QuinStreet, Inc. (QNST) Q3 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, good day and welcome to the QuinStreet Third Quarter Fiscal 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Hayden Blair, Investor Relations at QuinStreet. Please go ahead, sir.

Thank you, David. And thank you to everyone joining us as we report QuinStreet's Third Quarter of Fiscal Year 2021 Financial Results. Joining me on the call today, our Chief Executive Officer, Doug Valenti, and Chief Financial Officer, Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those projected by such statements, and are not guarantees of future performance. Factors that may cause results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent AK filing made today and our 10K filing made on August 28, 2020. Forward-looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today, we will be discussing both GAAP and non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures are included in today's earnings press release, which is available on our investor relations website@investor.quinstreet.com. With that, I will turn the call over to Doug Valenti. Please go ahead.

Thank you, Hayden. And thank you all for joining us today. Our business momentum and execution continue to be strong. We delivered excellent numbers once again last quarter as a result. Revenue, excluding divested businesses, grew 39% year-over-year. Adjusted EBITDA grew 65%. Cash flow was strong, and we continue to maintain a strong balance sheet. We expect the business momentum and good results to continue in the current quarter. Last quarter's results were again driven by strength in insurance and home services, our two largest businesses, where we delivered record quarterly revenue in each. We estimate that those client verticals represent large addressable markets of tens of billions of dollars and that both are still early in their shifts to digital and performance marketing, and in QuinStreet market share. We also continue to see improving trends in the credit-driven client verticals of financial services. We expect those businesses to return to year-over-year growth in the current June quarter. Most important, we continue to make excellent progress on a wide range of growth initiatives across the business, and to strengthen our products, technologies, and operations for future growth, competitive advantage, and efficiency. Those growth initiatives include QRP. The pipeline there continues to grow, and client integrations, testing, and initial rollouts continue to progress. Revenue is still early, but ramping, and our long-term expectations for QRP remain exciting. In the meantime, our core business tailwinds remain strong. Marketing budgets and consumer activity continue to shift to digital at an unprecedented rate, and increasingly to performance marketing and media. Within those megatrends, QuinStreet performance marketplace solutions are ever more recognized by the biggest, most sophisticated, and most advanced clients as their most productive and consistent digital marketing channels at scale. We had a record number of financial services and home services clients spending over $1 million per month with us in the March quarter. We also continued to make precise industry consolidating acquisitions and investments to accelerate progress in our client verticals and in new product areas. We made 2 relatively small acquisitions and one strategic investment in an early-stage technology company last quarter. Turning to our outlook. As I indicated earlier, we expect the strong business momentum and results to continue. Revenue in the June quarter, our fiscal Q4, is expected to be between $140 and $145 million, reasonably consistent with last quarter's outperformance, and once again representing 39% year-over-year growth in revenue, excluding divested businesses at the midpoint of the range. We expect adjusted EBITDA to be between $12 and $13 million, consistent with the top line seasonality of the June quarter, and representing about 50% year-over-year growth at the midpoint of the range. With that, I'll turn the call over to Greg.

Thank you, Doug. Hello, and thanks to everyone for joining us today. Our strong business momentum and execution continues in Q3, where we delivered an all-time record revenue month in March and an all-time record revenue quarter in Q3, all while expanding adjusted EBITDA dollars and margin. Total revenue was $153.1 million and grew 39% year over year, excluding divested businesses. Adjusted EBITDA was $15.4 million, or 10% of revenue, and grew 65% year-over-year. Adjusted net income was $10.9 million, or 20 cents per share, and grew 57% year-over-year. Looking at revenue by client vertical, our financial services client vertical represented 76% of Q3 revenue and grew 18%, excluding divested businesses, to $116.3 million. Momentum in auto insurance, our largest business remained strong, where we delivered an all-time record revenue month in March and an all-time record revenue quarter. This reflects strong spending and growth from a broad range of major carrier clients and good progress on a number of growth initiatives in the quarter. Also in financial services, our credit driven client verticals continued to improve on a year-over-year basis in fiscal Q3. We expect these businesses to return to year-over-year revenue growth in the June quarter and to be good long-term growth drivers for QuinStreet. Our home services client vertical represented 23% of Q3 revenue and grew 204% year-over-year, to $35 million. Home services continues to outpace our expectations due to strong organic growth and to the continued success of the integration and capturing of synergies for the modernized acquisition. Other revenue, which consists primarily of performance marketing agency and technology services, was the remaining $1.7 million of Q3 revenue. Turning to the balance sheet. We closed the quarter with $103.2 million of cash and equivalents. During the quarter, we generated $13.1 million of operating cash flow, offset by $11 million of cash outflow for 2 acquisitions in a strategic investment. Normalized free cash flow for the quarter was $13.1 million, or 9% of revenue. Most of our adjusted EBITDA dropped to normalized free cash cash flow due to the low capital requirements of our business model. Our success in narrowing the footprint to our best performing and fastest growing opportunities is evident. Trailing 12-month revenue, excluding divested businesses, was $518.4 million, reflecting a 3-year compound annual growth rate of 28%. With that I'll turn the call over to the operator for Q&A.

[Operator Instructions]. And it looks like our first question comes from John Campbell with Stephens.

Hey guys, this is James Holly [ph] stepping in for John Campbell. So I kind of wanted to touch here on the insurance side. Can you talk a little bit more first about some of the growth you're seeing there, maybe like how much it grew or some specific numbers around that?

Yes. Auto insurance grew over 40% year-over-year in the quarter. Very strong momentum still. Obviously, if you look at some of the numbers that have come out from some of the other companies in this space, you can tell that we are gaining share and growing significantly faster than those that have reported so far. Not surprising, given the initiatives we have going on, our strength with client budgets and clients, and our expansion of the product set and the media set, and that's our biggest business vertical. So lots and lots of very good stuff going on in auto insurance and insurance broadly, a lot of momentum, a lot of strong growth, as I just indicated, and very good outlook.

Yes, it was really impressive to see what you guys did there. Like, competitor only growing about 5%, and then you guys are up around 40%, so it's really impressive to see. It's a...

Yes, 42%.

42%. Thank you.

42%. Yes.

Our next question comes from Jason Kreyer with Craig-Hallum.

Nice quarter. Doug, you mentioned you're in the early stages of this shift to online and to performance marketing. And over the course of the last year, obviously, it seems like we've seen an acceleration of that trend and certainly, you recognize that in your business. Just wondering, as you look forward, do you see any risk that the rapid moves we've seen in the last year could take a little bit of a breather this year and other media formats could maybe gain a little bit more market share relative to this online pivot.

I don't think at a fundamental way, Jason. Whether or not we can sustain 40%, 50%, 60% year over year growth rates at their scale or consistently, though I think we will see other rounds of that in the future, is doubtful. But we do not see a falling off of the cliff or a reversal in trends of clients wanting to spend more on digital. It's just not the indications we're getting from clients. So when I say that, I mean this is from indications that we're getting from the clients about their budgets going forward in the coming year, and the programs and initiatives that we're working on with them. So we do not see a meaningful reversal or any reversal at all in terms of budget going back offline from online. Whether or not, I think the growth rates will remain strong and we expect to good, strong double digits, whether or not we'll keep stringing together 40% to 50%, at this scale, indefinitely and consistently, that's unlikely. But we don't see a slowdown from good, strong double digits and we don't see a reversal. Again, clients are much, the big mega trend here continues to be, clients wanting and needing to spend more money in digital and being underexposed and under-leveraged against digital versus the opportunity.

Perfect. Appreciate that. Wanted to walk through puts and takes on the home services side. You've now lapped the beginning of pandemic headwinds. And so, thinking through the different services you offer, I would assume things like indoor remodeling starts to see easy comps while gutters and solar probably start to see difficult comps. So can you maybe frame what your expectations are as we go forward? Can home services continue to grow the way it has the last couple of quarters, or do you expect any acceleration or deceleration in that category?

We expect, again, continued strong, double-digit growth in home services. The triple digits is largely coming from the effects of the acquisition, which we will lap here in the next couple of months. But in terms of the organic momentum and strong double-digit growth at scale, we expect that to continue, really, for as far as the eye can see. I mean, we are maybe the most under-penetrated versus the town in home services, and have a very clear view and runway for continuing to expand and grow in that really big market. So I think we will have the lapping of the modernized acquisition, but I think we expect to plow right through that with good, strong, double-digit growth for literally as far as the eye can see. We are already talking about numbers in the next couple years that are pretty significantly higher than where we are today. And we have our eyes on a half a billion-dollar revenue business there in the next 3 to 5 years on an annual basis. So we think that's a big market. We think we can make it, we can build a really big business there. And even then, we will be relatively small and relatively under-penetrated when you look at the number of service providers that we will be representing and the percentage of their budgets that we'll be a representing for them online. So that is a massive market and a very, very big long-term opportunity. We have a lot of momentum there.

Okay. Last one for me, I'm going to take the bait from earlier in your prepared remarks. But you mentioned some tuck-in acquisitions in a strategic investment. Can you give any additional color on those?

Yes. The tuck-in acquisitions were both in insurance. A Couple of small opportunities that we think added meaningfully to our footprint as we continue to look to expand different lines of insurance. They were both not in auto insurance. And so those, we're excited about because as you know, often we can pick up bits and pieces that help us get our cycle moving faster and rent that. So those were smaller acquisitions that helped seed and accelerate the development of a couple of insurance verticals that were continuing to work hard and growing pretty rapidly. The strategic investment was in a technology company. There's a technology that's very important to a future product we have, that we're working on, that is part of our continued progress in deepening our integration into our client verticals. And this is a very big long-term program we're working on. It's similar in attractiveness, in our opinion, to QRP, but in a different vertical. This locks down that technology partnership, which is a key piece of that product. It gives us exclusive rights to that technology in that business area and is just part of that roadmap. But we're super excited about that business opportunity. We'll talk more about it as it gets a little bit further along, a little bit more ready for prime time. But think of it as a piece of the product roadmap, R&D for another deep integration technology and another one of our verticals. Another one of our very big verticals and a product profile that, from a size and profitability standpoint, looks a lot like QRP.

Our next question comes from Adam Klauber with William Blair.

A couple questions. I'm not sure if you said it. Generally, what has been the organic growth of the home service in the last quarter and 2 -- the last 2 quarters?

20-something percent, Adam. I don't have the number right in front of me. Greg, I think.

Yes, hey Adam. Last quarter, it was 21% organic growth.

Okay, great. Has that picked up? Or has that run -- it's been running the last quarter -- the last quarter or two.

That increased from last quarter. Last quarter, we were in the teens.

Okay.

In the December quarter. So December quarter was in the teens organically. This quarter was 21%.

Great. And then for the credit card and personal loan business, how much of a drag would you say that was this quarter on growth? Just again, roughly.

Yes. The overall credit driven businesses were down about 35% this quarter. And that's down from 42% in the December quarter, 60% in the September quarter, and 70% in the June quarter of last year.

Okay. So as I think you said -- are you looking for those to more flattened out next quarter, off of, I guess, pretty low numbers. Is that right?

We expect to return to. Pretty strong growth. There are, as you heard, the second derivatives have been getting better. And I think I said this last, last quarter up pretty significantly from the bottom, in those businesses. We're still a long way from the top, but we do expect all of those businesses, all of the financial services, client verticals, we expect to grow at pretty significant double-digit rates this quarter, year view of the current quarter, year-over-year.

Okay. So and those credit businesses from February to March, and to the extent, just April, have you seen sequential improvement in those businesses?

We have. Yes. Continuously sequential improvement that there's, again I think, and Greg, you would have the numbers, but I think we're up at least 80-100% off the bottom.

That's correct.

And that has been a consistent up and to the right trend, Adam. And we expect that trend and are seeing that trend continue. We're seeing the clients are back, budgets are back, underwriting filters are opened up. And really, the missing ingredient at this point, although it's already begun because, as you can hear, the business has started coming back, is really re-ramp of consumer activity. And in credit cards, that will be just general consumer spending activity, including for travel, which is a big part of credit cards, which is just, just beginning to come back. And in personal loans, is kind of getting beyond the stimulus and also getting people's spending on the credit cards so then they want to consolidate that credit card debt to a lower rate in a personal loan. So a lot of good trends. Were up a lot from the bottom. Those trends have been continuously improving from the bottom, which was a little over a year ago, and good outlook going forward in those businesses.

And then as far as QRP, how many agencies have signed up today versus maybe 6, 9 months ago, are beginning to use that?

I think we have 25 launched and sign now. I mean the answer is, it's up pretty significantly. I don't have the exact numbers in front of me but continues to be up and to the right. And the progress with everybody that has signed has also been good. And everybody that has launched has also been good. So if you look at every piece of the pipeline, we are very pleased, as are our carrier partners, with the progress and where this thing is going. We are as excited today about QRP, given that progress and the feedback, as we have ever been. Actually, more than we've ever been. And we think it is a bigger opportunity than we ever have.

Great. Yes, that's good growth. If I remember roughly a year ago, I mean, you were more in the single digits, so going from that to 25 is definitely a good sign. In this part, home service, not saying you're going to do it, but are there other acquisitions, not just tuck-ins, but could move the pile like the last one?

There are other opportunities to look at, and we will continue to do that, as we've proved with Modernize, and as we've proven in so many places. By the way, 25 signed agencies is the number. I just went back. I just went to the pipeline report. I think we have 31, 50-something in the later stages of the pipeline. And so big, big continued progress and opportunity, QRP. Where were we? I'm sorry. I've pulled myself back, yet again. What was your last question?

So the last question is that -- I know in the last year or so, you've signed up some big marketing partners helping the insurance vertical.

Yes.

Is there a point where some of those annualize, and will that have an impact as they begin to annualize, or is this just more of a continual flow? No, but I'm looking at are there 1 or 2 big, big partners that signed up that are really been pushing growth in the last two quarters that are probably still growing, but maybe 2 quarters down the road won't have as big an impact?

I don't think so. I don't think we've had any big, chunky new publishers or partners come online that we're going to be [indiscernible] the pursuit. It's a fairly smooth continuum. Greg, am I forgetting anything?

No. No, you're not. I mean, we're not overly concentrated in any single publisher, and so it's just a continuation and a continual thing.

Okay.

I think it's still the fact that no single publisher represents even 10% of our insurance volume. I think that's still correct.

Okay. Great.

I don't have the numbers in front of me, but it's [indiscernible]. Okay.

Our next question comes from Jim Goss with Barrington Research.

Within the home services category, I'm wondering if you talked about which specific verticals were most prominent in this quarter, and how that might have compared to a year ago when you were in the midst of the pandemic? Has there been a shift from outside to more inside type activity, or has one complemented the other and that helped you achieve greater growth?

It's a great question. I don't think there's anything that's particularly illuminating there, Jim. The bias right now amongst consumers is still the exterior work, and so that still has represented the strongest growth areas for us, but we have good growth areas in more interior-oriented areas, as well, particularly as we've kind of been coming out of the pandemic, and as clients have been coming back, and as some supply chains have gotten fixed. There were some supply chain effects for a while in some of the indoor products, including some of the, say, kitchen and bathroom-related remodel products. I'd say still a bias generally toward the exterior, as you would expect, but good activity across the board. We're seeing good growth, exterior and interior, and I would expect the interior stuff to just continue to come back at a pretty good clip as we get further and farther down the path of opening up people's homes and people getting vaccinated.

Okay. Just to make sure I'm reading this correctly, when you talked about the 21% organic growth, are you basically suggesting Modernize was bigger than your own home services last year in the third quarter, with which you've been comparing, and that will be a similar situation in the fourth quarter before you lap it and move on as more of a single comparable year-over-year company?

Make sure I understand the question, but yes, Modernize, we will lap, Greg, July 1st? Is that the right...

July 1. Yes.

July 1. Of course, in that 200-and-something percent year-over-year growth, you've got the Modernize volumes. If you were normalize out the Modernize volumes of the overall business, the combined business, including Modernize, Greg, keep me honest on the calculation here, was up 21% year-over-year.

That's right.

Okay. That's what I wanted to make sure, because 11.5, year ago quarter, Modernize would have been more than that number, to give you the base for where I was coming from.

That's right, Jim. That's where I do all we do from an organic growth calculation is we take the two stand-alone businesses from last year, we take our standalone home services number, adding the Modernize as standalone, and calculating the growth off of that to get to the organic growth. Yes, that's correct.

So that's the reasonable template for the fourth fiscal quarter, and then we get into normalcy, except for whatever [indiscernible].

Yes, once we lap. We're lapping it.

Yes. Okay.

And our outlook is for growth rates to be in that 20% plus range going forward on that business.

Last question. Are you thinking in terms of your future growth in home services to focus to a greater extent on filling in the several verticals that might be key to you right now? I think there were 5 or 6, I think, the last time you talked about this. Or is it to try to move into other verticals as a complementary basis for those 5 or 6 that are big right now?

It will be both. We have a lot of growth opportunities in the verticals that we're already in, 4 or 5 of which are the most mature and biggest right now. We have another 6 plus that are earlier stage, but decent size, and then we have probably another dozen or so that we're beginning our footprint in, and we're very early. The growth will be coming from a combination. We're organized this way of both continuing to develop the productivity and the effectiveness of the marketplaces and the service area, the trades, we call them, the trades or services we're in, while also continuing to add new trades and develop those new trades just from an earlier stage. One of the reasons the growth and the scale of home services is so attractive to us going forward is that both of those vectors of growth in each of these service areas is quite large. We've got a lot more we can do in the verticals we're in, even the most mature ones, some of which are, by the way, the ones that are growing fastest for us, and then we have a lot of new verticals. There's a lot more growth to come. We have more verticals we're going to add over time. We think we can be in anywhere from 50 to 100, depending on who you believe, and how they develop trades, that is. A trade might be roofing, siding, kitchen remodels, home security, something like that. That's what we would call a trade, or a sub-vertical. We expect both, and we're working on both. That's why as far as the eye can see, we see growth in home services.

Okay. One last one. To the extent that you're still very small, relative to the TAMs you outlined, are you attracting a lot of attention and therefore competition that you might have not have had before, as this [indiscernible]?

In home services or generally?

In home services, specifically.

Yes. Home services -- there is reasonable competition there already, but it is more consolidated already than, say, insurance. We believe we're a pretty strong #2 at this point, in the performance marketing or marketplace model to ANGI. There's quite a bit of white space between us and #3, and would be a pretty tough challenge for them to try to figure out how to catch us. These are companies that have been around a long time. Right now, it's as complicated and difficult a space to execute in as there is in performance marketing, partly because it is multiservice, multi-vertical. The good news for QuinStreet is we were built to be multiservice, multi-vertical. We've always been multiservice, multi-vertical. There's a lot of fragmentation of folks that are in specific verticals, and our folks that have begun to go multi-vertical but have kind of stalled because of the complexity of trying to do that. There certainly is competition, but I'd say that we are further along the consolidation curve in that market in most ways than we are in insurance, where there's still a relatively good amount of fragmentation and competition for the scale of that industry.

Our next question comes from Jacob Stephan with Lake Street Capital Markets.

Yes. I'm here on behalf of Eric Martinuzzi. Just a quick question about possible margin compression. As some of these governments want to kind of take advantage of other retailers or other large digital advertising companies making a considerable amount of revenue, are you guys worried about any margin compression, or you might be charged more per lead?

Not really, Jacob. We're not seeing that.

Okay.

We generally are price makers, not price takers. We're the ones that are driving the price up, because as our marketplace is getting more and more efficient and productive and yield more, then we're able to pay that much more for media, whether it be in a partnership or in buy-and-click, say, from a Google. As you know, as well, we control, to a large extent, our gross margin, because of where we choose to be on the media curve. So, no, not really. We're not seeing that. Two main effects you should continue to see on margin with us. One is operating leverage. As we grow revenue at that on average 30% incremental margin, which is the contribution after media costs and we drop, as we grow that at double digits, which we expect to be able to do for as far as we can see. And we dropped that onto a semi-fixed cost base underneath that, but then as a natural upward tug on, on Eva [indiscernible] and that's what you've been seeing lately. You saw again, last quarter, you see a little bit of a diminishment of that this quarter only because this is always a seasonally down quarter for us over the last quarter down a little bit. You lose a little bit of that operating leverage. And then it starts coming back up again, as we flow through the rest of the year into, again. The next time we hit Q3, which is our peak quarter of the year fiscal Q3, or your normal human calendar Q1. That's one effect is that operating leverage, which will be driving on margins. We expect to be able to continue to drive margins up, to operating leverage. As we continue to grow that top line at about that incremental contribution into a semi-fixed cost space below that line. The second is we are blending in at a higher rate now, much higher margin businesses than our traditional and historic core. That is going to, depending on how we decide to manage that either, do we spend it to grow faster? Or do we find that we can't do that in a way that we feel is maximally productive or efficient. And therefore, do we begin to grow that 30% number? Which is good. Which obviously drives everything else up until the ride at a higher rate. Those were things that we're working on in which there are trade-offs that we'll have to make because of course you want us to continue to invest in growth. But again, the -- it takes us take your people, for example. If Europe is anywhere near as big as we think it is, and that it seems to be that as blends into the business model, there's going to be a pretty dramatic impact up until the ride on March. We probably will be at that point, we'll probably have to expand margin beyond just the operating leverage effects. But those are the things that I expect to have the biggest impact on margin in the foreseeable future. I do not see any effects from the other things you mentioned, not mature.

No, that's great color. Just an overall macro question, kind of piggybacking off of Jason's, I believe. Are you guys concerned that your consumer spending my kind of shift away from being online is everything kind of starts to open back up and then there's live concerts. How do you think about that?

That's a great question. We don't. The client's don't either. What we've said for a while and what the clients have indicated to us is that this has been an acceleration of a long-term curve to spend more in digital and on digital marketing. And it's helping to catch up faster, they were forced to focus on it and, and by COVID because other channels diminished so rapidly. But none of them were talking about pulling budget back out of digital to put into other channels or our offline channels. We're not hearing that from anybody, no clients. So we don't expect that. What we do expect is that we're further up the curve and that we're going to keep running up that curve, that the slope of that curve, I think is unlikely to stay 40%, 50% or 200%. But we think it's going to be a strong, double digits up into the right version for the foreseeable future. A couple of things that are working in our favor going forward, that kind of a credit card use is only going to drive more credit card spending. Credit card use is going to drive more personal loans, lending. Those are businesses that have been completely were dead and COVID. And we also expect on the home services side, that a lot of the verticals that have been stalled by COVID a lot of the inside services that Jim talked about, or Jim referred to me, I was talking about are coming back. We're seeing a lot of homeowner activity, and what people do in homes get really expensive if they don't sell the home and move, which most are not doing is they invest in their home. And so we are seeing extraordinary demand and strength and home services, and we see no reason why that would do anything other than increase post-COVID. Again, driven largely by the fact that people now are now willing to have work and workers done in house.

Our last question comes from Chris Sakai with Singular Research.

Just had a question. Hi, Doug. I know you talked about it in the Q and A, a little. But entrance into new client verticals. I know, you said you've got a lot on your Doc already, wanted to see, get your idea about what it takes or how do you test it? As far as what you think will be a next great successful client vertical.

Sure. I was referring when I talked about that, I was referring to adding more service trade or trade verticals and home services. Where it's really a home services is broadly made up of a lot of independent trades and getting roofing, would be one siding, would be one home security, would be one kitchen remodels, bathroom remodels, those would each be trades or verticals within that. The way we look at that is that we look at a combination of client budget availability and where the biggest budgets are for marketing generally. That we think are teed up to move into digital. Along with the media availability, how much are consumers, how active are consumers, our researching looking for that trader service online. And then we begin working on a Ray and we score those verticals against a number of dimensions that we believe help indicate how attractive they are for our business model and for the clients and for the media. And then we began working on a range of them, largely starting with clients, and then we get progress, we focus. Ideally, we'll get, what we call it, an anchor tenant. A big national client, or at least a big, super-regional client that engages in that we get far enough along with that we begin to focus on that vertical. We get them signed up, we surround them with more clients. That gives us some, the media buying power to go and get the kind of media supply curve. The media whip going. As we get more media, we can go get more clients. And then we get more clients, we get more media. It's first of all, identifying 5 characteristics there is we think are our best opportunities and most attractive. We then work on those opportunities, have folks calling, doing research. And then as we start to make progress, you'll see us kind of focusing on the ones where we've made progress to get them developed and didn't growing. As capacity opens up in door, we get those working that we start. We go right back and start all over again. It's a pretty tried and true approach that we've used historically to get into any vertical area. Again, would be surprised you to know that anyway, we're looking at the combination of characteristics of clients and client budgets with media, digital media availability and structure. And then we just go with that. That's how we do it.

Okay. Any chance you re-enter into education?

In a performance marketplace format, very, very, very low chance. That market has a lot of challenges. The demise of the big, high-quality for-profits and I call them high quality because they largely were. The university of Phoenix is, and others, or the conversion of some of those high-quality ones into not-for-profits has really resulted in there being a lot less marketing budget and then there's from a megatrend standpoint, there's an overcapacity in higher education generally. Then there's an overcapacity in the marketing services or performance marketplace components of that industry, because of all the loss of the for-profit budgets. So I think that industry is going to be on attractive structurally for a very, very long time. And we have plenty to work on in our core financial services and home services verticals going forward. I don't expect that we would be looking at going back into education and certainly not in my career lifetime. Not as, again, not as a marketplace solution, I say it that way, because there are some clients we serve on the agency or the technology services side but we're not going. And those are very attractive businesses for us. Our core marketplace business, which is what, 99% of our business, we do not anticipate going back into education.

Ladies and gentlemen, that concludes the time we have for Q&A. Please note that a replay of this webinar can be found on the company's website @investordotquinstreet.com. This concludes today's presentation. You may disconnect your phone lines and thank you for joining us this afternoon.