QuinStreet, Inc. (NASDAQ:QNST) Q2 2023 Earnings Call Transcript

Operator: Our next question comes from Jim Goss with Barrington Research. Please state your question.

Jim Goss: Hi. Thank you. All right a couple of questions. The first one €“ one of the trends recently has been auto sales have been at low levels for both new and used cars over the past couple of years and the mix has varied. And I’m wondering if that mix element does have any impact on the demand for your insurance, sort of, the pricing of the policies. I imagine it would but wondering what you actually thought.

Doug Valenti: We — not meaningful. Demand doesn’t change the market in a meaningful way. And we’ve not heard that from carriers and we haven’t seen it in the budget allocations. Most insurance as you know is really bought for existing ownership. Not that there aren’t any policy sold for new ownership, but most of it is for existing ownership. And the softening is really incremental in those markets. So A it’s not a big part of the overall mix annually; and B, it’s relatively — while it’s meaningful it’s relatively incremental on what’s happening with new. And when I say you want new whether they be brand new or used and so it’s just not a meaningful impact. And we have not seen that and we have not heard that from our carrier partners.

Jim Goss: Okay. Doug also I wondered if the soft period recently has given you an opportunity to maybe gain some share of budgets in some of the key carriers. I know Progressive has always been a key one, but you’ve had getting a bigger share and certain of the other ones. Has that been a part finished before you.

Doug Valenti: It’s part of why we’ve been spending so aggressively. We wanted to put ourselves in a position to — as the market came back have gained and to be able to benefit from the most share as possible.

Jim Goss: Okay.

Doug Valenti: So we have — we do believe we have gained share on — from the clients in both the media side and the budget side.

Jim Goss: Okay. And one last one. I was wondering about the comment that was made earlier about tripling potentially the subverticals served in the consumer products area and consumer services. And I’m wondering how you would pace such growth in terms of the cost positioning that would be required to enter new markets relative to embedding yourself further in existing markets?

Doug Valenti: Yes. It’s in the Home Services trades that Greg was talking about and the trade would be like kitchen remodel would be a trade. We are in about a dozen verticals there now trades there now we think we can be in a lot more. We think we can triple the number we’re in. We pace that really based on how fast those we’re able to do that within a reasonable contribution margin range. We invest a lot in Home Services, because there is such a big opportunity but we can — it’s more limited by our execution capacity than it is financial capacity. So we haven’t found that it’s been a drag. And in fact, Home Services is one of our highest contributing businesses. When I say contribution, I mean, you got several layers of margin, right?