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QuinStreet Inc (NASDAQ:QNST)
Q3 2021 Earnings Call
May 5, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, Good day and welcome to the QuinStreet third quarter fiscal 2021 financial results conference call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Hayden Blair Investor Relations for QuinStreet. Please go ahead, sir.

Hayden Blair -- Investor Relations

Thank you, David. And thank you to everyone joining us as we report quake 3/3 quarter of fiscal year 2021 financial results. Joining me on the call today, our chief executive officer Doug Valenti, and Chief Financial Officer Greg Wong. Before we begin, I would like to remind you that the following discussion will contain forward looking statements. forward looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those protected by such statements, and they're not guarantees of future performance. factors that may cause results to differ from our forward looking statements are discussed in our recent SEC filings, including our most recent 8k filing made today and our 10k filing made on August 28 2020. forward looking statements are based on assumptions as of today, and the company undertakes no obligation to update these statements. Today we will be discussing both gap and non gap measures. A reconciliation of gap to non gap financial measures are included in today's earnings press release, which is available on our Investor Relations website at investor.QuinStreet.com.

With that, I will turn the call over to Doug Valenti. Please go ahead.

Douglas Valenti -- Chief Executive Officer

Thank you, Hayden. And thank you all for joining us today. Our business momentum and execution continue to be strong. We delivered excellent numbers once again last quarter. As a result, revenue excluding divested businesses 39% year over year, adjusted EBITDA grew 65% cash flow was strong, and we continue to maintain a strong balance sheet. We expected this momentum and good results to continue and the current quarter. Last quarters results were again driven by strength and insurance and Home Services. Our two largest businesses where we delivered record quarterly revenue in each. We estimate that those client verticals represent large addressable markets of 10s of billions of dollars, and that both are still early in their shifts to digital and performance marketing and in QuinStreet market share. We also continue to see improving trends in the credit driven client verticals of financial services. We expect those businesses to return to year over year growth in the current June quarter. Most important, we continue to make excellent progress on a wide range of growth initiatives across the business and to strengthen our products, technologies and operations for future growth, competitive advantage and efficiency. Those growth initiatives include q Rp. pipeline there continues to grow and client integrations testing and initial rollouts continue to progress. revenue is still early, but ramping and our long term expectations for Q RP remain excited.

In the meantime, our core business tailwinds remain strong marketing budgets and consumer activity continues to shift to digital at an unprecedented rate and increasingly, key performance marketing and media within those mega trends QuinStreet performance marketplace solutions are ever more recognized by the biggest, most sophisticated and most advanced clients as their most productive and consistent digital marketing channels at scale. We have a record number of financial services and Home Services clients sending over $1 million per month with us in the march quarter. We also continue to make precise industry consolidating acquisitions and investments to accelerate progress in our client verticals. And in new product areas. We've made two relatively small acquisitions, and one strategic investment and an early stage technology company last quarter. Turning to our outlook, as I indicated earlier, we expect the strong business momentum and results to continue revenue in the June quarter. Our fiscal q4 is expected to be between 140 and $145 million dollars, pleasingly consistent with last quarters outperformance and once again, representing 39% year over year growth in revenue excluding divested businesses at the midpoint of the range. We expect adjusted EBIT da to be between 12 and $13 million consistent with the top line seasonality of the June quarter, and representing about 50% year over year growth at the midpoint of the range.

With that, I'll turn the call over to Greg.

Gregory Wong -- Chief Financial Officer

Thank you, Doug. Hello, and thanks to everyone for joining us today. strong business momentum and execution continued in q3 where we delivered an all time record revenue month in March and an all time record revenue quarter in q3. All while expanding adjusted EBIT dot dollars and margin. Total Revenue was $153.1 million in gross 39% year over year excluding domestic businesses. adjusted EBITDA was $15.4 million for 10% of revenue, and grew 65% year over year. adjusted net income was $10.9 million or 20 cents per share, and grew 57% year over year. Looking at revenue by client vertical, or financial services going vertical, represented 76% of q3 revenue, and grew 18% excluding domestic businesses to $116.3 million. momentum and auto insurance. Our largest business remains strong, where we delivered an all time record revenue month in March and an all time record revenue quarter. This reflects strong spending and growth from a broad range of major carrier clients and good progress on a number of growth initiatives in the quarter. Also in financial services, our credit driven client verticals continue to improve on a year over year basis in fiscal q3. We expect these businesses to return to year over year revenue growth in the June quarter, and to be good long term growth drivers for QuinStreet.

Home Services client vertical represented 23% of d3 revenue, and grew 204% year over year to $35 million. Conservative continues to outpace our expectations due to strong organic growth and to the continued success of the integration and capturing of synergies for the modernized acquisition. Other revenue, which consists primarily of performance marketing agencies and Technology Services was the remaining $1.7 million in q3 revenue. Turned into the balance sheet. We closed the quarter with $103.2 million of cash and equivalents during the quarter, we generated $13.1 million in operating cash flow offset by $11 million of cash outflow for two acquisitions in a strategic investment. normalized free cash flow for the quarter was $13.1 million, or 9% revenue. Most of our adjusted Eva da drops in normalized free cash flow due to the low capital requirements of our business model. Our success in narrowing the footprint to our best performing and fastest growing opportunities is evident. Trailing 12 month revenue excluding the vested businesses was $518.4 million, reflecting a three year compound annual growth rate of 28%.

With that, I'll turn the call over to the operator for Q&A.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from John Campbell with Stephens. Mr. Campbell, your line is open, sir.

James Holley -- Stephens -- Analyst

Hey, guys, this is James Holley, stepping in for john Campbell.

Douglas Valenti -- Chief Executive Officer

Hey, James.

James Holley -- Stephens -- Analyst

So I kind of wanted to touch here on the the insurance side. Can you talk a little bit more first about some of the growth you're seeing there? Maybe like how much it grew are some specific numbers around that?

Douglas Valenti -- Chief Executive Officer

Yeah, auto insurance grew over 40%. year over year in the quarter, very strong momentum. Still. Obviously, if you look at some of the numbers that have come out of the other companies in the space, you can tell that we are gaining share and growing significantly faster than those have reported. So far not surprising, given the initiatives we have going on our strength of client budgets and clients, and our expansion of the product set in the media set in that, you know, our biggest business vertical. So, you know, lots and lots of very good stuff going on in auto insurance and insurance broadly. A lot of momentum, a lot of strong growth, as I just indicated, and very good outlook.

Gregory Wong -- Chief Financial Officer

Yeah, it was really impressive to see what you guys did there. We like competitor only grown about 5%. And then you guys are up around 40. So that's really impressive to see. It's like 48% 42 Thank you.

Douglas Valenti -- Chief Executive Officer

42%. Yeah.

James Holley -- Stephens -- Analyst

Thank you guys.

Douglas Valenti -- Chief Executive Officer

Thank you, James.

Operator

Thank you. Our next question comes from Jason Kreyer with Craig-Hallum.

Jason Kreyer -- Craig-Hallum -- Analyst

Thanks, gentlemen, you mentioned, you're in the early stages of this shift from no to online into performance marketing, you know, over the course of the last year, obviously, it seems like we've seen an acceleration of that trend. And certainly you recognize that in your business. Just wondering, as you look forward, do you see any risk that the rapid moves we've seen in the last year, could kind of take a little bit of a breather this year and other media formats could maybe, you know, gain a little bit more market share relative to this, this online pivot?

Douglas Valenti -- Chief Executive Officer

I don't think in a fundamental way, Jason, we, I whether or not we can sustain 4050 60% year over year growth rates at this scale for you know, consistently do I think we will see, we will see other rounds of that in the future is doubtful that we do not see a falling off of a cliff or a reversal in trends of clients wanting to spend more on digital, it's just not the indications are getting compliant. So I'm not when I say that, I mean, that's this is from indications that we're getting from the clients about their budgets going forward in the coming year. And the programs and initiatives that we're working on with them. So we do not see a meaningful reversal or any reversal at all, in terms of budget going back offline from online. Whether or not you know, I think the growth rates will remain strong and we expect good strong double digits. Whether or not we will, you know, we'll keep stringing together 40 50% at this scale, you know, indefinitely and consistently is is you know, that's unlikely, but we don't see a slowdown from double shot from good strong double digits and we don't see a reversal.

Again, clients are much the big mega trend here continues to be clients wanting and needing to spend more money in digital and being underexposed and underleveraged against digital versus the opportunity. Perfect, appreciate that. Wanted to walk through, puts and takes on the Home Services side. You've now lapped the beginning of pandemic headwinds. So thinking through the different services you offer, you know, I would assume things like indoor remodeling starts to see easy comps, while like gutters, and solar probably starts to see difficult time. So can you maybe frame what your expectations are, as we go forward, they can Home Services continue to grow the way it has the last couple of quarters, if you expect any acceleration or deceleration in that category. We expect again, continued strong double digit growth in Home Services, the triple digits is largely coming from the the effects of the acquisition, which we were last here in the next couple of months. But in terms of the organic momentum, and strong double digit growth at scale, we expect that to continue, really for as far as the eye can see on the we are maybe the most under penetrated, versus the TAM, in Home Services, and have a very clear view and runway for continuing to expand and grow in that. That really big market. So I think we will have the lapping of the modernized acquisition.

But I think we expect to plow right through that with good strong double digit growth for literally, as far as you can see, we are already talking about numbers in the next couple of years that are that are pretty significant hard where we are today. And we have we have our eyes on, you know, a half a billion dollar revenue business there in the next three to five years on an annual basis. So we think that's a big market, we think we can make it we can build a really big business and even then, we will be relatively small and relatively under penetrated when you look at the number of service providers that we will be representing and the percentage of their budgets that will be but there will be representing for them online. So that is a massive market and a very, very big long term opportunity. We have a lot of momentum there.

Jason Kreyer -- Craig-Hallum -- Analyst

Okay, last one for me, I'm going to take the bait from from earlier in your prepared remarks. But you mentioned some tuck in acquisitions and strategic investment. Can you give any additional color on those?

Douglas Valenti -- Chief Executive Officer

Yeah, the tuck in acquisitions were both in insurance, a couple of small opportunities that we think added meaningfully to our our footprint, as we continue to look to expand different lines of insurance. They were both in non an auto insurance. And so those we're excited about because as you know, we often we can pick up bits and pieces that help us get our cycle moving faster, and ramp that so those were those were small acquisitions that have seed and accelerate the development of a couple of insurance verticals that that we're continuing to work hard and growing pretty rapidly. The the strategic investment was in a technology company, that there's a technology that's very important to a future product we have that we're working on. That is part of our continued progress in deepening our integration into our client verticals. And this is a very big long term program. We're working on that that's it's similar in attractiveness in our opinion, to QRP but in a in a different vertical. This locks down that technology Partnership, which is a key piece of that product. It gives us exclusive rights to that, that technology in that business area. And is a is just part of that. That roadmap. So we're super excited about that business opportunity. We'll talk more about it as it gets a little bit further long, a little bit more ready for primetime. But think of it as, as a piece of the product roadmap for R&D for another deep integration technology and another one of our verticals. Another one of our very big verticals, and a product profile that that from a size and profitability standpoint looks a lot like QRP.

Jason Kreyer -- Craig-Hallum -- Analyst

Perfect, thank you. Appreciate the time.

Douglas Valenti -- Chief Executive Officer

Thank you, Jason.

Operator

Thank you. Our next question comes from Adam klauber with William Blair.

Adam klauber -- William Blair -- Analyst

Hi, thanks. A couple of public questions. I'm not sure if he said it. So what generally what has been the organic growth of the home service in the last quarter into the last two quarters? 20 something percent Adam. I don't have the numbers. Right from Greg, I think. Yeah, last quarter. It was 21% organic growth. Okay. Okay, great. Is that picked up? Or is that run?

Gregory Wong -- Chief Financial Officer

What's been running the last quarter of the last quarter to that that increase from last quarter? Last quarter? We're in the teens. Okay, that ended November or December quarter was in the teens organically this quarter was 21%. Great. And then for the the credit card and personal loan business, how much of a drag? Would you say that was this quarter I growth just begun roughly? Yeah, the the overall credit driven businesses were down about 35%. This quarter. And that's, that's down from 42% in the December quarter 60% in the September quarter, and 70% in the June quarter of last year. Okay. So as I think you said your Are you two more flattened out next quarter off of you is pretty, pretty low numbers.

Adam klauber -- William Blair -- Analyst

That right.

Gregory Wong -- Chief Financial Officer

We expected to return to growth, pretty strong growth. There are, as you heard, the second derivative has been getting better. And we are I think I said this last last quarter, up pretty significantly from the bottom. In those businesses, we're still a long way from the top. But we do expect those businesses to actually all of those businesses, all of the financial services versus client verticals, we expect to grow at pretty significant double digit rates this quarter, year over year, the current quarter year earlier.

Adam klauber -- William Blair -- Analyst

Okay. So in those credit businesses from February to March, and to the extent, you know, just April, you know, have you seen sequential improvement in those businesses?

Gregory Wong -- Chief Financial Officer

We have, yes. Continuously sequential improvement, that is again, I think, and Greg, you would have the numbers, but I think we're up at least 80 to 100% off the bottom. And right has been a consistent up into the right trend data. And we expect that trend, and we're seeing that trend continue, we're seeing the client, the clients are back, budgets are back, underwriting filters are opened up. And really the the missing ingredient at this point, although it's already begun, because the as you can hear the businesses already started coming back is really, really ramped up consumer activity in credit cards, that will that will be just general consumer spending activity, including for travel, which is a big part of credit cards, which is just just beginning to come back. And in personal loans, it's kind of getting beyond beyond the stimulus. And also getting people spending on the credit cards. So then they want to consolidate that credit card debt to a to a lower rate and a personal loan. So a lot of good trends are still be we're up a lot from the bottom. And those trends have been continuously improving from the bottom, which was a little over a year ago. And good outlook going forward and there's businesses.

Adam klauber -- William Blair -- Analyst

Okay, thanks. And then as far as qR p, how many agents have their agencies, as signed up today versus maybe six, nine months ago, are beginning to use it? I think we have 25 launched and sign now in that day?

Douglas Valenti -- Chief Executive Officer

The answer is it's up to you know, pretty significantly. I don't have the exact numbers in front of me, but continues to be up and to the right and progress. And everybody that has signed has also been good. And everybody that has launched has also been good. So if you look at every piece of the pipeline, we are very pleased as our period partners with the progress that and no and where this thing is going we are as excited today about pure RP given that progress and the feedback as we have ever been, actually more than we've ever been. And we think it is a bigger opportunity than we ever had.

Adam klauber -- William Blair -- Analyst

Great, yeah, that's good, gross, fair number. roughly a year ago, I mean, you were more in the single digits. So going from that to 25 is is definitely a good sign. And then as far as home service, you know not saying you're going to do it but it you know, is there you know other other acquisitions that could not just tuck in but could move the pile like the last one. There are other opportunities to look at and we will continue to do that we reproved with modernize that we've proven in so many places, probably 25 signed agencies is the number just went back. I just want the pipeline report.

Douglas Valenti -- Chief Executive Officer

So I think we have 3150 something in the in the later stages of the pipeline. And so, OK, big, big, continued progress and opportunity to repeat the word. I'm sorry, I've got, I've caught myself. The last question is that, you know, I know in the last year or so, you know, you've signed up some big marketing partners helping the insurance vertical, is at a point where some of those annualize and will that, you know, have an impact as they begin to annualize, or is this just more of a continuous world? No, I'm looking at are there one or two big, big partners that signed up that are, you know, really been pushing growth in the last few quarters that are probably still grown, but maybe two quarters down the road. We won't have as big an impact I don't think so. I think we've had the big, chunky new publishers or partners come online, that we're going to be lamping the facility, so fairly continue to fairly smooth continuum. Greg, man, am I forgetting anything?

Gregory Wong -- Chief Financial Officer

No, no, you're not. I mean, we're not overly concentrated in any single publishers. And so it's just a continuation and they continually think no single progress still, that I think is still the fact that no single publisher represents even 10% of our of our insurance volume. I think that's still correct. Okay, I don't think so for me, but it's been.

Adam klauber -- William Blair -- Analyst

Okay. So yeah, thanks for the answers, guys. Thank you.

Douglas Valenti -- Chief Executive Officer

You bet.

Operator

Thank you. Our next question comes from Jim Goss with a Barrington Research.

Jim Goss -- Barrington Research -- Analyst

Thanks. Listen, in the Home Services category. I'm wondering if there if you talked about which specific verticals were most prominent in this quarter? And how that might have compared a year ago, when you were in the midst of a pandemic? Has there been a shift from outside to more inside type activity? Or, you know, has one complement of the other? And that helps you achieve greater growth?

Douglas Valenti -- Chief Executive Officer

That's a great question. I don't think there's anything anything that's particularly illuminating there, Jim, we're still the bias right now, most consumers are still the exterior work. And so that still has has represented the strongest growth areas for us. But we have good growth areas and more interior oriented areas as well, particularly as the, as we've been coming out of the pandemic. And as clients have been coming back into some supply chains have gotten fixers of supply chain effects for a while. And some of the indoor products, including some of their say, kitchen and bathroom related remodel products. So I'd say still a bias generally toward the exteriors you would expect, but good activity across the board. And we're seeing good growth, exterior and interior and, and I would expect the interior stuff to just continue to to come back at a pretty good clip as we get, you know, farther and farther down the path of opening up the, you know, opening up people's homes and people getting vaccinated.

Jim Goss -- Barrington Research -- Analyst

Okay, and just to make sure I'm reading this correctly, when you talked about the 21% organic growth. Right. Are you basically suggesting modernized was bigger than your own home services last year in the third quarter of the switchover? and comparing there will be a similar situation in the fourth quarter before you let that and move on as more of a single comparable year of your company. Make sure I understand the question, but you have modernized we will lap Greg July 1 to july first. Is that?

Douglas Valenti -- Chief Executive Officer

Yes. July 1, and of course the July. So in that 270% year over year growth, you've got the modernized volumes. If you were to take the if you are normalized out the modernized volumes, the overall business to combine business, including modernize. Greg, keep me on a Sunday on the calculation here was that was a 21% year over year.

Gregory Wong -- Chief Financial Officer

That's right. Okay, that's because 11.5 here about quarter modernized would have been more than that number to give you the day separately. That's right. All we do from an organic growth calculation is we take the two stand-alone businesses on the from last year we take our stand-alone Home Services number adding the modernises stand-alone and calculating the growth off of that to get to the organic growth. So yes, that's correct. So that's the reasonable template for the fourth quarter. And then we get into normalcy. Except, we like.

Jim Goss -- Barrington Research -- Analyst

Okay, And now our outlook is for growth rates to be in that, you know, 20% plus range going forward on that business. And our last question, Are you thinking in terms of your future growth in Home Services to focus to a greater extent and filling in the several verticals, that may be key to you right now?

Douglas Valenti -- Chief Executive Officer

I think there are five or six, I think the last time we talked about this, where are you is it to try to move into other verticals, as a complementary basis for those five or six that are big right now. There'll be both, we have a lot of growth opportunities in the in the verticals that we're already in four or five of which are the most mature and biggest right now, we have another six plus that are, you know, earlier stage, but decent size, and then we have called another dozen or so that are we that we're beginning our footprint, and we're very early. So the growth will be coming from a combination. And we're organized this way of both continuing to develop the productivity and the effectiveness of marketplaces and the service area that trades we call them the trades or services we're in, while also continuing to add new trades and develop those new trades, just from an earlier stage. So it's one of the reasons, the growth and the scale Home Services is so attracted to us going forward is that we have the both of those vectors of growth in each of these service areas is quite large. So we have a river to market where we got a lot more we can do in new verticals, we're in even the most mature ones, where some of which are By the way, the ones that are growing fastest for us. And then we have a lot of new verticals. So a lot more growth to come we have more workers, we're going to add over time, we think we can be in in anywhere from 50 to 100 behead between the depending on who you believe in, and and how they develop trades. That is a trade might be roofing, siding, kitchen remodels, Home Security, something like that. So those are those are what we would call a trade or a sub vertical. So we expect both, and we're working on both. And that's why we as far as the eye can see we see growth in Home Services.

Jim Goss -- Barrington Research -- Analyst

And one last one, to the extent that you're still very small, given relative the tans, your outline, are you attracting a lot of attention? And therefore competition that you might have never had before? Is this and Home Services are generally it in Home Services Specifically?

Douglas Valenti -- Chief Executive Officer

Yeah, Home Services. There is there's reasonable competition there already, but it is more consolidated already then, say insurance. We, you know, we believe we're pretty strong number two at this point in this in the performance marketing a marketplace model to Angie. And pretty. There's quite a bit of whitespace between us and in number three, and would be a pretty tough challenge for them to try to figure out how to catch us. These are companies that been around a long time. So right now it's a it's a it's as complicated and difficult to space to execute in as there is in performance marketing, partly because it is multi service multi vertical. The good news for QuinStreet is we were built to be multi service multi vertical, we've always been multi service multi vertical. And so there's a lot of fragmentation of folks that are in specific verticals, and are folks that have been done to go multi vertical, but have kind of stalled because the complexity of trying to do that. And so it's there certainly is competition, that that I'd say that we are further along the consolidation curve in that market in in most ways that we are insurance where there's still, you know, relatively good amount of fragmentation and competition for the scale of that industry.

Jim Goss -- Barrington Research -- Analyst

All right, thanks. Okay. Thank you.

Douglas Valenti -- Chief Executive Officer

Thank you, Jim.

Operator

Thank you. Our next question comes from Jacob Stefan with Lake Street capital markets.

Jacob Stefan -- Lake Street capital markets -- Analyst

Yeah, hi, thanks for taking my question. I'm here on behalf of Eric Martin newsy. So quick question about possible margin compression. So as some of these governments want to kind of take advantage of other retailers or other large advertising digital advertising companies making considerable amount of revenue. Are you guys worried about any margin compression where you might be charged more? For lean? Really.

Douglas Valenti -- Chief Executive Officer

Jacob, we're not saying that. We generally are price makers, not price takers. So we're the ones that are driving the price up. As our marketplaces get more and more efficient and productive, and yield more than we're able to pay that much more for media, whether it be in a partnership, or and buy a click, say, from a Google. And as you know, as well, we, we control to a large extent, our our gross margin, because of the where we choose to be on the media curve. And so no, not really, we're not saying that the main effect that you have, you should two main effects you should continue to see on margin with us. One is operating leverage, as we grow revenue, at that, you know, on average 30% incremental margin, which is the the the the contribution after media costs, and we drop it as we grow that double digit, which we expect to be able to do for as far as we can see. And we've dropped that on to a semi fixed cost base underneath that, then as a natural upward tug on on, even though and that's what you've been seeing lately, you saw again, last quarter, you see a little bit of a diminishment of that this quarter only because this is always a seasonally down quarter for us over last quarter down a little bit. See there's a little bit of that operating leverage. And then it starts coming back up again, as we flow through the rest of the year into again, our next the next time we have q3 which is our is our peak quarter of the year fiscal q3 or your normal human calendar Q1. So we're there. So that's one effect is that operating leverage, which will be driving on margins, and we expect to be able to continue to travel margins up through operating leverage, as we continue to grow that top line at about that incremental contribution into a semi fixed cost space below that line. The second is we are blending in at a higher rate now much higher margin businesses than our traditional and historic core.

Jacob Stefan -- Lake Street capital markets -- Analyst

And so that is going to depending on how we decide to manage that either do we spend it to grow faster? Or do we find that we can't do that in a way that we feel is maximally productive or or efficient? And therefore do we begin to grow that 30% number, which is good, which obviously, you know, drives everything else up into the right at a higher higher rate?

Douglas Valenti -- Chief Executive Officer

Those are things that we're working on. And there are trade offs that we'll have to make, because of course, you want us to continue to invest in growth. But you know, again, they it takes us take GRP. For example, if Europe is anywhere near as big as we think it isn't, that it seems to be that as that blends into the business model, there's going to be a pretty dramatic impact up into the right hand margin, we probably will be at that point, we'll probably have to expand margin beyond just the operating leverage effects. So but but those are the things that I expect to have the biggest impact on margin in the foreseeable future do not see any effects from the other things you mentioned.

Jacob Stefan -- Lake Street capital markets -- Analyst

It's very nice color. Thank you. This is an overall macro question. Kind of piggybacking off of Jason's I believe, are you guys concerned that you're welcome consumer spending my kind of shift away from being online is, you know, everything kind of starts open back up. And there's live concerts? And how do you think about that?

Douglas Valenti -- Chief Executive Officer

Yeah, that's a great question. We don't, the clients don't either. What we've said for a while, and what the clients have indicated to us is that this has been an acceleration of the long term curve to spend more in digital and on digital marketing. And it's helping them to catch up faster they were they were forced to focus on it and and by COVID, because other channels diminish so rapidly, but none of them are talking about pulling budget back out of digital to put into other channels or our offline channels. We're not hearing that from anybody, no clients. So we don't expect that. What we do expect is that were further up the curve, and that we're going to keep running up that curve, that this slope of that curve, I think will will you know is unlikely to stay 40 50% For 200%, but we think it's going to be strong double digits up into the right version for the foreseeable future. A couple of things that are working in our favor going forward, that kind of credit card use is only going to drive more credit card spending, credit card usage, enjoy more personal loans, lending, those businesses have been completely were dead, and COVID. And we also expect on Home Services side, that a lot of the verticals that have been stalled by COVID, a lot of the inside services that Jim talked about, or Jim referred to, in the US talking about are coming back. And we're seeing a lot of homeowner activity. And what people do and homes get really expensive. If they don't sell the home and move, which most are not doing is they invest in their home. And so we are seeing extraordinary demand and strength and Home Services. And we see no reason why that would do anything other than increase, post COVID. Again, driven largely by the fact that people now are now willing to have work and workers done in house.

Jacob Stefan -- Lake Street capital markets -- Analyst

That's great. Thank you. Congrats on the quarter, by the way.

Douglas Valenti -- Chief Executive Officer

Thank you, Jacob.

Operator

Thank you. Our last question comes from Chris Sakai with Singular Research.

Chris Sakai -- Singular Research -- Analyst

Hi, good afternoon. Chris just had a question on dog insurances. I know you mentioned you talked about it in the q&a, a little but insurance into new client verticals. I know you said you've got a lot on your docket already wanted to see, get your idea about, you know what, what it takes? Or how do you test it? As far as what what you think would be the next great successful client vertical?

Douglas Valenti -- Chief Executive Officer

Sure. And then I was referring one, when I talked about that I was referring to adding more service trade or trade verticals and Home Services. Where it's really a Home Services is broadly made up of a lot of independent trades and getting roofing would be one siding would be one. Home Security would be one kitchen remodels, bathroom remodels, those would each be trades or verticals within that, the way we look at that as we look at a combination of of client budget, availability and where the biggest budgets are for marketing generally, and and that, that we think are are teed up to move into digital along with the media availability. How much of consumers how active are consumers researching looking for that trade or service online, and then we begin working on a rate and we score those verticals against a number of dimensions that we believe help indicate how attractive they are for our business model and for for the clients and for the media. And then we began working on a range of them largely starting with clients. And then we were we we get progress we we focus.

So you know, ideally, we'll get a what we call an anchor tenant, a big national client, or at least a big Super Regional client, that engages and that we get far enough along with that we we begin to, we can begin to focus on that vertical, we get them signed up, we surround them with more clients. And then we that gives us the media buying power to go and get the kind of media so media supply curve, the media whip going. And then as we get more media, we can go get more clients and we get more clients, we get more more media. So it's really, it's first of all, identifying, you know, five characteristics, there is we think are our best opportunities and, and, and the most attractive, we then work on those opportunities, have folks calling doing research. And then as we start to make progress, you'll see us kind of focusing on the ones where we've made progress to get them developed and then growing. And then as as capacity opens up and door, we get those working that we start with go right back and start all over again. So it's a pretty tried and true approach that we've used historically to get into any vertical area. And that again wouldn't be surprise you to know that we're looking at the combination of characteristics of clients and client budgets, with media, digital media, availability and and in structure. And then we just go with that. So that's, that's how we do.

Chris Sakai -- Singular Research -- Analyst

Okay, any chance you you re enter into education in the in a performance marketplace format, very, very, very low chance that market has a lot of challenges.

Douglas Valenti -- Chief Executive Officer

The, you know, the demise of the big, high quality for profits, and I call them high quality because they largely were the University of Phoenix was and others, are there conversion of some of those high quality ones, into nonprofits has really resulted in there being a lot less marketing budget, and an overkill. And then there's from a mega trend standpoint, there's an overcapacity in higher education generally. So and then there's an overcapacity in the marketing services or performance marketplace components of that industry, because of all the loss of the for profit budgets. I think that industry is going to be unattractive structurally, for a very, very long time. And we have plenty to work on in our core financial services, and Home Services, verticals going forward. I don't expect that we would be looking at going back into education and in my in the certainly not in my career like not as a marketplace solution. I say it that way. Because there are some clients we serve on the agency or the technology services side that you know, we're but we're not going in those are very attractive businesses for us, but we are a core marketplace business, which is what 99% of our business, we do not anticipate going back into education.

Chris Sakai -- Singular Research -- Analyst

Okay, all right. Thank you.

Douglas Valenti -- Chief Executive Officer

Thank you, Chris.

Operator

Ladies and gentlemen, that concludes the time we have for Q&A. Please note that a replay of this webinar can be found on the company's website at investor.quinStreet.com. [Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Hayden Blair -- Investor Relations

Douglas Valenti -- Chief Executive Officer

Gregory Wong -- Chief Financial Officer

James Holley -- Stephens -- Analyst

Jason Kreyer -- Craig-Hallum -- Analyst

Adam klauber -- William Blair -- Analyst

Jim Goss -- Barrington Research -- Analyst

Jacob Stefan -- Lake Street capital markets -- Analyst

Chris Sakai -- Singular Research -- Analyst

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