Good day, ladies and gentlemen, and welcome to the QuinStreet Fourth Quarter Fiscal 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host for today, Mr. Matthew Hunt of The Blueshirt Group. Sir, you may begin.

Thank you, and good afternoon, ladies and gentlemen. Thank you for joining us today as we report QuinStreet's fiscal fourth quarter and full year 2013 financial results. Joining me on the call today are Doug Valenti, CEO; and Ken Hahn, COO and CFO of QuinStreet. This call is being simultaneously webcast on the Investor Relations section of our website at www.quinstreet.com. Before we get started, I would like to remind you that the following discussion contains forward-looking statements. These are statements that relate to future events or financial performance and involve risks and uncertainties. QuinStreet's actual results may vary materially from those discussed here. Factors that may cause the results to differ from our forward-looking statements are discussed in our most recent 10-Q filing with the SEC, completed on May 9, 2013. Forward-looking statements are based on current expectations and the company does not intend to and undertakes no duty to update this information to reflect future events or circumstances. Now I'll turn the call over to Doug, CEO of QuinStreet. Please go ahead.

Thank you, Matt. Hello, everyone. Thank you for joining us today as we report our fiscal fourth quarter and full year 2013 financial results. Revenue in the quarter was in the higher end of the outlook range we provided last quarter at $76 million. Adjusted EBITDA was 16% of revenue. This is our third consecutive quarter of an improving top line trend or smaller year-over-year revenue declines. We continue to make good progress on initiatives that we believe will return us to growth. Our business model has remained stable and attractive, with good adjusted EBITDA and cash flow margins and a strengthening balance sheet. We expect the trends of good cash flow generation and moderate capital requirements to continue. The challenges of the past year resulted in uncertainties and year-over-year revenue declines unprecedented in our 14-year history. However, it was also a year of excellent progress along the widest array of new product, client and market initiatives in company history. Our business model and organization have remained resilient despite the recent challenges and despite spending on such a wide range of new initiatives. Of particular note, in the year, we generated $38 million of normalized free cash flow, and went from net debt of $2 million to net cash of over $35 million. QuinStreet is a leader in online performance marketing, and we believe that this is an important, early and very large market opportunity. We continue to be well positioned, given our strength, strong capabilities, assets and resources. Now turning to our outlook. For the September quarter, we expect the improving top line trend to continue and estimate revenue in the range of $74 million to $79 million. Adjusted EBITDA margin is expected to be approximately 12% as we choose to more aggressively spend on media as an investment…

Thanks, Doug. Hello, and thanks again for joining us. Today, I'll provide a brief recap of the quarter, an overview of the past fiscal year and then, some more detail on our fourth fiscal quarter. So the high level for Q4, we posted $75.7 million of revenue, a 12% decline compared to the same quarter last year. Adjusted net income was $6.2 million or $0.14 per share on a fully diluted basis, and adjusted EBITDA was $12.3 million or 16% margin. We're pleased to deliver results to the top of the guidance range we provided. Q4 was our third consecutive quarter of an improving top line trend, that is, smaller year-over-year revenue declines or, stated differently, improvement of the second derivative for our last 3 quarters. Looking back at fiscal 2013 as a whole, we've been transparent about our plans and progress over this past challenging year, and we're pleased to have ended the year much farther down the path to recovery than when we started the year. While we've been making progress on returning to top line growth, we've also maintained a fundamentally strong business model, delivering 16% adjusted EBITDA margin for the year and throwing off $52 million of operating cash flow, $48 million of free cash flow and $38 million of normalized free cash flow. Overall, our net cash position increased from negative $2 million at the beginning of the year to positive $35 million at year end. Now to details on the quarter. Please see the supplemental data sheets available for download on the Investor Relations page of our corporate website. They provide, in tabular form, the figures that I will now walk through with you. For revenue by client vertical, our Education client vertical represented 44% of Q4 revenue or $33 million. The year-over-year decline…

[Operator Instructions] Our first question comes from the line of Carter Malloy of Stephens Inc.

So first, I just want to get some clarity on the spending for auto insurance and media. When you're saying that that's going to be an OpEx expense, so you guys are building out your owned -- or your owned and operated inventory and then sites? Or is that more of a longer-term structural, "Hey, you know what? We're going to go ahead and do larger payouts to the affiliates," so it would be more on the growth side of the business?

Carter, this is Doug. It's really neither of those in particular. It's not capital expenditures or OpEx on our owned and operated sites, so those are ongoing. The increase is really coming from spending more aggressively in bought or purchased sources of media on the operating line, in the operating expenses. And spending where we now know that good margins are in reach, but for time to scale and iterate and optimize. And we kind of -- and this is something we do on an ongoing basis throughout the business, but we're doing it -- it's having a bigger effect because we're doing it in a more aggressive, bigger way given the opportunity we see in the investments we've made in the expanded auto insurance model. So for example, more aggressively going after pay-per-click spending on Google, where we have not had previously. The monetization power that we now have and working up that iteration and optimization curve is a big chunk of that, and an important one, because it represents access to a lot of media that we now have the ability to afford as we make those efforts. And very good quality media, which has a beneficial effect with clients and in pricing, which we're already beginning to see. So it's really just speeding that virtuous cycle that we now believe we have the product and the clients and the coverage to work on. So that's really where -- that and then, some partner publisher media sources, again, have similar characteristics. Those are the places we'll be spending. Again, it's an investment cycle, this is not a structural change to what we think we'll make in auto insurance overall. As I indicated, I think it's -- we think it's a couple of months to a couple of quarters. And we think we see a pretty clear path given the monetization, given our typical optimization curves and given what we see as the pipeline of more coverage, more budget, more clients coming down the pipe. We think it's something that's -- it's time to do, as we've talked before. In auto insurance, the shift to the expanded model from a couple of -- which began a couple of years ago, was -- we had to have the concept, then, we had to buy the assets, then we had to integrate the assets, we had to build the products and we had to sign the clients. And the last phase, and the phase we're now into, which is terrific, because that means the other pieces have gone well and have gotten us to this point, as the monetization comes, is to now go and do what we -- do what we have to do to grow, which is access more media, which is the whole idea in the first place. So we're coming full circle and we're right back to -- right at the point where we want to be.

So what you're saying is that, I'll think of that on a per lead basis or even per visitor basis, the monetization is improving because both internal initiatives, as well as end market improvements. But at the end of the day, I'm still trying to understand how is it not structural if you're spending on keywords to drive incremental traffic? Is it just because you think that the monetization will continue to improve, while those keywords [indiscernible] sort of stay flat?

Yes, absolutely. Well, it's a combination of a couple of things again. One is, whenever we go into newer media sources, it takes a while for us to work our way, kind of, up the optimization curve to get the margins where we want them to eventually be. We've been doing that for 14 years, so we're pretty good at it and we see a tremendous opportunity. And we think we now have the current monetization to begin that process and make very good progress from here. And to your other point, we also see a lot more monetization improvements coming down the pipe from increased client expansion, improvements in productivity in the agent call center, and improvements in coverage on the product side. So that combination, for us -- it's like, we've got to jump on the curve at some point. We're not ready to jump on the curve and we really can't get there until we do. So we're getting on the curve, we're going to start working our way up.

And is that -- as we saw in Bankrate last night, some of the monetization for insurance had improved pretty dramatically just in July. Have you guys -- is that what has given you confidence in that insurance guide for 1Q, as you're seeing that same sort of increasing the overall lift to CPC and CPL?

We're seeing very good improvements, very strong improvements in modernization in auto insurance. I think for very different reasons than Bankrate is seeing, but we are seeing them. We're seeing them for all the reasons we've been talking about for the past few quarters, and that is the addition of the broader product set, as well as the addition of a lot of new clients. And those trends both continued this past quarter where we made, I think, we'd given some indications of our hopes for the next couple of quarters about 6 months ago in terms of client adds. And I think we beat that in terms of our targets. And then, the monetization rates continued to improve, as well, consistent with what we had indicated. So those things have happened and we see them continuing to happen and those give us good ability to go and access more media and make the channel bigger which is, again, what's going to drive growth and what has been the objective of this project all along.

And is it same to assume that, that insurance, again, just given your confidence in the 1Q outlook in insurance, is that the business that gives you confidence in saying you're going to have positive overall growth next year? Or do you think that all of your segments are going to return to growth next year?

I think there's -- we think growth will be driven by 3 of the businesses primarily. One will be auto insurance, continued expansion there and continued progress there, consistent with what we've seen over the past few months in terms of monetization and now feeding that monetization with media and working that up. That will be, probably, the biggest driver. Next biggest driver is likely to be Mortgage, where we have a lot of momentum in that business. On the heels of product expansions, that business was up about 35% year-over-year last year. And we're going into this year with a moderate wind at our backs because of our product and media expansions there. And then, the third piece of it, we believe, will be Education. Not as big a contributor, necessarily, to overall growth, but we do expect growth there. But the lack of downdraft or the greater stabilization driven some by more stability in the market, but more by the -- seeing the results of a lot of initiatives on the product and client media side there that are allowing us to overcome some of the instability and the broader for-profit, post-secondary market. And those are the 3 things that we see really driving growth. And the other verticals will continue to feed contribution, and we are not focusing on growing those as much as we're focusing on keeping them stable and keeping good contribution there to help subsidize and help support the investment we're making in those 3 more critical, larger verticals, where we also see better growth opportunities in the near term.

Our next question comes the line of Douglas Anmuth of JPMorgan. Douglas Anmuth - JP Morgan Chase & Co, Research Division: I just wanted to follow-up and ask about the Education business. I mean, you can clearly see the smaller declines here on a year-over-year basis. But what do you think really gets you over the hump on Education? And I guess, in particular, can you provide just some more color on how you're continuing to improve the quality of inventory and then also, on the new click product that you talked about?

Sure, Doug. The -- Education stability and growth, we think, are going to come from a combination of effects. One is, the industry itself is at a -- is in more of a stable position as they've adapted more to regulation -- the industry I'm talking about there is for-profit post-secondary. We are not counting on much by way of return to growth for that sector for us to stabilize, and we think, grow the Education business. We're really counting more on initiatives that we've been talking about for a while that are beginning to have good impact, including, as you asked, the click product, which is -- which has the benefit of accessing incremental budget from clients we already have that are typically spent elsewhere, so it gives us more budget access from existing clients. It gives us budget access from clients we haven't served that would prefer to buy that way. And very importantly, it gives us the ability to convert more visitors because many of our visitors won't convert on a contact form on a third-party website, but they will click over to a school. So it adds leverage on the margin side, which allows us to go afford more media to feed budgets that we can't necessarily fill in places where we're media-constrained. So that click product just continues to be an important strategic initiative that continues to develop well. There are also other product initiatives in Education that have been successful for us. Our call center revenue in Education was up pretty dramatically this past year as we expanded the ability for our traffic to be monetized or visitors to interact with us via the phone, either to the clients or through our call center to the clients or through our call center as a…

[Operator Instructions] Our next question comes from the line of Jordan Rohan from Stifel, Nicolaus. Jordan E. Rohan - Stifel, Nicolaus & Co., Inc., Research Division: So the question I have for you is one, whether at a high level, the fix in Financial Services is really more tactics rather than strategy. I understand offering more products, which I think is an obvious and nice diversification from just insurance products. But when you just spend more money, aren't you just inviting competitors to spend more money alongside you and eliminate that advantage? Or wouldn't it be a short duration advantage? And then, separately, on the Education side, can you remind me how much of your traffic in Education is from direct NAS or SEO or through your unpaid traffic? And are there any initiatives to really improve that traffic as opposed to just spend more to drive more, say, media?

Yes. I mean, we -- and you know we don't do this historically. We're not starting to do it now. We don't just spend more to get more media and just take the margin hit. You can always do that in these businesses, and you always have to ask yourself if you're doing it such that you are finding a way to work the margin back up over time because you see a path to doing that or if you're just structurally lowering your margins. If your question is, are we just structurally lowering our margins for short-term gain? The answer is an absolute no. We haven't done that historically, we're not going to start doing that today. What we do see, and it is strategic, not tactical, is that with a broader range of products that we can now -- with a broader range of products and clients, which have -- equal higher monetization capabilities, we now have to start feeding those products with media in order to grow the business and to begin to optimize to the margin levels we think we can reach once we get the products in place, which you kind of have to start at the curve somewhere and feed it with media so they have the opportunity to optimize and to get up. So we see this as a very fundamental, very sustainable, very expandable move to better margins because of the strategic investments we've made in the broader product set, which we've talked about now for 2.5 years. So yes, we get the question and I think you know us well enough to know that's not what we do. And I think we've been super clear about what the levers are, of how we're doing that. So we have no discomfort in…

We didn't buy any back this past quarter. We completed our $50 million buyback a couple of quarters ago. And we are -- we don't have any near-term plans. We'll, of course, be mindful of the fact that we're building cash, we expect to continue to build cash and we'll make decisions as a board as to what to do with that, what we think are in the best interest of the shareholders going forward. But no current plans in place.