QUINSTREET, INC Q3 FY2026 earnings call

• Fiscal Q2 was a quarter of strong performance with revenue and adjusted EBITDA growth to new company records. • Initiatives include dozens of active projects applying AI across various business aspects. • AI is strengthening competitive advantages and driving better results. • In fiscal Q3, set records for quarterly revenue and adjusted EBITDA. • Major client verticals: Auto insurance had record revenue due to strong carrier demand; home services had record quarterly revenue with successful integration of HomeBuddy. • Applied AI to multiple areas like integrating carrier rates into rating platform, generating better ads, using natural language analytics, and improving software coding productivity. • Exciting growth in revenue from AI media, including participation in OpenAI's advertising platform in insurance and home services.

Financial Performance: Fiscal Q3 revenue was $346 million, up 28% year over year; adjusted EBITDA was $29.6 million, up 53% year over year. Revenue by client vertical: Financial services client vertical represented 67% of Q3 revenue, growing 16% year-over-year to $231.8 million (auto insurance momentum continued with a record quarter, growing 27% year-over-year); home services client vertical represented 33% of Q3 revenue, growing 63% year-over-year to $114.3 million, with revenue run rates approaching half a billion dollars annually.

• Fiscal Q4 revenue expected to be between $350 and $370 million, up sequentially to a new quarterly record, implying at least 34% growth year over year. • Fiscal Q4 adjusted EBITDA expected to be between $37 and $43 million, up sequentially to a new quarterly record, reflecting continued margin expansion and implying at least 67% growth year over year. • Early view of next fiscal year (begins July 1st) expects again strong double-digit revenue and adjusted EBITDA growth year over year.

Q: Doug, can you talk more about the AI actions taken in the quarter and relationships with Google and OpenAI?

A: Applying AI across the business system including media. Active in OpenAI's advertising platform, early participant, active in insurance and home services, using it to generate revenue and help pilot the platform.

Q: How did HomeBuddy perform in the first quarter and interaction with modernized assets?

A: Integration going extremely well, generated revenue from integrations, ahead of schedule in integrating organizations and media platform.

Q: Color on auto insurance side, size of carriers and trends?

A: Strength across auto insurance client base, broader base of clients grew significantly faster than largest clients, continued increased activity and broadening.

Q: Drivers of early fiscal year 27 outlook and biggest risks?

A: Double-digit revenue growth across board, margins growing faster than revenue in most cases, home services strong early and back half, insurance strong demand and new media capacity, credit-driven verticals good legs of growth, M1 Financial expected to resume aggressive growth next fiscal year. Risks not specified.

Q: Home services front, contractor demand, lead pricing, media availability?

A: Client demand extraordinarily strong, greater demand than capacity, good progress on media side with shared media between HomeBuddy and Modernize, good growth in new product areas, homeowning consumers quite healthy.

Q: Carrier adoption on AI side, direct activity from carriers?

A: Carriers buying through platform, not yet direct activity from what seen and heard, OpenAI expected to be big player, similar to Google opportunity.

Q: Outlook for 2027 on solid double-digit growth, pro forma for acquisitions?

A: Assumption with no new acquisitions, on current base business.

Q: Other financial services verticals impacted by rate environment or macro?

A: Mixed bag, M1 financial helps lower end consumers, credit cards serve prime and super prime, deposit side strong, some less activity by source of funds clients due to unclear rate path.

Q: Macro side for auto, elevated oil prices and discretionary budgets?

A: Continued strong demand from carriers, carrier loss ratios healthy, higher gas prices likely mean less driving and fewer incidents, more shopping activity for auto insurance.

Q: Mix shift over time and long-term marketing possibility?

A: Normalization of mix, auto insurance mix less dominant leading to natural lifting of media margin profile and EBITDA margin, three factors driving margin expansion: mix shift, continued expansion of auto insurance margins, natural operating leverage