QUINSTREET, INC

Previous wording

Our financial services client vertical represented 74% and 76% of net revenue for the three and nine months ended March 31, 2025, and 67% and 62% of net revenue for the three and nine months ended March 31, 2024. Our home services client vertical represented 24% and 23% of net revenue for the three and nine months ended March 31, 2025, and 32% and 37% of net revenue for the three and nine months ended March 31, 2024. Other revenue, which primarily includes performance marketing agency and technology services, represented 2% and 1% of net revenue for the three and nine months ended March 31, 2025 and 1% of net revenue for both the three and nine months ended March 31, 2024. We generated the majority of our revenue from sales to clients in the United States.

Current wording

Our financial services client vertical represented 73% and 76% of net revenue for the three months ended September 30, 2025 and 2024. Our home services client vertical represented 27% and 24% of net revenue for the three months ended September 30, 2025 and 2024. We generated the majority of our revenue from sales to clients in the United States.

Previous wording

One client in our financial services client vertical accounted for 27% of net revenue for the three months ended March 31, 2025, and two clients accounted for 23% and 13% of net revenue for the nine months ended March 31, 2025. One client in our financial services client vertical accounted for 15% of net revenue for the three months ended March 31, 2024 and no clients accounted for more than 10% of revenue for the nine months ended March 31, 2024.

Current wording

One client in our financial services client vertical accounted for 21% of net revenue for the three months ended September 30, 2025, and two clients accounted for 20% and 14% of net revenue for the three months ended September 30, 2024.

Previous wording

In addition, within our financial services client vertical, we derive a significant amount of revenue from auto insurance carriers and our financial results depend on the performance of the auto insurance industry, which may be affected by macroeconomic conditions, extreme-weather related events and supply chain events existing or occurring from time to time. Specifically, starting in the first half of fiscal 2022, inflation, weather-related and supply chain events led to increases in insurance industry loss ratios, which resulted in our auto insurance industry clients decreasing their advertising spending, which had an adverse effect on our business. Beginning in calendar 2024, the auto insurance industry began to benefit from rate increases and product optimizations which allowed increased advertising spending which resulted in increases in our revenues and reduction to quarterly net losses. Beginning with the three and nine months ended March 31, 2025 the Company has reported a return to net income.

Current wording

In addition, within our financial services client vertical, we derive a significant amount of revenue from auto insurance carriers and our financial results depend on the performance of the auto insurance industry, which may be affected by macroeconomic conditions, extreme-weather related events and supply chain events existing or occurring from time to time. For example, starting in the first half of fiscal 2022, inflation, weather-related and supply chain events led to increases in insurance industry loss ratios, which resulted in our auto insurance industry clients decreasing their advertising spending, which had an adverse effect on our business.

Previous wording

All of our businesses also benefit from more spending by clients in digital media and performance marketing as digital marketing continues to evolve.

Current wording

All of our businesses benefit from more spending by clients in digital media and performance marketing as digital marketing continues to evolve.

Previous wording

Acquisitions have historically been, and continue to be, an important element of our overall corporate strategy and use of capital. We have completed several strategic acquisitions in the past, including the acquisitions of BestCompany and AquaVida completed in fiscal year 2024, the acquisitions of Modernize, Mayo Labs, LLC (“Mayo Labs”) and FC Ecosystem, LLC (“FCE”) completed in fiscal year 2021, and the acquisitions of AmOne Corp. (“AmOne”), CCM and MyBankTracker.com, LLC (“MBT”) completed in fiscal year 2019.

Current wording

Acquisitions have historically been, and continue to be, an important element of our overall corporate strategy and use of capital. We have completed several strategic acquisitions in the past, including the acquisitions of BestCompany and AquaVida completed in fiscal year 2024, the acquisitions of Modernize, Mayo Labs, LLC ("Mayo Labs") and FC Ecosystem ("FCE") completed in fiscal year 2021, and the acquisitions of AmOne Corp. ("AmOne"), CloudControlMedia, LLC ("CCM"), and MyBankTracker.com, LLC ("MBT") completed in fiscal year 2019.

Previous wording

An example of a regulatory change that may affect our business is the amendment of the Telephone Consumer Protection Act (the “TCPA”) that affects telemarketing and the consent requirements for certain types of telemarketing calls and automated messaging. The scope and interpretation of the laws that are or may be applicable to the automated delivery of voice and text messages are continuously evolving and developing. Our clients may make business decisions based on their own experiences with the TCPA regardless of our products and compliance practices. Those decisions may negatively affect our revenue and profitability.

Current wording

An example of a regulatory change that may affect our business is the amendment of the Telephone Consumer Protection Act ("TCPA") that affects telemarketing and the consent requirements for certain types of telemarketing calls and automated messaging. The scope and interpretation of the laws that are or may be applicable to the automated delivery of voice and text messages are continuously evolving and developing. Our clients may make business decisions based on their own experiences with the TCPA regardless of our products and compliance practices. Those decisions may negatively affect our revenue and profitability.

Previous wording

Our business generates revenue primarily from fees earned through the delivery of qualified inquiries such as clicks, leads, calls, applications, or customers. We deliver targeted and measurable results through a vertical focus, which includes our financial services client vertical and our home services client vertical. All remaining businesses that are not significant enough for separate reporting are included in other revenue.

Current wording

Our business generates revenue primarily from fees earned through the delivery of qualified inquiries such as clicks, leads, calls, applications, or customers. We deliver targeted and measurable results through a vertical focus, which includes our financial services client vertical and our home services client vertical.

Previous wording

Net revenue increased by $101.3 million, or 60%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Revenue from our financial services client vertical increased by $87.5 million, or 78%, primarily due to an increase in revenue in our insurance business, which increased by $89.5 million, or 144%, attributable to higher demand from a broad base of carrier clients. Revenue from our home services client vertical increased by $11.5 million, or 21%, primarily as a result of increased client budgets and successful execution of growth initiatives. Other revenue, which primarily includes performance marketing agency and technology services, contributed $4.7 million of revenue for the three months ended March 31, 2025, as compared to $2.4 million of revenue for the three months ended March 31, 2024.

Current wording

Net revenue increased by $6.6 million, or 2%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Revenue from our home services client vertical increased by $10.1 million, or 15%, primarily as a result of increased client budgets and successful execution of growth initiatives. Revenue from our financial services client vertical decreased by $3.4 million, or 2%, primarily due to a decrease in revenue in credit cards business of $7.2 million, attributable to the timing of limited time offers with our credit card customers, offset by an increase in revenue in our banking business of $3.5 million, attributable to higher demand from a broad base of clients.

Previous wording

Cost of revenue increased by $87.7 million, or 57%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by increased media and marketing costs of $85.8 million due to higher revenue volumes, increased personnel costs of $1.7 million mainly attributable to increased personnel costs including stock-based compensation expense. Gross profit margin, which is the difference between net revenue and cost of revenue as a percentage of net revenue, was 10% and 8% for the three months ended March 31, 2025, and 2024. The increase in gross profit margin was attributable to a decrease in personnel cost and depreciation as percentage of net revenue, offset by a higher mix of revenue from our financial services client vertical which had a higher media cost as a percentage of revenue.

Current wording

Cost of revenue increased by $8.1 million, or 3%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily driven by increased media and marketing costs of $8.6 million due to higher revenue volumes. Gross profit margin, which is the difference between net revenue and cost of revenue as a percentage of net revenue, was 9% and 10% for the three months ended September 30, 2025 and 2024. The decrease in gross profit margin was attributable to an increase in media and marketing fees as a percentage of net revenue.

Previous wording

Sales and marketing expenses increased by $1.5 million, or 42%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to increased personnel cost of $1.5 million due to higher average headcount, increased annual employee compensation expense and increased stock-based compensation expense.

Current wording

Sales and marketing expenses increased by $0.6 million, or 14%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to increased personnel cost due to higher average headcount and increased stock-based compensation expense.

Previous wording

General and administrative expenses increased by $17.3 million, or 75%, for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024, primarily due to an adjustment to the fair value of contingent consideration of $12.4 million in the first three quarters of fiscal year 2025, and increased stock-based compensation expense of $1.9 million as a result of an increase in the share price.

Current wording

General and administrative expenses decreased by $7.6 million, or 45%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to an adjustment to the fair value of contingent consideration of $6.3 million in the first quarter of fiscal year 2025 and decreased bad debt expense of $1.0 million.

Previous wording

The Company recorded a provision for income taxes of $0.5 million and $0.4 million for the three and nine months ended March 31, 2025, and a benefit from income taxes of $0.6 million and a provision for income taxes of $0.4 million f[SK2]or the three and nine months ended March 31, 2024.

Current wording

The Company recorded a provision for income taxes of $0.2 million and a benefit from income taxes of $49 thousand for the three months ended September 30, 2025 and 2024.

Previous wording

As of March 31, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $81.8 million and cash we expect to generate from future operations. Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible.

Current wording

As of September 30, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $101.3 million and cash we expect to generate from future operations. Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible.

Previous wording

In April 2022, our Board of Directors authorized a new stock repurchase program allowing the repurchase of up to $40.0 million worth of common stock. There were no repurchases made during the three and nine months ended March 31, 2025. As of March 31, 2025, approximately $16.8 million remained available for stock repurchases pursuant to the board authorization.

Current wording

In April 2022, our Board of Directors authorized a new stock repurchase program allowing the repurchase of up to $40.0 million worth of common stock. During the three months ended September 30, 2025, the Company repurchased and retired 462,440 shares of its common stock at an average price of $15.41 per share, at a total cost of $7.1 million (including a broker commission of $0.03 per share). Repurchases under this program took place in the open market and were made under a Rule 10b5-1 plan. The repurchased shares of common stock were recorded as treasury stock and were accounted for under the cost method. There were no repurchases made during the fiscal year 2025. As of September 30, 2025, approximately $9.7 million remained available for stock repurchases pursuant to the board authorization.

Previous wording

Cash flows from operating activities are primarily the result of our net income adjusted for depreciation and amortization, change in the fair value of contingent consideration, provision for sales returns and doubtful accounts receivable, stock-based compensation expense, non-cash lease expense, deferred income taxes, and changes in working capital components. Cash provided by operating activities was $55.1 million for the nine months ended March 31, 2025, compared to cash used in operating activities of $4.5 million for the nine months ended March 31, 2024.

Current wording

Cash flows from operating activities are primarily the result of our net income (loss) adjusted for depreciation and amortization, change in the fair value of contingent consideration, provision for sales returns and doubtful accounts receivable, stock-based compensation expense, non-cash lease expense, deferred income taxes, and changes in working capital components. Cash provided by operating activities was $19.6 million for the three months ended September 30, 2025, compared to cash used in operating activities of $13.7 million for the three months ended September 30, 2024.

Previous wording

Cash used in operating activities for the nine months ended March 31, 2024 consisted of a net loss of $29.2 million, offset by non-cash adjustments of $37.4 million, and a net decrease in cash from changes in working capital of $12.8 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $18.1 million, depreciation and amortization expense of $17.3 million, and impairment of investment of $2.0 million. The changes in working capital accounts were primarily attributable to an increase in accounts receivable of $32.6 million, offset by an increase in accrued liabilities of $14.9 million, a decrease in prepaid expenses and other assets of $2.5 million, and an increase in accounts payable of $2.3 million. The increases in accounts receivable and accrued liabilities and accounts payable were primarily due to higher revenue levels for the two months ended March 31, 2024 as compared to two months ended June 30, 2023, and timing of receipts and payments. The decrease in prepaid expenses and other assets was primarily due to higher amortization expense.

Current wording

Cash provided by operating activities for the three months ended September 30, 2025 primarily consisted of a net income of $4.5 million and non-cash adjustments of $15.1 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $9.2 million and depreciation and amortization expense of $5.8 million. The changes in working capital accounts were primarily attributable to an increase in accounts receivable of $14.8 million, offset by an increase in accrued liabilities and accounts payable of $14.5 million. The increases in accounts receivable, and accrued liabilities and accounts payable were primarily due to higher revenue for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, and timing of receipts and payments.

Previous wording

Cash provided by operating activities for the nine months ended March 31, 2025 consisted of a net income of $1.5 million and non-cash adjustments of $57.4 million offset by a net decrease in cash from changes in working capital of $3.8 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $24.5 million, depreciation and amortization expense of $18.6 million, change in the fair value of contingent consideration of $12.4 million, and provision for sales return and doubtful accounts receivable of $1.7 million. The changes in working capital accounts were primarily attributable to an increase in accounts receivable of $27.1 million and an increase in prepaid expenses and other assets of $2.5 million, offset by an increase in accrued liabilities of $18.1 million and an increase in accounts payable of $7.7 million. The increases in accounts receivable, and accrued liabilities and accounts payable were primarily due to higher revenue levels for the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024, and timing of receipts and payments.

Current wording

Cash used in operating activities for the three months ended September 30, 2024 consisted of a net loss of $1.4 million and a net decrease in cash from changes in working capital of $34.3 million, offset by non-cash adjustments of $22.0 million. The non-cash adjustments primarily consisted of stock-based compensation expense of $8.4 million, depreciation and amortization expense of $6.4 million, and provision for sales return and doubtful accounts receivable of $1.5 million. The changes in working capital accounts were primarily attributable to an increase in accounts receivable of $63.6 million and an increase in prepaid expenses and other assets of $0.8 million, offset by an increase in accrued liabilities of $17.6 million and an increase in accounts payable of $12.3 million. The increases in accounts receivable, and accrued liabilities and accounts payable were primarily due to higher revenue for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, and timing of receipts and payments.

Previous wording

Cash flows from investing activities generally include capital expenditures, capitalized internal software development costs, and acquisitions from time to time. Cash used in investing activities was $8.4 million for the nine months ended March 31, 2025, compared to $19.1 million for the nine months ended March 31, 2024.

Current wording

Cash flows from investing activities generally include capital expenditures, capitalized internal software development costs, and acquisitions from time to time. Cash used in investing activities was $4.1 million for the three months ended September 30, 2025, compared to $2.6 million for the three months ended September 30, 2024.

Previous wording

Cash used in investing activities in the nine months ended March 31, 2025 was primarily due to internal software development costs and capital expenditures of $6.9 million.

Current wording

Cash used in investing activities in the three months ended September 30, 2025 was primarily due to internal software development costs of $2.9 million and capital expenditures of $1.2 million.

Previous wording

Cash used in investing activities in the nine months ended March 31, 2024 was primarily due to internal software development costs of $8.9 million, $4.5 million cash paid at the closing of acquisitions completed in the third quarter of fiscal year 2024, capital expenditures of $4.2 million, and other investing activities of $1.5 million.

Current wording

Cash used in investing activities in the three months ended September 30, 2024 was primarily due to internal software development costs of $2.2 million and capital expenditures of $0.4 million.

Previous wording

Cash flows from financing activities generally include repurchases of common stock, payment of withholding taxes related to the release of restricted stock, net of share settlement, proceeds from the exercise of stock options and issuance of common stock under employee stock purchase plan, and post-closing payments related to business acquisitions. Cash used in financing activities was $15.4 million for the nine months ended March 31, 2025, compared to $10.5 million for the nine months ended March 31, 2024.

Current wording

Cash flows from financing activities generally include post-closing payments related to business acquisitions, payment of withholding taxes related to the release of restricted stock, net of share settlement, repurchases of common stock, proceeds from issuance of common stock under employee stock purchase plan and exercise of stock options. Cash used in financing activities was $15.3 million for the three months ended September 30, 2025, compared to $9.2 million for the three months ended September 30, 2024.

Previous wording

Cash used in financing activities in the nine months ended March 31, 2024 was due to payment of post-closing payments and contingent consideration related to acquisitions of $6.6 million, payment of withholding taxes related to the release of restricted stock, net of share settlement of $4.9 million, and repurchases of common stock of $2.3 million, offset by proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan of $3.3 million.

Current wording

Cash used in financing activities in the three months ended September 30, 2025 was due to repurchase of common stock of $6.7 million, payment of withholding taxes related to the release of restricted stock, net of share settlement of $5.3 million and payment of post-closing payments and contingent consideration related to acquisitions of $4.6 million, offset by proceeds from the issuance of common stock under the employee stock purchase plan of $1.3 million.

Previous wording

Cash used in financing activities in the nine months ended March 31, 2025 was due to payment of withholding taxes related to the release of restricted stock, net of share settlement of $11.3 million and payment of post-closing payments and contingent consideration related to acquisitions of $8.0 million, offset by proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan of $3.9 million.

Current wording

Cash used in financing activities in the three months ended September 30, 2024 was due to payment of withholding taxes related to the release of restricted stock, net of share settlement of $5.4 million and payment of post-closing payments and contingent consideration related to acquisitions of $5.1 million, offset by proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan of $1.4 million.