What happened
Shares of marketing products and technology provider QuinStreet (QNST +2.13%) dropped on Tuesday following a generally positive fiscal fourth-quarter report. Robust revenue growth easily beat out analyst expectations, and the company's outlook called for continued double-digit growth in fiscal 2019. The stock was down 11.2% at market close.
So what
QuinStreet reported fourth-quarter revenue of $111.5 million, up 37% year over year and about $11.5 million higher than the average analyst estimate. "Our strategies and products are meeting increased demand for performance marketing with clients and media," said QuinStreet CEO Doug Valenti.
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Non-GAAP earnings per share came in at $0.13, up from $0.06 in the prior-year period and in-line with analyst expectations. The company swung to a GAAP net profit of $0.10 per share, up from a loss of $0.03 in the fourth quarter of last year.
QuinStreet expects revenue to grow by at least 10% in fiscal 2019, along with adjusted EBITDA margin of roughly 10%. The company recorded an adjusted EBITDA margin of 8.6% in fiscal 2018.
Now what
While QuinStreet beat revenue estimates, guidance calling for at least 10% revenue growth in fiscal 2019 would mark a dramatic slowdown. The company grew revenue by nearly 35% in fiscal 2018.
Valuation could also be a factor in the stock's plunge on Tuesday. Shares of QuinStreet had nearly quadrupled over the past year through Monday, pushing up the market capitalization to almost $700 million. With non-GAAP net income of $22.3 million in fiscal 2018, the price-to-earnings ratio surpassed 30 prior to the report. That's not quite nosebleed territory, but it does seem high given the revenue guidance.
