Okay. I think the door closing is a good sign to start the presentation. Good morning. I'm Sam Hirsch. I work with Adam Klauber in the insurance research team. Today we have with us QuinStreet, a digital performance marketing company. They've had great growth over the past couple of years as insurers shifted back to growth mode, became much more competitive, spent significantly more on advertising. Long-term, we like QuinStreet. We think they're going to become more important to insurance distribution as they enable targeted customer acquisition. That's really going to power and support the shift from an agency distribution model to direct and digital channels. With that, hand it off to CEO Doug Valenti.
Thank you, Sam. Welcome. Nice to see everyone, and happy to be here to tell you guys about QuinStreet. First of all, I should say the safe harbor statement does apply. Who is QuinStreet? Well, first of all, we are the premier performance marketing company in financial services and home services. We see our job is to be the leading innovator in performance marketing, and we have been the pioneer of performance marketing for over 27 years now.
This is a market and a business model that we created and that we pioneered, and we continue to lead and to push forward. A little bit more about us. As I said, we've been around for 27 years now. Founded in 1999. We pioneered performance-based digital marketing. We deliver millions and millions of customer acquisition prospects to our clients monthly with precision, transparency, and measurability, which is key.
That's why we founded the company. We said, everything in digital is measurable. Let's create a platform that allows clients to measure and buy on that basis. As I said, founded in 1999, profitable since 2001, now doing over $1 billion in revenue annually and over $100 million in adjusted EBITDA. We run billions of dollars in marketing campaigns and have done so over the past 20+ years. We have thousands of media partners and campaigns live at any given time. We do very strong cash flow and have a very strong balance sheet.
I think we have net debt of $50 million now, and cash flow. I think our capital expenditures are about $10 million a year. Most of the EBITDA after taxes is free cash flow. A little bit more about our business model. This is an overview. I'll walk you through it. The most important point is in the top, making media efficient in the world's largest channel. Ours is a very fundamentally oriented business model, very microeconomically based. What we do for our clients is we allow them to buy media much more efficiently and at scale, and we are a big scale company that serves big scale clients.
The only thing that really matters is media cost and media efficiency. How do we make media efficient for our clients? Let me talk about it in two different ways. One, kind of a pragmatic view, and then one of the more theoretical view, which is the way we view ourselves. From a pragmatic standpoint, let's talk about auto insurance, we're the largest client in that vertical. If they bought all the traffic in digital associated with auto insurance shopping, they can convert maybe 40% of it with their footprint.
Their footprint of product, their footprint of coverage, their footprint of risk. That means that 60% of that would be wasted. 60% of their media buy would be wasted, and they're the most effective in the industry. Dramatically more from all the other clients. If they buy through QuinStreet, they only buy the segments they want. They only pay the price it's worth, and all the other clients do the same. We serve every major client in all of our verticals. The other clients buy the segments they want at the prices that it's worth to them, so that the efficiency for everyone is dramatically increased.
That's why most of our large clients buy everything we can deliver. They go uncapped with us. It's open to buy. There is a theoretical way to think about that, which is the underpinnings of our business model, the microeconomic underpinnings. We think of media and end market consumers as a supply curve that has certain value and certain volume. We see our job as thin slicing that supply curve and matching that thin slice to the client that it's most valuable to. As we do that, as you will recall from your consumer surplus sessions in microeconomics, we extract maximum efficiency or surplus from that curve.
That's what we see ourselves doing every day of our lives. We make money on that media efficiency, and we drive client demand through that media efficiency. We're a very fundamentally oriented business model, and that's why it has worked so well for so long, and it actually is accelerating at this point. A little bit more on the marketplace on this chart. On the left-hand side, you can see we deal with digital media wherever consumers are in market. We are indifferent. Lately, they are becoming in market on ChatGPT. We are there.
We're live in insurance. We're live in home service. We're live in banking there, and we're profitable there already. Obviously, we're in Google. We do SEM campaigns. We're one of the biggest SEM buyers in the world, and we have major partnerships with other folks who have either members or visitors or consumers that are in market. We help those consumers find the right match for them, someone that can solve their problem. We help our media partners make a lot more money on their media than they could without us because we have that aggregated demand model. On the right-hand side, clients.
We are in insurance, Home services, loans and credit solutions through our AmOne brand, credit cards, and banking. That is a footprint that can probably carry us for the next decade plus and drive very strong double-digit growth. I'll show you some numbers on that in a second. How do we compete? We compete with matching technologies that allow us to hyper-segment and hyper-match at the right price in the right way, at the right conversions on the consumers. That's our technology stack. We're the most technology-driven company in our industry and always have been and always will be, including AI, which I'll talk about again in a second.
We have thousands of integrations with clients and media that allow us to constantly refine that segmentation and that matching, including value. Our largest client, by the way, on our platform defines 10,000 unique segments of consumers, uniquely allocates their budget to each of those segments, uniquely prices each of those segments to lifetime value. That's what I mean when I say thin slicing the demand curve. It drives dramatic value for them and dramatic value for us. You can see it in their results, you can see it in our results. We have billions of dollars worth of data that we generate when we run these campaigns and learn what works and what doesn't work, and what permutation, where, and how.
That is maybe our most valuable competitive asset because not only do we have that data, and it's unique data that you only get by spending money to do it, but we've been applying AI to that data since 2008, which is when we first launched machine learning algorithms, was in 2008. We're constantly working to increase the efficiency of all of that, and it changes continuously. We have millions and millions of permutations of campaigns going on all the time that, of course, we can only manage with technology. Again, as I said, we are by far the most technology-oriented company in our industry and always have been.
I have more engineers than many of my competitors have employees. We serve the big brands in all of our verticals, which speaks to our strengths, speaks to our capabilities. Why do we serve the big brands? I'll talk about that in a second, but largely because they can count on us, and we can deliver, and you can plan around us, including performance, volume, and compliance. This is a list of our major brands in all of our verticals. Why do they choose us? As I said, proven results. We deliver value. We deliver predictably. We deliver to their metrics. We provide scale and reach. If there are consumers in digital, we will find them, we will integrate with them, and we will convert them for our clients.
That means that we manage thousands and thousands of points of contact that they can't manage individually. Third, we price purely on performance. A click that converts into a policy at a certain value, at a certain rate, of a certain lifetime value, an approval in a credit card issuer context that's worth a certain amount to that issuer, a client for a windows job of a certain size at a certain profitability for a certain installer in a certain market. We price that at either at the click level, at the lead level, at the call level, sometimes at the actual conversion level, whatever makes sense for us and the client to make their economics work and our media economics work and align incentives.
We manage end-to-end compliance. All of our verticals require compliance of some type. There are government regulatory requirements that we have to manage, brand compliance that we have to manage. Compliance to our major clients is an extraordinarily important factor, and we manage it better than anybody through technology and through staff. We also have big media partnerships. We have our own media campaigns that we run directly with folks like Google and now ChatGPT and others, but we also partner with others.
You can see on the left side here names of a number of the brands that we work with to help them convert their consumers because we can monetize that traffic better than they can, and we have the marketplace technologies that they don't have. On the right-hand side, you can see a number of our own brands that we use for mostly paid campaigns, but also for some membership sign-up campaigns and some campaigns that are pulled into answers for ChatGPT and answers for Google now, as they've rolled out their own version of AI Overviews.
By the way, as Google's rolled out AI Overviews over the past few years, it's now about 60% of queries have an AI Overview. Our volumes and revenue with Google have grown over 100%. It's been a boon for us. It's been a boon for them. HomeBuddy, listed on the right-hand side, was our most recent acquisition. We also acquired years ago Modernize and AmOne and have grown our footprint historically, largely through acquisition. We are a very natural acquirer in a very fragmented space, and that will continue to likely be a major component of our growth strategy.
Modernize was the footprint that allowed us to hyper-scale our home services business, and HomeBuddy is an add-on to that. We expect that there will likely be more over time. We're a very effective acquirer, and if you saw the metrics on HomeBuddy, you'd note that that's a big return acquisition for us. Modernize has been a runaway success. We have big competitive advantages, many of which I've alluded to, but let me just talk about a little of them again. A massive store of proprietary data.
You only get that data from running campaigns, and you only run those campaigns from spending money. Billions and billions of dollars worth of data on what works and what doesn't work, and what permutation. Millions and millions of permutations. Actually, probably billions of permutations. We have a proprietary data stack that allows us to manage all that data and manage these campaigns and optimize them. The core of that is our AI algorithms for optimization of the marketplace.
Many other components to that technologically, including, as I said, giving the clients integrations and their ability to define segmentation on our platform in a way that allows us to hyperscale and hyper manage that segmentation. We have thousands of proprietary workflows, of course, that allow us to stitch all that together. Many of those more and more managed with technology as we roll AI more broadly out across the business. We have thousands, number four, of proprietary integrations with clients and media, which are difficult to get and difficult to manage.
Once you have them, sticky, and continue to feed our data and allow us to feed our optimization. We have hundreds of engineers and technical product employees. As I said before, I have more engineers than some of my competitors have employees. Our strategy has always been to be the product and technology leader in performance marketing. People ask me, "Well, how do they know I do that?" I say, "Well, I have over $1 billion in revenue and over $100 million in EBITDA, and I don't have proprietary media to speak of, not branded, and I don't have a brand.
How else could I be doing it?" It's the only way I could be doing it. We will continue to be the leaders in technology and performance marketing. Of course, number six, millions of permutations of those campaigns going on at any given time to continuously refresh that data and continuously allow us to optimize. We believe, and I think we're proving we will be an AI winner. As I said before, we launched our first machine learning algorithm in 2008.
We're the industry leader in AI forever. Not only are we continuing to build on that, to continue to do hyper segmentation and optimization through our algorithms, but we're rolling AI out across the business in more ways now because we can. All of us can. Some examples of that from a performance and productivity standpoint, of course, even more powerful optimization algorithms. New and updated carrier rates in our QRP platform, which is the leading rating platform in insurance. We run comparison rates for agencies and for our clients.
When Progressive tells you they'll show you other carriers' rates, that's us. Auto Quote Explorer is us. We are a rating platform. We believe rates are a fundamentally important component of your long-term strategy in digital. We have the best rating platform in the industry. None of our competitors have a rating platform. We are applying AI to get more rates faster and keep those rates updated in a more efficient way. We generate more and better ads and creative and launch more of our campaigns faster and more effectively with AI.
We have AI-enabled natural language analytics from our data that our front online employees can use now, whereas they used to have to write queries. On the revenue side, we have seen dramatic increases in revenue from our proprietary campaigns on Google as they've rolled out AI Overviews. As I said, over the past year and a half or so, we've grown our revenue with Google and the AI Overviews format by over 100%, and that's to over $100 million in revenue. I'm not talking about from one to two. I'm talking about from big scale to big scale.
We're an early participant on OpenAI. We're live, as I said, in insurance and home services, in banking, and already making money. It is a big focus for them. It's a big focus for us. Recently, a large client asked us for an introduction to them because they want to work with folks like us because they know that's where the budget is, that's where the buying power is, that's where the consumer choice is, and they know that's a place that they need to go to get a return on their capital. We're improving conversions of consumers and for clients dramatically by applying AI as an interface across the business. A lot going on.
These are just examples. This is not an exhaustive list. There are dozens and dozens of places. It's one of the reasons why I think if you listen to a call a couple of calls ago, I noted that we had gone from $600 million in revenue to $1.2 billion in revenue and only added 28 employees. We expect to continue to see those kinds of efficiencies in the business going forward. We went from 900 employees to 928 employees when running from $600 million in revenue to about $1.2 billion in revenue.
These markets are big. Well over $100 billion in our existing footprint and growing. Performance marketing for the verticals we're in tend to be the last stop for clients. When they get to digital and they allocate budget to digital, eventually they get to performance. Once they're in performance, they start concentrating budget there. 80% of our growth historically and continuingly comes from existing clients giving us more budget.
Not from signing up more clients and cycling through clients, but from clients growing their budgets with us. Big markets, these two, this was insurance and home services, which together represent about 80% of our current revenue. There is no lack of headroom in this business model. Our own performance. By the way, on the left-hand side, you can see we're currently running about 35% home services, 65% financial services. Home service was growing more rapidly, then insurance really hyper-scaled for a while coming out of the post-COVID doldrums, now it's starting to level back out again.
We expect that this ratio will be what we will see next year. You can see in fiscal 2024, our fiscal year ends June 30th, we're in the end of our current fiscal year. Our fiscal 2027 is about to begin July 1st. You can see that we've grown quite nicely, and more importantly, we've grown EBITDA faster than we've grown revenue. We've been expanding margins at a pretty strong rate, and we expect to continue to do that.
When we guided for the current quarter, the quarter we are in, after having a record quarter last quarter where we grew EBITDA about twice as fast as we grew revenue, we said we're going to have another record quarter this quarter. We're going to grow revenue faster again, and once again, we'll grow EBITDA quite a bit faster than revenue. We expect to continue to be in margin expansion mode for quite some time to come. I'm going to leave it on that for a second because I think you want to think about our current valuation relative to that performance.
In terms of capital deployment, we do generate a lot of cash. Historically, we have prioritized making sure we're investing in growth initiatives first, accretive acquisitions second, and returning capital to shareholders third. We think long-term value is going to be created by growing and scaling the business first and foremost. I did say in the last call, and I'll say it again, that given the current stock dynamics, returning cash to shareholders is probably a higher priority than it has been historically. We have historically acquired about $100 million of our own stock in buybacks, and we have a current approved authorization of $40 million.
How are we going to keep growing? We have three big nine-figure businesses that we have a lot more momentum and opportunity to grow in insurance, home services, and what we call our credit-driven verticals, which are lending, credit cards, and banking. We are very early in all three. Even insurance is early. I would say that we might be 10%- 20% into the insurance opportunity at this point. Only one of our clients is really spending, on an allocated basis, what we think they should be spending in digital, and only one of our clients is really spending it in the hyper-segmented, value-oriented, lifetime value way that we think they should be spending it.
Most of the other clients are trying to catch that client because that client has done so well in that market. There's a lot of momentum. I think we have eight insurance clients now, the most we've ever had, spending more than $1 million a month with us, and all of them are continuing to push to find help, get us to help them figure out ways to grow more and spend more. Number two, continue to grow our digital and client wallet share. Most clients do not yet spend as much in digital as they should. If you look at where consumers are shopping, that is a long-term tailwind for us.
That shift to digital is still relatively early, shockingly, and there's a lot more to go. Continuing to work that wallet share is going to be a tailwind for us for many years to come. Number three, continue to expand our footprint in each of our verticals by adding new products, adding new media, adding new clients, and new segments of clients, which we're doing in all of our verticals. When I say insurance, we're in all forms of different insurance. We're adding new forms of insurance all the time.
Lately, in insurance, one of the fastest-growing components is selling leads and calls to agents, which is a market we really haven't been in, insurance at P&C, and that's half the market. Most of our insurance business is direct to the big carriers. We grew that, leads and calls to agents, by over 50% last year. We're going to grow it another 50% this year. We're already running at $100 million in that business. We will expand our footprint, capture more budget, more media, more yield. We just added AquaVida Media a couple of years ago and HomeBuddy recently.
The reason I mention those is they both expand both our product footprint and our media footprint. We need more media to continue to fuel the demand from our clients. While digital media is growing generally, we want even more. And HomeBuddy do is they allow us to get into the social, native, and display areas of media, which represent vast new sources of media supply for shopping consumers, and an area that we have not historically participated in. AquaVida has been a runaway success. You can track our filings and see how we continue to have to mark up their earn-out. HomeBuddy, similarly, based primarily in those channels, is looking like it will be a runaway success as well.
Number four, continue to develop industry-best technologies. We still have half of our employees in product and engineering roles, and we expect that we will continue to be the innovator, as I said earlier, and the leading innovator technologically in performance marketing. That's our strategy, and will continue to be our strategy. As a summary slide, in terms of key investment highlights, as I said, we're a digital performance marketplace platform. Hopefully, now you understand what that means. We have unique and strong competitive advantages on the data side, technology side, integration side, workflow side, client, and supply side.
We're addressing huge markets that are still early and continuing to expand. We have participating in number four, massive shift to online spending that is still relatively early. Once online to performance marketing, which tends to be the last stop and the big growth area once they get there, they being the clients. We're growing our revenue rapidly. We're expanding our margins more rapidly. We have strong cash flow and a strong balance sheet. Again, net debt of $50 million right now.
We're running right now, if you look at last quarter, running over about $120 million a year in adjusted EBITDA, and that was just last quarter. That doesn't take into consideration next year. I said on our last call that as we are in the early planning stages, as we look at fiscal 2027, which begins July 1st, we expect to once again grow at strong double-digit rates, and we expect to grow adjusted EBITDA significantly faster than revenue. We expect to continue to expand margins and cash flow. With that, I'll open it up, Sam, to questions.
Thank you, Doug. Yeah. I'll kick it off with a few questions. I guess the insurance side, it's not an industry that's known for moving fast.
Right.
It's a mature, regulated insurance. There's certain leaders like Progressive that was very early to adopt, to spend, very targeted to acquire customers efficiently. You look at everybody else, maybe they're way out here. It's been like that for a while. I guess my question is, what does it take to change that dynamic? The other players see what Progressive is doing. Why don't they just adopt, using you to really target and acquire customers cost-effectively? Is it education? Is it something that you can push on? Is it a pull dynamic? Where are we today, and where could we be? It's a big question.
Yeah. It's a great question. I guess for those that aren't in the room, how do we accelerate insurance? There's been one client that's been so far out in front. By the way, they went from, what, they were four or five in market share a decade ago to now number one in market share. By the way, P&C insurance is all about market share, right? You're in a regulated industry, which means that your price is regulated. It's a mature industry, your growth rate is relatively small, your potential growth. You're kind of growing with population.
How do you make money? You make money by gaining market share. That's why it's such a great client base for us because they're all fighting for market share, as they should be, as a way to generate value. Sam was saying, "Well, gosh, we've had this one carrier that's done so well." By the way, they are our biggest partner and have been our closest partner for many, many years. How do we get the others to participate? I think it's happening. I think the way we do it is there's twofold. One is we engage, we do engage very directly with these carriers, with sales teams and account management teams, I will go, other executives will go.
And there is a natural-- In that engagement, we try to bring to them the argument that I just made to you about why they can have so much better media buying and media efficiency. The good news is the largest client has grown so effectively that it's created a felt need for many of these folks to say, "How the heck do I catch up because I'm being left behind?" That is a powerful motivator. I think that for years, I feel like we had to evangelize, and we had to convince them it was important. I don't feel like we have to do that anymore, and that's great news. I think now it's a matter of helping them down the path faster. I think we're out of the phase of, "Hey, this is important.
You guys need to pay attention to it. You need to know this is really good for you." I think the vast majority of them get that, and now it's a matter of helping them on the path, and it is not an easy path. They have to be able to understand for themselves their segmentation, their lifetime value, their analytics, and many of them don't have that capability, but they're building it, and they're building it fast and digital.
They're seeing digital as more important. They're building the capabilities, and I think AI is going to accelerate that for them because they'll be able to get more done faster on that basis. I think it's an unstoppable trend now. It's just a matter of how fast we can do it, and as you've seen, it's come very quickly lately, and I think it's going to accelerate. That's what we've got.
Will we have the breakout here?
This is the breakout. They're going to do it in here at this one right here.
Oh, okay.
Yeah. Because it's the last meeting. Yeah.
I guess the property business sort of directly is under some pressure right now. How does that affect you?
You mean like the home insurance side or the P&C business generally?
Which one is it? I mean, it's both sides really for the competitive side, but the margin's going down with the home, I think is the hard part.
We haven't seen much of an effect. We've seen them ask us to help them be more aggressive and to find more opportunities. They've asked us to help them identify places they can be more efficient. It hasn't affected their demand with us, but it has affected, in some ways, how they engage with us. I'd say that they are engaging in some ways more aggressively than they have historically. They're a great client, and they're an incredibly capable company. They are asking us to make sure that we are helping them pay attention to opportunities in the market, and we're being very responsive to that.
I'd say that hasn't affected their spend with us in a negative way. It has affected their engagement with us in quite positive ways. I think that makes sense. I think that one of the things that they're finding is it's more competitive. They've been so far out front for so long that they're now asking themselves, and they probably have plans that we don't know about, to figure out how to counter that and how to regain the efficiencies that they had when they had so much of the market to themselves.
As I said, we now have eight clients spending over $1 million a month with us, the most in history, which means that there's now more competition for this media. I have no doubt that they'll respond to that pretty effectively in terms of just raising the bar yet again, but hasn't had a negative effect.
Just actually related question to the property pricing dynamic, the idea that insurers compete on two bases. They can increase the advertising, or they can cut their rates and say, "Hey, we can lower prices to attract customers. Yeah. Is that a risk for your growth if they choose the, "Let's cut rates?
Yeah.
Maybe they're not willing to pay as much for a click, or maybe it just those two levers, pull back on the ad side.
We've seen both. Yeah, we've seen both. Sam, I'm sure you know better than I do. They've been selectively cutting rates for a while now. A number of the clients have, including the leading client, because their loss ratios. The rates that they took at coming out of the post-COVID period got them in a position where they could do that and other things that they've done in their business to be more efficient. We've seen both. I don't think it materially impacts the long-term view of the business. They're still going to want to do marketing to gain market share when they have the rates that they feel like are appropriate competitively.
I think they're so stable now, it's just going to be a normal trade-off, just like it has been for most of the time we've been. Remember, we've been in insurance for 20 years, so there have been lots of ups and downs. In a more stable market, you have taking rate, cutting rate, getting in right with the market, and then growing market share alongside that. I think we're in that kind of a normalized shared period. We don't foresee any significant downside from it.
Yeah, Doug.