples as a metric for
analyzing company valuations. It is also an element of certain
maintenance covenants under our debt agreements.
Adjusted net (loss) income and adjusted diluted net (loss)
income per share are useful to us and investors because they
present an additional measurement of our financial performance,
taking into account depreciation, which we believe is an ongoing
cost of doing business, but excluding the impact of certain
non-cash expenses (stock-based compensation, amortization of
intangible assets, impairment of goodwill and tax valuation
allowance) and other non-recurring charges. The Company believes
that analysts and investors use adjusted net (loss) income and
adjusted diluted net (loss) income per share as supplemental
measures to evaluate the overall operating performance of companies
in our industry.
We intend to provide these non-GAAP financial measures as part
of our future earnings discussions and, therefore, the inclusion of
these non-GAAP financial measures will provide consistency in our
financial reporting. A reconciliation of these non-GAAP measures to
GAAP is provided in the accompanying tables.
Legal Notice Regarding Forward Looking
Statements
This press release and its attachments contain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 that involve risks and uncertainties. Words
such as "estimate", "will", "believe", "intend", "potential" and
similar expressions are intended to identify forward-looking
statements. These forward-looking statements include the statements
in quotations from management in this press release, as well as any
statements regarding the Company's anticipated financial results,
growth and strategic and operational plans and results of analyses
on impairment charges. The Company's actual results may differ
materially from those anticipated in these forward-looking
statements. Factors that may contribute to such differences
include, but are not limited to: the impact of changes in industry
standards and government regulation including but not limited to
investigation of enforcement activities of the Department of
Education and the Federal Trade Commission; the Company's ability
to maintain and increase client marketing spend; the Company's
ability to maintain and increase the number of visitors to its
websites and to convert those visitors and those to its third-party
publishers' websites into client prospects in a cost-effective
manner; the impact of the current economic climate on the Company's
business; the Company's ability to access and monetize Internet
users on mobile devices; the Company's ability to attract and
retain qualified executives and employees; the Company's ability to
compete effectively against others in the online marketing and
media industry both for client budget and access to third-party
media; the Company's ability to identify and manage acquisitions;
and the impact and costs of any alleged failure by the Company to
comply with government regulations and industry standards. More
information about potential factors that could affect the Company's
business and financial results is contained in the Company's annual
reports on Form 10-K and quarterly reports on Form 10-Q as filed
with the Securities and Exchange Commission ("SEC"). Additional
information will also be set forth in the Company's quarterly
report on Form 10-Q for the quarter ended September 30, 2015, which
will be filed with the SEC. The Company does not intend and
undertakes no duty to release publicly any updates or revisions to
any forward-looking statements contained herein.
About QuinStreet
QuinStreet, Inc. (Nasdaq:QNST) is one of the largest Internet
performance marketing and media companies in the world. QuinStreet
is committed to providing consumers and businesses with the
information they need to research, find and select the products,
services and brands that meet their needs. For more information,
please visit www.QuinStreet.com.
QUINSTREET,
INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In
thousands) |
(Unaudited) |
|
|
|
|
September 30, |
June 30, |
|
2015 |
2015 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 60,660 |
$ 60,468 |
Accounts receivable,
net |
45,861 |
46,240 |
Deferred tax assets |
173 |
166 |
Prepaid expenses and other
assets |
6,054 |
11,503 |
Total current assets |
112,748 |
118,377 |
|
|
|
Property and equipment, net |
8,733 |
8,565 |
Goodwill |
56,118 |
56,118 |
Other intangible assets, net |
16,604 |
19,030 |
Deferred tax assets, noncurrent |
-- |
-- |
Other assets, noncurrent |
3,012 |
3,063 |
Total assets |
$ 197,215 |
$ 205,153 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities |
|
|
Accounts payable |
$ 19,407 |
$ 20,425 |
Accrued liabilities |
25,261 |
27,146 |
Deferred revenue |
1,146 |
1,208 |
Debt |
49 |
49 |
Total current liabilities |
45,863 |
48,828 |
|
|
|
Deferred revenue, noncurrent |
-- |
-- |
Debt, noncurrent |
15,000 |
15,000 |
Other liabilities, noncurrent |
5,641 |
5,740 |
Total liabilities |
66,504 |
69,568 |
|
|
|
Stockholders' equity |
|
|
Common stock |
45 |
45 |
Additional paid-in capital |
250,570 |
249,358 |
Accumulated other comprehensive
loss |
(420) |
(413) |
Accumulated deficit |
(119,484) |
(113,405) |
Total stockholders' equity |
130,711 |
135,585 |
Total liabilities and
stockholders' equity |
$ 197,215 |
$ 205,153 |
|
|
|
|
|
|
QUINSTREET,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands,
except per share data) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
|
2015 |
2014 |
Net revenue |
$ 72,389 |
$ 69,189 |
Cost of revenue (1) |
65,795 |
63,409 |
Gross profit |
6,594 |
5,780 |
Operating expenses: (1) |
|
|
Product development |
4,386 |
4,956 |
Sales and marketing |
3,575 |
3,667 |
General and administrative |
4,163 |
4,615 |
Operating loss |
(5,530) |
(7,458) |
Interest income |
6 |
26 |
Interest expense |
(133) |
(1,180) |
Other (expense) income, net |
(57) |
2,325 |
Loss before income taxes |
(5,714) |
(6,287) |
Provision for taxes |
(365) |
-- |
Net loss |
$ (6,079) |
$ (6,287) |
|
|
|
|
|
|
Net loss per share |
|
|
Basic |
$ (0.14) |
$ (0.14) |
Diluted |
$ (0.14) |
$ (0.14) |
|
|
|
Weighted average
shares used in computing net loss per share |
|
|
|
Basic |
|
|
Diluted |
44,836 |
44,266 |
|
44,836 |
44,266 |
(1) Cost of revenue
and operating expenses include stock-based compensation expense as
follows: |
|
|
|
Cost of revenue |
$ 804 |
$ 644 |
Product development |
600 |
595 |
Sales and marketing |
425 |
464 |
General and administrative |
675 |
572 |
|
|
|
|
|
|
QUINSTREET,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In
thousands) |
(Unaudited) |
|
|
|
|
Three Months
Ended September 30, |
|
2015 |
2014 |
|
|
|
Cash Flows from Operating
Activities |
|
|
Net loss |
$ (6,079) |
$ (6,287) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
Depreciation and
amortization |
3,944 |
5,422 |
Net realized loss from sale of
marketable securities |
-- |
-- |
Provision for sales returns and
doubtful accounts receivable |
(73) |
182 |
Write-off of bank loan upfront
fees |
-- |
328 |
Stock-based compensation |
2,504 |
2,275 |
Excess tax benefits from
stock-based compensation |
-- |
(51) |
Gain on sales of domain
names |
(65) |
(2,450) |
Other adjustments, net |
-- |
43 |
Changes in assets and
liabilities: |
|
|
Accounts receivable |
453 |
690 |
Prepaid expenses and other
assets |
5,500 |
(1,312) |
Deferred taxes |
(8) |
2 |
Accounts payable |
(1,100) |
633 |
Accrued liabilities |
(1,673) |
(2,886) |
Deferred revenue |
(62) |
71 |
Other liabilities,
noncurrent |
(98) |
(161) |
Net cash provided by (used in)
operating activities |
3,243 |
(3,501) |
Cash Flows from Investing
Activities |
|
|
Capital expenditures |
(489) |
(2,141) |
Business acquisition |
-- |
-- |
Other intangibles |
-- |
-- |
Internal software development costs |
(1,276) |
(427) |
Purchases of marketable securities |
-- |
(10,605) |
Proceeds from sales and maturities of
marketable securities |
-- |
9,762 |
Proceeds from sales of domain names |
40 |
2,700 |
Proceeds from sale of property and
equipment |
-- |
-- |
Net cash used in investing
activities |
(1,725) |
(711) |
Cash Flows from Financing
Activities |
|
|
Payments for issuance of common stock |
-- |
-- |
Proceeds from exercise of common stock
options |
-- |
1,300 |
Proceeds from bank debt |
-- |
-- |
Principal payments on bank debt |
-- |
(3,750) |
Payment of bank loan upfront fees |
-- |
(272) |
Principal payments on acquisition-related
notes payable |
-- |
(444) |
Excess tax benefits from stock-based
compensation |
-- |
51 |
Withholding taxes related to restricted stock
net share settlement |
(1,323) |
(445) |
Net cash used in financing
activities |
(1,323) |
(3,560) |
Effect of exchange rate changes on cash and
cash equivalents |
(3) |
16 |
Net increase (decrease) in cash and cash
equivalents |
192 |
(7,756) |
Cash and cash equivalents at beginning of
period |
60,468 |
84,177 |
Cash and cash equivalents at end of
period |
$ 60,660 |
$ 76,421 |
|
|
|
|
|
|
QUINSTREET,
INC. |
RECONCILIATION OF NET
LOSS TO |
ADJUSTED NET (LOSS)
INCOME |
(In thousands, except
per share data) |
(Unaudited) |
|
|
|
|
Three Months
Ended September 30, |
|
2015 |
2014 |
Net loss |
$ (6,079) |
$ (6,287) |
Amortization of intangible
assets |
2,409 |
3,761 |
Stock-based compensation |
2,504 |
2,275 |
Restructuring |
218 |
439 |
Tax valuation allowance |
-- |
-- |
Tax impact after non-GAAP
items |
-- |
(68) |
Adjusted net (loss) income |
$ (948) |
$ 120 |
|
|
|
Adjusted diluted net (loss) income per
share |
$ (0.02) |
$ 0.00 |
|
|
|
Weighted average shares used in computing
adjusted diluted net (loss) income per share |
44,836 |
44,283 |
|
|
|
|
|
|
QUINSTREET,
INC. |
RECONCILIATION OF NET
LOSS TO |
ADJUSTED
EBITDA |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
|
2015 |
2014 |
Net loss |
$ (6,079) |
$ (6,287) |
Interest and other expense
(income), net |
184 |
(1,171) |
Provision for taxes |
365 |
-- |
Depreciation and
amortization |
3,944 |
5,422 |
Stock-based compensation |
2,504 |
2,275 |
Restructuring |
218 |
439 |
Adjusted EBITDA |
$ 1,136 |
$ 678 |
CONTACT: Investor Contact:
Erica Abrams
(415) 297-5864
eabrams@quinstreet.com
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