QUINSTREET, INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

The following dialogue and evaluation of our monetary situation and outcomes of
operations must be learn at the side of our condensed consolidated
monetary statements and associated notes showing elsewhere on this Quarterly
Report on Form 10-Q and our Annual Report on Form 10-Ok for the fiscal yr ended
June 30, 2021, filed with the Securities and Exchange Commission (“SEC”).

This Quarterly Report on Form 10-Q accommodates “forward-looking statements” that
contain dangers and uncertainties, in addition to assumptions that, if they don’t
materialize or in the event that they show incorrect, may trigger our outcomes to vary
materially from these expressed or implied by such forward-looking statements.
The statements contained on this Quarterly Report on Form 10-Q that aren’t
purely historic are forward-looking statements throughout the which means of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are sometimes
recognized by way of phrases resembling, however not restricted to, “anticipate,”
“consider,” “anticipate,” “can,” “proceed,” “may,” “estimate,” “anticipate,” “intend,”
“outlook,” “might,” “will,” “plan,” “undertaking,” “search,” “ought to,” “goal,” “will,”
“would,” and related expressions or variations supposed to establish
forward-looking statements. These statements replicate the beliefs and assumptions
of our administration primarily based on info presently out there to administration. Such
forward-looking statements are topic to dangers, uncertainties and different
vital components that might trigger precise outcomes and the timing of sure
occasions to vary materially from future outcomes expressed or implied by such
forward-looking statements. Factors that might trigger or contribute to such
variations embrace, however aren’t restricted to, these recognized in “Part II -Item
1A. Risk Factors” under, and people mentioned within the sections titled “Special
Note Regarding Forward-Looking Statements” and “Risk Factors” included in our
Annual Report on Form 10-Ok for the fiscal yr ended June 30, 2021, filed with
the SEC. Furthermore, such forward-looking statements converse solely as of the date
of this report. Except as required by regulation, we undertake no obligation to replace
any forward-looking statements to replicate occasions or circumstances after the date
of such statements.

Management Overview

We are a pacesetter in efficiency marketplaces and applied sciences for the monetary
providers and residential providers industries. We concentrate on buyer acquisition for
shoppers in excessive worth, information-intensive markets or “verticals,” together with
monetary providers and residential providers. Our shoppers embrace among the world’s
largest corporations and types in these markets. The majority of our operations
and income are in North America.

We ship measurable and cost-effective advertising and marketing outcomes to our shoppers,
sometimes within the type of certified inquiries resembling clicks, leads, calls,
purposes, or prospects. Clicks, leads, calls, and purposes can then
convert right into a buyer or sale for shoppers at a price that leads to an
acceptable advertising and marketing value to them. We are sometimes paid by shoppers after we
ship certified inquiries within the type of clicks, leads, calls, purposes,
or prospects, as outlined by our agreements with them. References to the supply
of shoppers means a sale or accomplished buyer transaction (e.g., funded loans,
sure insurance coverage insurance policies or buyer appointments with shoppers). Because we bear
the prices of media, our applications should end in engaging advertising and marketing prices to
our shoppers at media prices and margins that present sound monetary outcomes for
us. To ship clicks, leads, calls, purposes, and prospects to our shoppers,
usually we:

  •   personal or entry focused media by way of enterprise preparations (e.g., income
      sharing preparations with on-line writer companions, giant and small) or by
      buying media (e.g., clicks from main serps);


  •   run commercials or different types of advertising and marketing messages and applications in that
      media that end in shopper or customer responses, sometimes within the type of
      clicks (by a shopper to additional qualification or matching steps, or to
      on-line consumer purposes or choices), leads (e.g., shopper contact
      info), calls (from a shopper or to a shopper by our owned and
      operated or contracted name facilities or by that of our shoppers or their
      brokers), purposes (e.g., for enrollment or a monetary product), or
      prospects (e.g., funded private loans); and


  •   repeatedly search to show shoppers and consumer choices to guests or
      customers that consequence within the most variety of customers discovering options
      that may meet their wants and to which they'll take motion to reply,
      leading to media shopping for effectivity (e.g., by segmenting media or site visitors
      in order that probably the most acceptable shoppers or consumer choices could be displayed or
      "matched" to every section primarily based on match, response charges or conversion charges);


  •   by way of expertise and analytics, search to optimize a mixture of
      aims to fulfill the utmost variety of purchasing or researching guests
      or customers, ship on consumer advertising and marketing aims, successfully compete
      for on-line media, and generate a sound monetary consequence for us.

Our major monetary goal has been and stays creating income development
from sustainable sources, at goal ranges of profitability. Our major
monetary goal is to not maximize short-term earnings, however reasonably to realize
goal ranges of profitability

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whereas investing in numerous development initiatives, as we proceed to consider we’re
within the early phases of a giant, long-term market alternative.

Our enterprise derives its internet income primarily from charges earned by way of the
supply of certified inquiries resembling clicks, leads, calls, purposes, or
prospects. Through a vertical focus, focused media presence and our expertise
platform, we’re capable of ship focused, measurable advertising and marketing outcomes to our
shoppers.

Our monetary providers consumer vertical represented 74% and 68% of internet income
for the three months ended September 30, 2021 and 2020. Our dwelling providers consumer
vertical represented 25% and 24% of internet income for the three months ended
September 30, 2021 and 2020. Other income, which primarily consists of efficiency
advertising and marketing company and expertise providers, represented 1% of internet income for the
three months ended September 30, 2021. In addition, income acknowledged from our
former training consumer vertical represented 8% of internet income for the three
months ended September 30, 2020. We generated nearly all of our income from
gross sales to shoppers in the United States.

One consumer in our monetary providers consumer vertical accounted for 15% and 26%
of our internet income for the three months ended September 30, 2021 and 2020. No
different consumer accounted for 10% or extra of our internet income for the three months
ended September 30, 2021 and 2020.

Trends Affecting our Business

COVID-19

We proceed to watch the impacts from the COVID-19 pandemic which will
unfavorably have an effect on our enterprise, resembling reductions in consumer spending on
advertising and marketing and promoting, drops in media availability or efficiency,
deteriorating shopper spending, fluctuations in rates of interest, and credit score
high quality of our receivables. The COVID-19 pandemic has affected and will proceed
to have an effect on our enterprise operations, together with our workers, shoppers, publishers,
enterprise companions, and communities, and there may be substantial uncertainty within the
nature and diploma of its continued results over time. For instance, inside our
monetary providers consumer vertical, sure credit-driven traces of enterprise,
resembling private loans and bank cards, have seen and will proceed to see
reductions in near-term demand for our providers attributable to weakening financial and
employment circumstances, and the uncertainty over the size and depth of the
financial downturn. While we skilled year-over-year development in our
credit-driven companies, forecasting the timeline for full restoration nonetheless
stays difficult. The extent to which the COVID-19 pandemic impacts our
enterprise going ahead will rely on quite a few evolving components we can’t
reliably predict, together with the period and scope of the pandemic; enterprise and
people’ actions in response to the pandemic; additional actions taken by
governmental authorities to restrict the human and financial impression of the pandemic
(e.g., stimulus funds); the event, efficacy and distribution of
vaccines for COVID-19; and the impression on financial exercise together with the size
and depth of the financial downturn or monetary market instability. These
components might adversely impression shopper, enterprise, and authorities spending as nicely
as our shoppers’ skill to pay for our providers on an ongoing foundation. While there
is optimism that the pandemic will come to an finish with the event and
prevalence of vaccines, there are nonetheless important uncertainties. For instance,
the resurgence of instances attributable to emergence and persistency of latest variants to
COVID-19 and the financial impression attributable to various ranges of restrictions imposed
by every state in the United States. Refer to Risk Factors (Part II, Item 1A of
this Form 10-Q) for a dialogue of those components and different dangers.

Client Verticals

Our monetary providers consumer vertical has been challenged by quite a lot of
components prior to now, together with the restricted availability of top quality media at
acceptable margins attributable to the acquisition of media sources by opponents,
elevated competitors for top of the range media and modifications in search engine
algorithms. These components might impression our enterprise sooner or later once more. To offset
this impression, we’ve enhanced our product set to supply better segmentation,
matching, transparency and proper pricing of media which have enabled higher
monetization to supply better entry to prime quality media sources. Moreover,
we’ve entered into strategic partnerships and acquisitions to extend and
diversify our entry to high quality media and consumer budgets. Our monetary providers
consumer vertical additionally advantages from extra spending by shoppers in digital media and
efficiency advertising and marketing as digital advertising and marketing continues to evolve.

On July 1, 2020, we accomplished the acquisition of Modernize, a number one dwelling
enchancment efficiency advertising and marketing firm, to broaden our buyer and media
relationships within the dwelling providers consumer vertical. Our dwelling providers consumer
vertical has been increasing over the previous a number of years, primarily pushed by
profitable execution of development initiatives and ahead-of-schedule integration and
synergies with the Modernize acquisition.

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Acquisitions and Divestitures

Acquisitions have traditionally been, and proceed to be, an vital ingredient of
our general company technique and use of capital. We have accomplished a number of
strategic acquisitions prior to now, together with the acquisitions of Modernize,
Mayo Labs and FCE accomplished in fiscal yr 2021, and the acquisitions of AmOne
Corp.
(“AmOne”), CloudControlMedia, LLC (“CCM”) and MyBankTracker.com, LLC
(“MBT”) accomplished in fiscal yr 2019.

Furthermore, on account of the choice to slim our focus to the most effective
performing companies and market alternatives, we accomplished a sequence of
enterprise divestitures prior to now two fiscal years, together with the divestiture of
our former training consumer vertical accomplished in fiscal yr 2021, and the
divestitures of our former B2B consumer vertical, our companies in Brazil
consisting of QuinStreet Brasil Online Marketing e Midia Ltda (“QSB”) and VEMM,
LLC
(“VEMM”) together with its pursuits in Euro-Demand Do Brasil Serviços de
Geração de Leads Ltda (“EDB”), and our mortgage enterprise accomplished in fiscal
yr 2020.

Development, Acquisition and Retention of High Quality Targeted Media

One of the first challenges of our enterprise is discovering or creating media that
is top of the range and focused sufficient to draw prospects for our shoppers at
prices that present a sound monetary consequence for us. In order to develop our
enterprise, we should be capable of discover, develop, or purchase and retain high quality
focused media on an economical foundation. Consolidation of media sources,
modifications in search engine algorithms and elevated competitors for out there
media has, throughout some intervals, restricted and will proceed to restrict our skill to
generate income at acceptable margins. To offset this impression, we’ve developed
new sources of media, together with coming into into strategic partnerships with different
advertising and marketing and media corporations and acquisitions. Such partnerships embrace
takeovers of efficiency advertising and marketing capabilities for giant internet media properties;
backend monetization of unmatched site visitors for shoppers with giant media buys; and
white label merchandise for different efficiency advertising and marketing corporations. We have additionally
targeted on rising our income from name heart, e mail, cellular and social media
site visitors sources.

Seasonality

Our outcomes are topic to important fluctuation on account of seasonality.
In explicit, our quarters ending December 31 (our second fiscal quarter) are
sometimes characterised by seasonal weak point. In our second fiscal quarters,
there may be usually decrease availability of media throughout the vacation interval on a
value efficient foundation and a few of our shoppers have decrease budgets. In our quarters
ending March 31 (our third fiscal quarter), this development usually reverses with
higher media availability and infrequently new budgets at first of the yr for
our shoppers with fiscal years ending December 31.

Our outcomes are additionally topic to fluctuation on account of seasonality in our
shoppers’ enterprise. For instance, income in our dwelling providers consumer vertical is
topic to cyclical and seasonal traits, as the patron demand for dwelling
providers sometimes rises throughout the spring and summer season seasons and declines
throughout the fall and winter seasons. Other components affecting our shoppers’
companies embrace macro components resembling credit score availability out there,
rates of interest, the power of the economic system and employment.

Regulations

Our income has fluctuated partly on account of federal, state and
industry-based rules and growing requirements with respect to the
enforcement of these rules. Our enterprise is affected instantly as a result of we
function web sites and conduct telemarketing and e mail advertising and marketing, and not directly
affected as our shoppers alter their operations on account of regulatory
modifications and enforcement exercise that have an effect on their industries.

Clients in our monetary providers vertical have been affected by legal guidelines and
rules and the elevated enforcement of latest and pre-existing legal guidelines and
rules. The impact of those rules, or any future rules, might
proceed to end in fluctuations within the quantity and mixture of our enterprise with
these shoppers.

An instance of a regulatory change which will have an effect on our enterprise is the modification
of the Telephone Consumer Protection Act (the “TCPA”) that impacts telemarketing
calls. Our shoppers might make enterprise choices primarily based on their very own experiences
with the TCPA no matter our merchandise and compliance practices. Those
choices might negatively have an effect on our income and profitability.

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Basis of Presentation

Net Revenue

Our enterprise generates income primarily from charges earned by way of the supply
of certified inquiries resembling clicks, leads, calls, purposes, or prospects.
We ship focused and measurable outcomes by way of a vertical focus, which
consists of our monetary providers consumer vertical and our dwelling providers consumer
vertical. All remaining companies that aren’t important sufficient for separate
reporting are included in different income. Our income acknowledged throughout the three
months ended September 30, 2020 additionally included the income generated from our
former training consumer vertical, which was divested within the first quarter of
fiscal yr 2021.

Cost of Revenue

Cost of income consists primarily of media and advertising and marketing prices, personnel
prices, amortization of intangible property, depreciation expense and amenities
expense. Media and advertising and marketing prices consist primarily of charges paid to third-party
publishers, media homeowners or managers, or to strategic companions which might be instantly
associated to a revenue-generating occasion and of pay-per-click, or PPC, advert purchases
from Internet search corporations. We pay these third-party publishers, media
homeowners or managers, strategic companions and Internet search corporations on a
revenue-share, a cost-per-lead, or CPL, or cost-per-click, or CPC, foundation.
Personnel prices embrace salaries, stock-based compensation expense, bonuses,
commissions and worker profit prices. Personnel prices are primarily associated to
people related to sustaining our servers and web sites, our name
heart operations, our editorial employees, consumer administration, inventive staff,
content material, compliance group and media buying analysts. Costs related to
software program incurred within the growth part or obtained for inner use are
capitalized and amortized to value of income over the software program’s estimated
helpful life.

Operating Expenses

We classify our working bills into three classes: product growth,
gross sales and advertising and marketing and normal and administrative. Our working bills
consist primarily of personnel prices and, to a lesser extent, skilled
providers charges, amenities charges and different prices. Personnel prices for every
class of working bills usually embrace salaries, stock-based
compensation expense, bonuses, commissions and associated taxes and worker
profit prices.

Product Development. Product growth bills consist primarily of personnel
prices, amenities charges {and professional} providers charges associated to the event
and upkeep of our merchandise and media administration platform. We are
constraining bills usually to the extent practicable.

Sales and Marketing. Sales and advertising and marketing bills consist primarily of personnel
prices, amenities charges {and professional} providers charges. We are constraining
bills usually to the extent practicable.

General and Administrative. General and administrative bills consist
primarily of personnel prices of our finance, authorized, worker advantages and
compliance, technical assist and different administrative personnel, accounting and
authorized skilled providers charges, amenities charges and dangerous debt expense. We are
constraining bills usually to the extent practicable.

Interest and Other Income, Net

Interest and different earnings, internet, consists primarily of curiosity expense, curiosity
earnings, and different earnings and expense. Interest expense is expounded to imputed
curiosity on post-closing funds associated to our acquisitions. We haven’t any
borrowing agreements excellent as of September 30, 2021; nonetheless curiosity
expense may improve if, amongst different issues, we enter into a brand new borrowing
settlement to handle liquidity or make extra acquisitions by way of debt
financing. Interest earnings represents curiosity earned on our money and money
equivalents, which can improve or lower relying on market rates of interest
and the quantities invested. Other earnings and expense consists of good points and losses on
overseas forex trade, good points and losses on divestitures of subsidiaries,
consumer verticals and property that weren’t thought of to be strategically
vital to our enterprise, and different non-operating gadgets.

Provision for Income Taxes

We are topic to tax in the United States in addition to different tax jurisdictions or
international locations through which we conduct enterprise. Earnings from our restricted non-U.S.
actions are topic to native nation earnings tax and could also be topic to U.S.
earnings tax.

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Critical Accounting Policies, Estimates and Judgments

In presenting our consolidated monetary statements in conformity with U.S.
usually accepted accounting ideas, or GAAP, we’re required to make
estimates and assumptions that have an effect on the reported quantities of property and
liabilities, disclosures of contingent property and liabilities as of the date of
the monetary statements, and reported quantities of income and bills throughout
the reporting interval.

Some of the estimates and assumptions we’re required to make relate to issues
which might be inherently unsure as they pertain to future occasions. We base these
estimates and assumptions on historic expertise or on numerous different components
that we consider to be cheap and acceptable beneath the circumstances. On an
ongoing foundation, we rethink and consider our estimates and assumptions. Actual
outcomes might differ considerably from these estimates.

We consider that the crucial accounting insurance policies listed under contain our extra
important judgments, assumptions and estimates and, subsequently, may have the
best potential impression on our consolidated monetary statements.

  • Revenue recognition;


  • Valuation of goodwill and intangible property;


  • Stock-based compensation;


  • Business mixture;


  • Income taxes; and


  • Valuation of long-lived property.

For additional info on our crucial and different important accounting
insurance policies and estimates, see Part II, Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of our Annual Report
on Form 10-Ok for the yr ended June 30, 2021, filed with the SEC.

Recently Issued Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to our condensed
consolidated monetary statements.

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Results of Operations

The following desk units forth our condensed consolidated statements of
operations for the intervals indicated:


                                    Three Months Ended September 30,
                                     2021                      2020
                                   (In hundreds, besides percentages)
Net income                  $ 159,608       100.0 %   $ 139,269       100.0 %
Cost of income (1)            141,505        88.7       122,231        87.8
Gross revenue                    18,103        11.3        17,038        12.2
Operating bills: (1)
Product growth              4,625         2.9         4,891         3.5
Sales and advertising and marketing              2,906         1.8         2,643         1.9
General and administrative       6,634         4.1         6,581         4.7
Operating earnings                 3,938         2.5         2,923         2.1
Interest earnings                      -           -            22           -
Interest expense                  (273 )      (0.2 )        (339 )      (0.2 )
Other earnings, internet                    4           -        16,689        12.0
Income earlier than earnings taxes       3,669         2.3        19,295        13.9
Provision for earnings taxes        (576 )      (0.4 )      (4,614 )      (3.4 )
Net earnings                   $   3,093         1.9 %   $  14,681        10.5 %




(1) Cost of income and working bills embrace stock-based compensation
expense as follows:



Cost of income              $ 1,821       1.1 %   $ 2,201       1.6 %
Product growth              606       0.4         549       0.4
Sales and advertising and marketing              732       0.5         547       0.4
General and administrative     1,747       1.1       1,483       1.1


Gross Profit



                    Three Months Ended        Three
                       September 30,          Months
                    2021          2020       % Change
                      (In hundreds)
Net income       $ 159,608     $ 139,269           15 %
Cost of income     141,505       122,231           16 %
Gross revenue      $  18,103     $  17,038            6 %


Net Revenue

Net income elevated by $20.3 million, or 15%, for the three months ended
September 30, 2021 in comparison with the three months ended September 30, 2020.
Revenue from our monetary providers consumer vertical elevated by $23.7 million,
or 25%, primarily attributable to our enhanced product set and information analytics that
enabled entry to extra media and a rise in consumer budgets in our insurance coverage
enterprise, in addition to some financial restoration from the impression of the COVID-19
pandemic in our credit-driven companies. Revenue from our dwelling providers consumer
vertical elevated by $6.5 million, or 19%, primarily on account of elevated
consumer budgets and profitable integration of the Modernize acquisition. Other
income, which primarily consists of efficiency advertising and marketing company and expertise
providers, contributed $1.7 million of income for the three months ended
September 30, 2021. The divestiture of our former training consumer vertical,
accomplished within the first quarter of fiscal yr 2021, resulted in a lower in
income by $11.6 million for the three months ended September 30, 2021, as
in comparison with the three months ended September 30, 2020.



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Cost of Revenue and Gross Profit Margin

Cost of income elevated by $19.3 million, or 16%, for the three months ended
September 30, 2021 in comparison with the three months ended September 30, 2020,
primarily pushed by elevated media and advertising and marketing prices of $19.7 million
related to greater income volumes, offset by decreased personnel prices
together with stock-based compensation expense of $0.6 million. Gross revenue margin,
which is the distinction between internet income and price of income as a share
of internet income, was 11% and 12% for the three months ended September 30, 2021
and 2020. The lower in gross revenue margin was primarily attributable to
elevated media and advertising and marketing prices as a share of income.

Operating Expenses



                               Three Months Ended        Three
                                  September 30,          Months
                                2021          2020      % Change
                                 (In hundreds)
Product growth          $    4,625     $  4,891           (5 %)
Sales and advertising and marketing               2,906        2,643           10 %
General and administrative        6,634        6,581            1 %
Operating bills           $   14,165     $ 14,115            -

Product Development Expenses

Product growth bills decreased by $0.3 million, or 5%, for the three
months ended September 30, 2021 in comparison with the three months ended September 30,
2020
, primarily attributable to decreased personnel prices of $0.4 million.

Sales and Marketing Expenses

Sales and advertising and marketing bills elevated by $0.3 million, or 10%, for the three
months ended September 30, 2021 in comparison with the three months ended September 30,
2020
, primarily attributable to elevated personnel prices of $0.2 million.

General and Administrative Expenses

General and administrative bills elevated by $0.1 million, or 1%, for the
three months ended September 30, 2021 in comparison with the three months ended
September 30, 2020.

Provision for Income Taxes



                               Three Months Ended
                                  September 30,
                               2021           2020
                                 (In hundreds)
Provision for earnings taxes   $    (576 )    $ (4,614 )

As of September 30, 2021, we’ve not recorded any important valuation
allowance changes primarily based on the knowledge and proof out there on the
time. However, if there are unfavorable modifications to precise working outcomes or
to projections of future earnings, we might decide that it’s extra possible than
not that such deferred tax property might not be realizable.

We recorded a provision for earnings taxes of $0.6 million and $4.6 million for
the three months ended September 30, 2021 and 2020.

Liquidity and Capital Resources

As of September 30, 2021, our principal sources of liquidity consisted of money
and money equivalents of $105.9 million and money we anticipate to generate from
future operations. Our money and money equivalents are maintained in extremely liquid
investments with remaining maturities of 90 days or much less on the time of
buy. We consider our money equivalents are liquid and accessible.

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Our short-term and long-term liquidity necessities primarily come up from our
working capital necessities, capital expenditures, inner software program
growth prices and acquisitions occasionally. Our acquisitions in fiscal
yr 2021 and financial yr 2019 even have deferred buy value elements and
contingent consideration which requires us to make a sequence of funds
following the acquisition cut-off date. Our major working money necessities
embrace the fee of media prices, personnel prices, prices of knowledge
expertise programs and workplace amenities. Our skill to fund these necessities
will rely on our future money flows, that are decided, partly, by future
working efficiency and are, subsequently, topic to prevailing world
macroeconomic circumstances together with the impression of COVID-19, and monetary,
enterprise and different components, a few of that are past our management. Even although we
might not want extra funds to fund anticipated liquidity necessities, we might
nonetheless elect to acquire debt financing or challenge extra fairness securities for
different causes.

We consider that our principal sources of liquidity can be adequate to fulfill
our presently anticipated money necessities by way of no less than the following 12 months.

The following desk summarizes our money flows for the intervals indicated:


                                              Three Months Ended
                                                 September 30,
                                              2021          2020
                                                (In hundreds)

Net money offered by working actions $ 5,753 $ 17,558
Net money utilized in investing actions (1,374 ) (20,707 )
Net money utilized in financing actions (8,764 ) (2,055 )

Operating Activities

Cash flows from working actions are primarily the results of our internet earnings
adjusted for depreciation and amortization, stock-based compensation expense,
good points and losses on divestitures of companies, and modifications in working capital
elements.

Cash offered by working actions was $5.8 million for the three months
ended September 30, 2021, in comparison with money offered by working actions of
$17.6 million for the three months ended September 30, 2020.

Cash offered by working actions for the three months ended September 30,
2021
consisted of a internet earnings of $3.1 million, non-cash changes of $9.7
million
, offset by a internet lower in money from modifications in working capital of
$7.1 million. The non-cash changes primarily consisted of stock-based
compensation expense of $4.9 million, depreciation and amortization expense of
$4.2 million, and a lower in deferred tax property of $0.6 million primarily
attributable to provision for earnings taxes for the primary quarter of fiscal yr 2022. The
modifications in working capital accounts had been primarily attributable to a lower in
accrued liabilities of $9.0 million and a rise in accounts receivable of
$0.7 million, offset by a rise in accounts payable of $3.2
million
. The lower in accrued liabilities and improve in accounts payable
had been as a result of timing of funds. The improve in accounts receivable was due
to the timing of receipts.

Cash offered by working actions for the three months ended September 30,
2020
consisted of a internet earnings of $14.7 million, a internet improve in money from
modifications in working capital of $6.0 million, offset by non-cash changes of
$3.1 million. The modifications in working capital accounts had been primarily
attributable to a rise in accounts payable of $9.0 million, offset by a
lower in accrued liabilities of $2.7 million. The improve in accounts
payable and reduce in accrued liabilities was as a result of timing of funds.
The non-cash changes primarily consisted of a internet disposition acquire of $16.6
million
acknowledged from the divestiture of our former training consumer vertical
accomplished within the first quarter of fiscal yr 2021, offset by stock-based
compensation expense of $4.8 million, a lower in deferred tax property of $4.5
million
attributable to provision for earnings taxes for the primary quarter of fiscal yr
2021, and depreciation and amortization of $4.1 million.

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Investing Activities

Cash flows from investing actions usually embrace capital expenditures,
capitalized inner software program growth prices, acquisitions occasionally,
enterprise divestitures, and funding in fairness securities.

Cash utilized in investing actions was $1.4 million for the three months ended
September 30, 2021, in comparison with money utilized in investing actions of $20.7
million
for the three months ended September 30, 2020.

Cash utilized in investing actions within the three months ended September 30, 2021
was attributable to inner software program growth prices of $1.0 million and capital
expenditures of $0.4 million.

Cash utilized in investing actions within the three months ended September 30, 2020
was primarily attributable to $43.9 million money paid on the closing of the Modernize
acquisition, internet of money acquired of $3.6 million, and capital expenditures and
inner software program growth prices of $1.1 million, offset by $20.0 million
money obtained from the divestiture of our former training consumer vertical
accomplished within the first quarter of fiscal yr 2021, and $0.7 million money
obtained from the divestiture of our B2B consumer vertical accomplished within the third
quarter of fiscal yr 2020.

Financing Activities

Cash flows from financing actions usually embrace post-closing funds
associated to our acquisitions, withholding taxes associated to the discharge of
restricted inventory, internet of share settlement, and proceeds from the train of
inventory choices.

Cash utilized in financing actions was $8.8 million for the three months ended
September 30, 2021, in comparison with money utilized in financing actions of $2.1
million
for the three months ended September 30, 2020.

Cash utilized in financing actions within the three months ended September 30,
2021
was attributable to fee of post-closing funds associated to acquisitions of $5.3
million
, fee of withholding taxes associated to the discharge of restricted
inventory, internet of share settlement of $3.8 million, offset by proceeds from the
train of inventory choices of $0.4 million.

Cash utilized in financing actions within the three months ended September 30,
2020
was as a result of fee of withholding taxes associated to the discharge of
restricted inventory, internet of share settlement of $2.9 million, fee of contingent
consideration associated to the CCM acquisition of $0.3 million, offset by proceeds
from the train of inventory choices of $1.2 million.

Off-Balance Sheet Arrangements

During the intervals offered, we didn’t have any materials relationships with
unconsolidated entities or monetary partnerships, resembling entities typically
known as structured finance or particular function entities, which might have
been established for the aim of facilitating off-balance sheet preparations
or different contractually slim or restricted functions.

Contractual Obligations

Our contractual obligations primarily include working leases, post-closing
funds and contingent consideration funds acknowledged from the acquisitions
accomplished in fiscal yr 2021 and financial yr 2019. These contractual
obligations impression our short-term and long-term liquidity and capital useful resource
wants. There have been no materials modifications in our contractual obligations as
offered in Part II, Item 7 Management’s Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report on Form 10-Ok
for our fiscal yr ended June 30, 2021.




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