Good day, and welcome to QuinStreet fourth quarter 2014 earnings conference call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Erica Abrams. Please go ahead.

Thank you, operator, and good afternoon, ladies and gentlemen. Thank you for joining us today to report QuinStreet's fourth quarter fiscal 2014 financial results. Joining me on the call today are Doug Valenti, CEO; and Greg Wong, 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 statements 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-K filing with the SEC, completed on August 20, 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 will turn the call over to Doug, CEO of QuinStreet. Please go ahead.

Thank you, Erica. Hello, everyone. Thank you for joining us today. Fiscal Q4 revenue was $67.6 million, just above the outlook we provided in our last call. Adjusted EBITDA was 3% of revenue, in line with our outlook for single digits, and consistent with management’s expectations. EBITDA margin reflected our aggressive investments in new products, media, and marketing initiatives, as forecast. Those investments are clearly beginning to pay off. In auto insurance, almost 50% of revenue is already coming from the recently launched new products described in our last call. The products are driving renewed, positive momentum and have significantly increased our growth opportunities in that important market. We now expect double digit sequential growth in auto insurance revenue in the current, or September quarter, our fiscal Q1, and year over year growth beginning in the December quarter. We are seeing benefits from a broader product line and expanded media footprint across the financial services vertical. We expect revenue in all of our financial services client groups, which include auto insurance, mortgage, credit cards, health and life insurance, and deposit accounts to grow sequentially in the September quarter, the first time that has happened in five years. And, we expect our financial services client vertical in total to grow year over year beginning in the December quarter. We are seeing good results and progress on other strategic initiatives as well. For example, last quarter was our strongest quarter yet of signing and growing distribution partnerships with large media companies, an important strategic and diversification initiative for the company. These relationships are driving good volumes of new, high-quality visitors for our client programs and generating new streams of performance marketing revenues for our partners, which now include AOL, Mint.com, FICO, and TransUnion, among others. We also entered into important relationships in…

Thanks, Doug. Hello, and thanks again for joining us today. Today, I’ll provide a brief recap of the quarter, an overview of the past fiscal year, and then more detail on our fourth fiscal quarter. At a high level for Q4, we posted $67.6 million of revenue, an 11% decline compared to the same quarter last year. Adjusted net income was $526,000 or $0.01 per share on a fully diluted basis. Adjusted EBITDA was $1.8 million or 3% margin, consistent with management expectations and the outlook we provided on the last call. Looking back at fiscal 2014 as a whole, it has been a transformational year for QuinStreet, particularly in the back half. We made good progress with our product, market, and media expansion strategies that we have been discussing for some time. Specifically, in auto insurance, we launched our full range of complementary new products at the end of the third quarter and have already transitioned approximately 50% of our revenue to those products in that important client vertical. This is a big success for us, as it significantly expands our addressable market and allows us to better differentiate quality, which leads to better monetization and increased access to high-quality media sources. We began to see the impact of these benefits at an accelerated rate in the latter part of the fourth quarter. We ended the year with a clear momentum shift that we continue to see as we move into fiscal Q1. We now expect the company to deliver year over year revenue growth for fiscal 2015. While we’ve invested significantly over the past year to support our product offerings and our growth initiatives, we continue to be financially disciplined and maintain a fundamentally strong business model, delivering 9% adjusted EBITDA margin for the year and generating $18…

[Operator instructions.] And our first question will come from John Campbell with Stephens Incorporated.

It sounds like you guys are definitely seeing and expecting continued sharp not-for-profit education revenue in full year 2015. And I may have missed this, but just give us your general expectations for the for-profit side looking out over the next several quarters. And then maybe just further on that, if you guys could talk to us a little bit about the initial conversations you’re having and kind of the early stages of budget planning cycles for calendar year 2015? Just both sides of that education spectrum.

Sure, John. And we actually just finished a budget cycle for fiscal 2015, because our fiscal, you may recall, ends in June. So we just started a new fiscal year, and we won’t necessarily rebudget for the calendar. But overall, our view on for-profit education is that it will continue to be the most challenged of our businesses. I think it’s the only business we’re now projecting to be down year over year in fiscal 2015. Education overall we expect to be approximately flat to down in single digits, and for-profit education, we expect to be down approximately 10% year over year. We feel pretty good about that forecast, but I will, of course, add the obvious, which is it’s a pretty challenged space, and there’s been a lot about it up and down that we haven’t anticipated as the clients go through various stages of transformation and adjustment and adaptation to their new reality. But again, from budgeting standpoint, for for-profits, we think down probably in the neighborhood of 10%, plus or minus a little, and overall education flat to down in the single digits, as the revenue from growth in nonprofits and international, particularly in primarily Brazil, though we have a nicely growing but smaller business in India, offset some of those declines in for-profit.

And the reason I was asking was more on the budget planning cycle for those guys as they set aside their budget for calendar year 2015, because given you guys are on the fiscal year, could there potentially be tapering headwinds kind of middle of the year for you guys?

It’s a great question. They’re mixed. We have some of them who have fiscal years ending in April and some of them, Devry, for example, thinks on our fiscal year. But you’re right, there’s a bunch of them on the calendar year too. I would say it really is a mixed bag. We’re seeing some clients doing fairly well, and we’re working very hard to continue to do well with them and grow our budgets there. And then we’re seeing other clients that are declining and having real structural issues. And we’re working hard to be as supportive as we can there, but also be cautious about our services there. So again, I don’t think there’s a lot of new news, other than it appears to be a dampening wave of issues, but is still generally, as most of them have reported down and to the right. Just at a little bit, it’s what education analysts, if you read them, continue to say a lot of less worse stuff, which is about as clear a silver lining as you can put on it.

I think you guys kind of alluded to the higher-quality product you’re starting to focus on, on the for-profit side. How do those differ from some of your more traditional offerings? And then can you give us an idea of what the margin profile is there, for the more traditional products?

Sure, the kind of traditional average conversion rate education lead online, which was the bulk of the business in that industry for most players, including us, for well over a decade, it is a product that’s really in decline. Most of the clients under the new regulatory regime, and with the way they’re managing their call centers, just can’t convert those leads at a rate that’s high enough to make the economics make sense. And there also concerns in the ecosystem, not necessarily in our ecosystem, but generally in the ecosystem, about how those leads are generated and whether or not they can meet the new, much higher expectations and compliance standards of the industry. So that product itself, what we’re seeing industry-wide, is decline in demand and oversupply. And for much and most of the industry, significant declines in pricing as a result of that, not surprisingly, from basic economics, which has happened over the last three or four years. We, on the other hand, have been able to actually increase our average pricing over that same period, in total about 5%. But we’ve increased pricing, and we’ve done that by shifting to, as you ask about, more premium, higher-quality products. And that product set includes leads, certainly, but leads that are more highly qualified and higher intent, that either we’re filtering more aggressively or our publisher partners are, or that we’re qualifying to different standards, or that we’re pulling out of media sources that by their nature are further and deeper into the funnel, and therefore closer to an ability to convert. The next product, and I’ll come back to the margins question in a moment as well, the next premium product really is the click product, and we’re seeing continued very strong interest in that product. It’s…