UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|
☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2018
or
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-34628
QuinStreet, Inc.
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware |
|
77-0512121 |
|
(State or Other Jurisdiction of |
|
(I.R.S. Employer |
|
Incorporation or Organization) |
|
Identification No.) |
|
950 Tower Lane, 6th Floor |
|
|
Foster City, California |
94404 |
|
(Address of principal executive offices) |
(Zip Code) |
650-578-7700
Registrant’s telephone number, including area code
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
|
☐ |
|
|
|
Accelerated filer |
|
☑ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accelerated filer |
|
☐ |
|
|
|
Smaller reporting company |
|
☐ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company |
|
☐ |
|
|
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Number of shares of common stock outstanding as of January 31, 2019: 49,807,261
QUINSTREET, INC.
INDEX
2
QUINSTREET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
|
December 31, |
|
|
June 30, |
|
||
|
|
|
2018 |
|
|
2018 |
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
62,447 |
|
|
$ |
64,700 |
|
|
Accounts receivable, net |
|
|
63,122 |
|
|
|
68,492 |
|
|
Prepaid expenses and other assets |
|
|
4,927 |
|
|
|
4,432 |
|
|
Total current assets |
|
|
130,496 |
|
|
|
137,624 |
|
|
Property and equipment, net |
|
|
4,575 |
|
|
|
4,211 |
|
|
Goodwill |
|
|
67,429 |
|
|
|
62,283 |
|
|
Other intangible assets, net |
|
|
28,984 |
|
|
|
8,573 |
|
|
Deferred tax assets, noncurrent |
|
|
50,132 |
|
|
|
60 |
|
|
Other assets, noncurrent |
|
|
6,133 |
|
|
|
7,545 |
|
|
Total assets |
|
$ |
287,749 |
|
|
$ |
220,296 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
34,759 |
|
|
$ |
32,506 |
|
|
Accrued liabilities |
|
|
28,592 |
|
|
|
34,811 |
|
|
Deferred revenue |
|
|
892 |
|
|
|
715 |
|
|
Other liabilities |
|
|
3,903 |
|
|
|
— |
|
|
Total current liabilities |
|
|
68,146 |
|
|
|
68,032 |
|
|
Other liabilities, noncurrent |
|
|
8,397 |
|
|
|
3,938 |
|
|
Total liabilities |
|
|
76,543 |
|
|
|
71,970 |
|
|
Commitments and contingencies (See Note 10) |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Common stock: $0.001 par value; 100,000,000 shares authorized; 49,771,433 and 48,146,384 shares issued and outstanding at December 31, 2018 and June 30, 2018 |
|
|
50 |
|
|
|
48 |
|
|
Additional paid-in capital |
|
|
282,493 |
|
|
|
277,761 |
|
|
Accumulated other comprehensive loss |
|
|
(357 |
) |
|
|
(380 |
) |
|
Accumulated deficit |
|
|
(70,980 |
) |
|
|
(129,103 |
) |
|
Total stockholders' equity |
|
|
211,206 |
|
|
|
148,326 |
|
|
Total liabilities and stockholders' equity |
|
$ |
287,749 |
|
|
$ |
220,296 |
|
See notes to condensed consolidated financial statements
3
QUINSTREET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
December 31, |
|
|
December 31, |
|
||||||||||
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
|
Net revenue |
|
$ |
104,096 |
|
|
$ |
87,494 |
|
|
$ |
216,965 |
|
|
$ |
174,912 |
|
|
Cost of revenue (1) |
|
|
90,915 |
|
|
|
75,239 |
|
|
|
187,728 |
|
|
|
151,179 |
|
|
Gross profit |
|
|
13,181 |
|
|
|
12,255 |
|
|
|
29,237 |
|
|
|
23,733 |
|
|
Operating expenses: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development |
|
|
2,995 |
|
|
|
3,475 |
|
|
|
6,300 |
|
|
|
6,689 |
|
|
Sales and marketing |
|
|
2,283 |
|
|
|
2,597 |
|
|
|
4,327 |
|
|
|
5,044 |
|
|
General and administrative |
|
|
5,049 |
|
|
|
4,511 |
|
|
|
10,443 |
|
|
|
8,971 |
|
|
Operating income |
|
|
2,854 |
|
|
|
1,672 |
|
|
|
8,167 |
|
|
|
3,029 |
|
|
Interest income |
|
|
69 |
|
|
|
36 |
|
|
|
135 |
|
|
|
73 |
|
|
Interest expense |
|
|
(98 |
) |
|
|
— |
|
|
|
(98 |
) |
|
|
— |
|
|
Other income, net |
|
|
115 |
|
|
|
243 |
|
|
|
48 |
|
|
|
286 |
|
|
Income before taxes |
|
|
2,940 |
|
|
|
1,951 |
|
|
|
8,252 |
|
|
|
3,388 |
|
|
Benefit from (provision for) taxes |
|
|
49,886 |
|
|
|
(4 |
) |
|
|
49,871 |
|
|
|
4 |
|
|
Net income |
|
$ |
52,826 |
|
|
$ |
1,947 |
|
|
$ |
58,123 |
|
|
$ |
3,392 |
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.07 |
|
|
$ |
0.04 |
|
|
$ |
1.18 |
|
|
$ |
0.07 |
|
|
Diluted |
|
$ |
1.00 |
|
|
$ |
0.04 |
|
|
$ |
1.11 |
|
|
$ |
0.07 |
|
|
Weighted-average shares used in computing net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
49,490 |
|
|
|
45,974 |
|
|
|
49,077 |
|
|
|
45,776 |
|
|
Diluted |
|
|
52,682 |
|
|
|
49,614 |
|
|
|
52,562 |
|
|
|
48,172 |
|
|
(1) |
Cost of revenue and operating expenses include stock-based compensation expense as follows: |
|
Cost of revenue |
|
$ |
2,001 |
|
|
$ |
1,001 |
|
|
$ |
3,540 |
|
|
$ |
1,926 |
|
|
Product development |
|
|
427 |
|
|
|
484 |
|
|
|
828 |
|
|
|
960 |
|
|
Sales and marketing |
|
|
429 |
|
|
|
306 |
|
|
|
713 |
|
|
|
605 |
|
|
General and administrative |
|
|
1,022 |
|
|
|
772 |
|
|
|
1,909 |
|
|
|
1,509 |
|
See notes to condensed consolidated financial statements
4
QUINSTREET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
December 31, |
|
|
December 31, |
|
||||||||||
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
|
Net income |
|
$ |
52,826 |
|
|
$ |
1,947 |
|
|
$ |
58,123 |
|
|
$ |
3,392 |
|
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(55 |
) |
|
|
(26 |
) |
|
|
23 |
|
|
|
(17 |
) |
|
Total other comprehensive (loss) income |
|
|
(55 |
) |
|
|
(26 |
) |
|
|
23 |
|
|
|
(17 |
) |
|
Comprehensive income |
|
$ |
52,771 |
|
|
$ |
1,921 |
|
|
$ |
58,146 |
|
|
$ |
3,375 |
|
See notes to condensed consolidated financial statements
5
QUINSTREET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|||
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|
||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
|
||||||||
|
Balance at September 30, 2018 |
|
|
49,145,985 |
|
|
$ |
49 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
277,084 |
|
|
$ |
(302 |
) |
|
$ |
(123,806 |
) |
|
$ |
153,025 |
|
|
|
Issuance of common stock upon exercise of stock options |
|
|
397,306 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
3,071 |
|
|
|
— |
|
|
|
— |
|
|
|
3,072 |
|
|
|
Release of restricted stock, net of share settlement |
|
|
228,142 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,899 |
|
|
|
— |
|
|
|
— |
|
|
|
3,899 |
|
|
|
Withholding taxes related to release of restricted stock, net of share settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,561 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,561 |
) |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
52,826 |
|
|
|
52,826 |
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(55 |
) |
|
|
— |
|
|
|
(55 |
) |
|
|
Balance at December 31, 2018 |
|
|
49,771,433 |
|
|
$ |
50 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
282,493 |
|
|
$ |
(357 |
) |
|
$ |
(70,980 |
) |
|
$ |
211,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|||
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|
||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
|
||||||||
|
Balance at September 30, 2017 |
|
|
45,713,248 |
|
|
$ |
46 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
265,137 |
|
|
$ |
(454 |
) |
|
$ |
(143,588 |
) |
|
$ |
121,141 |
|
|
|
Issuance of common stock upon exercise of stock options |
|
|
181,175 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
898 |
|
|
|
— |
|
|
|
— |
|
|
|
898 |
|
|
|
Release of restricted stock, net of share settlement |
|
|
388,821 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Repurchases of common stock |
|
|
— |
|
|
|
— |
|
|
|
(62,364 |
) |
|
|
(523 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(523 |
) |
|
|
Retirement of treasury stock |
|
|
(62,364 |
) |
|
|
|
|
|
|
62,364 |
|
|
|
523 |
|
|
|
(523 |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,579 |
|
|
|
— |
|
|
|
— |
|
|
|
2,579 |
|
|
|
Withholding taxes related to release of restricted stock, net of share settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,109 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,109 |
) |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,947 |
|
|
|
1,947 |
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
— |
|
|
|
(26 |
) |
|
|
Balance at December 31, 2017 |
|
|
46,220,880 |
|
|
$ |
46 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
266,982 |
|
|
$ |
(480 |
) |
|
$ |
(141,641 |
) |
|
$ |
124,907 |
|
|
See notes to condensed consolidated financial statements
6
QUINSTREET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|||
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|
||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
|
||||||||
|
Balance at June 30, 2018 |
|
|
48,146,384 |
|
|
$ |
48 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
277,761 |
|
|
$ |
(380 |
) |
|
$ |
(129,103 |
) |
|
$ |
148,326 |
|
|
|
Issuance of common stock upon exercise of stock options |
|
|
701,386 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
5,123 |
|
|
|
— |
|
|
|
— |
|
|
|
5,124 |
|
|
|
Release of restricted stock, net of share settlement |
|
|
923,663 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,028 |
|
|
|
— |
|
|
|
— |
|
|
|
7,028 |
|
|
|
Withholding taxes related to release of restricted stock, net of share settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,418 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,418 |
) |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
58,123 |
|
|
|
58,123 |
|
|
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23 |
|
|
|
— |
|
|
|
23 |
|
|
|
Balance at December 31, 2018 |
|
|
49,771,433 |
|
|
$ |
50 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
282,493 |
|
|
$ |
(357 |
) |
|
$ |
(70,980 |
) |
|
$ |
211,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
Total |
|
|
|||
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|
||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
|
||||||||
|
Balance at June 30, 2017 |
|
|
45,435,836 |
|
|
$ |
45 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
263,533 |
|
|
$ |
(463 |
) |
|
$ |
(145,033 |
) |
|
$ |
118,082 |
|
|
|
Issuance of common stock upon exercise of stock options |
|
|
181,175 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
898 |
|
|
|
— |
|
|
|
— |
|
|
|
898 |
|
|
|
Release of restricted stock, net of share settlement |
|
|
697,210 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Repurchases of common stock |
|
|
— |
|
|
|
— |
|
|
|
(93,341 |
) |
|
|
(648 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(648 |
) |
|
|
Retirement of treasury stock |
|
|
(93,341 |
) |
|
|
— |
|
|
|
93,341 |
|
|
|
648 |
|
|
|
(648 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,035 |
|
|
|
— |
|
|
|
— |
|
|
|
5,035 |
|
|
|
Withholding taxes related to release of restricted stock, net of share settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,835 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,835 |
) |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,392 |
|
|
|
3,392 |
|
|
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
|
|
Balance at December 31, 2017 |
|
|
46,220,880 |
|
|
$ |
46 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
266,982 |
|
|
$ |
(480 |
) |
|
$ |
(141,641 |
||||||