QuinStreet, Inc. (QNST) CEO Douglas Valenti on Q2 2019 Results - Earnings Call Transcript

QuinStreet, Inc. (NASDAQ:QNST) Q2 2019 Earnings Conference Call February 7, 2019 5:00 PM ET

Company Participants

Erica Abrams - Head of Investor Relations

Douglas Valenti - Chief Executive Officer

Gregory Wong - Chief Financial Officer

Conference Call Participants

John Campbell - Stephens

Robert Breza - Northland Capital Markets

Chris Sakai - Singular Research

Adam Klauber - William Blair & Company

Jason Kreyer - Craig-Hallum Capital Group LLC

James Goss - Barrington Research Associates, Inc.

Operator

Good day, and welcome to the QuinStreet Second Quarter 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ms. Erica Abrams. Please go ahead, ma'am.

Erica Abrams

Thank you, Brad. Good afternoon, ladies and gentlemen. Thank you for joining us today as we report QuinStreet's second quarter fiscal year 2019 financial results. Joining me on the call today are Doug Valenti, CEO; and Greg Wong, CFO of QuinStreet. This call is being simultaneously webcast on the Investor Relations section of our website, at www.quinstreet.com.

Before we get started, I would like to remind you that the following discussion contains forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected by such statements and are not guarantees of future performance. Factors that may cause the results to differ from our forward-looking statements are discussed in our recent SEC filings, including our most recent 10-Q filing made on November 9, 2018.

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 GAAP and non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures are included in today's earnings press release, which is available on our Investor Relations website.

With that, I will turn the call over to Doug, CEO of QuinStreet. Please go ahead.

Douglas Valenti

Thank you, Erica, and thank you all for joining us. We continue to make good progress and to see strong demand for our performance marketplace solutions in fiscal Q2. I was particularly excited about the breadth of our growth momentum in the quarter, as more progress with our product and media initiatives led to faster growth at scale in more verticals.

That broadening and acceleration of growth at scale in more verticals is indicative of the main theme I always try to emphasize with shareholders and investors. And that is delivering on digital media's capacity for transparent, targeted, measurable and optimized marketing is a huge long-term opportunity and trend. And we are still very early on that arc.

No one has the combination of products, networks and technologies or results to deliver on that promise in our verticals that QuinStreet has, and our capabilities, and rate of progress and innovation to increase those capabilities are the strongest they have been in our 19 year existence.

The strong growth contributions from a broader set of verticals in fiscal Q2 offset greater-than-expected weakness in education and mortgage; education, due mainly to restructuring and budget loss from our largest client in that vertical; and mortgage, due to cyclical softness in that market.

We now expect revenue from both of those businesses to be down significantly year over year in the back half of fiscal 2019. Revenue in all other verticals, including insurance, credit cards, personal loans, banking, home services and B2B grew at double- and triple-digit rates year-over-year, driving good quarterly results overall.

We grew total revenue 19% year over year to $104 million, setting a new fiscal Q2 record for the company. And we continue to expand margins, growing adjusted EBITDA by 42% and adjusted net income by 76%.

Looking ahead, we expect continued strength and progress across most of our verticals. As a result, we continue to expect full fiscal year 2019 revenue to grow in the 15% to 20% range we cited last quarter. And for fiscal year 2019 adjusted EBITDA to expand to about 10% of revenue.

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

Gregory Wong

Thank you, Doug. Hello, and thanks to everyone for joining us today. As you know from our press release, we continued to deliver good financial results in the second quarter demonstrating the ongoing momentum across QuinStreet's diversified portfolio of verticals. Our footprint for growth expanded further, which grow strong year-over-year revenue growth.

Total revenue in the second quarter was $104.1 million, an increase of 19% year-over-year. Adjusted EBITDA increased 42% year-over-year to $9.3 million or 9% margin. Adjusted net income increased 76% year-over-year to $6.5 million or $0.12 per share on a fully diluted basis. In the second quarter, we generated $9.4 million of normalized free cash flow or 9% of revenue.

As you know, our clients continue to shift their marketing spend from offline to online media and as this shift occurs QuinStreet provides measurable, sustainable and cost effective results for clients with scale, which allows them to spend more aggressively and confidently marketing on the internet.

Looking at revenue by client vertical, our Financial Services client vertical represented 71% of Q2 revenue and grew 19% to $74.4 million. We delivered double and triple digit year-over-year revenue growth in insurance, personal loans, credit cards and banking in the quarter. We continue to see cyclical softness in the mortgage vertical. Excluding mortgage, our Financial Services client vertical grew 33% in the quarter.

Our Education client vertical represented 16% of Q2 revenue, and grew 5% year-over-year to $16.2 million. Our Q2 results in Education reflect a partial quarter loss of budget from our largest client in that vertical, who is restructuring their business.

Our Other client vertical represented remaining 13% of Q2 revenue and grew 38% year-over-year to $13.5 million. Here, we delivered strong revenue growth in home services, driven by the continued expansion of our service offerings and our client base. Home Services is yet another massive market opportunity, where we are still early in our penetration in growth. We also drove accelerated double-digit growth from our B2B business in the quarter, as we continue to add new clients and deepen our relationships with existing clients.

As we look to the back half of fiscal 2019, we're excited about the large opportunities ahead of us as we continue to build our leadership in these early and large markets. Over the last few weeks, we completed a full bottoms-up re-forecast for the second half and still expect the full year revenue growth in the 15% to 20% range. But given the challenges in education and mortgage, we are currently leaning towards the low end of that range.

Unlike our typical seasonal trends, we believe the bulk of the year-over-year revenue growth in the second half will come in the June quarter, as we further ramp growth initiatives. We also expect the ramp of these growth initiatives to provide strong momentum and set us up for continued double digit revenue growth and margin expansion in fiscal 2020.

Moving on to adjusted EBITDA, we continue to be focused on expanding profitability. For the second quarter, we reported $9.3 million in adjusted EBITDA or 9% of revenue, representing 42% growth year-over-year.

Moving to the tax front, our provision this quarter includes a onetime benefit of $49.4 million related to the reversal of our valuation allowance against the deferred tax assets that we established in 2014. We have returned to a three-year cumulative profit, so this entry was required by GAAP.

To be clear, this onetime benefit is a non-cash item and is excluded from non-GAAP results. For your modeling purposes, we expect our ongoing tax rate to be approximately 25%.

Turning to the balance sheet, we grew cash by $12 million net of the AmOne acquisition in the quarter. We closed the second quarter with $62.4 million of cash and equivalents. Normalized free cash flow for the quarter was $9.4 million or 9% of revenue. Most of our adjusted EBITDA drops to normalized free cash flow, due to the low capital requirements of our business model.

In summary, Q2 validated the continued momentum and expansion of our footprint for growth in our business. We are pleased with our strong revenue growth, expansion of profitability, and solid cash flow generation.

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

Question-and-Answer Session

Operator

Thank you. At this time, we will open the floor for questions. [Operator Instructions] And our first question comes from John Campbell with Stephens.

John Campbell

Hey, guys. Good afternoon.

Gregory Wong

Hey, John.

Douglas Valenti

Hey, John.

John Campbell

Hey, I just want to dig in on the Financial Services segment for just a second. So, I guess, first, what was progressive as a percent of revs?

Gregory Wong

It was pretty similar to what we've seen in historic quarters, John.

John Campbell

Okay.

Gregory Wong

Yes, I don't have the exact percentage, but very similar to low 20s.

John Campbell

Okay. And then, on AmOne, I guess you guys closed it kind of early in the quarter. Did you guys expect - or did you get the revenue you kind of expected there and any way you can kind of size it up, what the contribution was?

Gregory Wong

We did. That integration is going very well. In terms of sizing it up, I think if you took AmOne out, we still grew at good solid double-digit rates in Financial Services and overall. But I don't have the exact numbers in front of me, in terms of the contribution. But I would say right on schedule. The integration is probably gone better than we expected and we continue to be very enthusiastic about that acquisition.

John Campbell

Okay. Yeah, so I was getting to that low double-digit Financial Services organic growth, so that does kind of checkup of what you guys have?

Douglas Valenti

Yes, I think that's fair.

John Campbell

Okay. And then, the last one for me is, I mean, obviously you've got kind of the new QuoteWizard in the market. I'm just wondering, I mean, I guess, there's still kind of - it's kind of early on there and LendingTree is still working to the integration efforts. But are you guys seeing anything different out there with those guys?

Douglas Valenti

No. And we don't really expect to. QuoteWizard has been in the market with us for a long time. We know them very well. They're a good, respectable competitor. We know kind of where they are and what they're good at. I would expect this is not going to change even with the LendingTree ownership. We don't expect it to change much in terms of the dynamics of that vertical for us.

I think there may be changes in other parts of the vertical as they expand their footprint in ways that are consistent with LendingTree's strengths, but we really don't expect much change for us in that vertical, due to the LendingTree acquisition of QuoteWizard.

John Campbell

Okay, great. Thanks, guys.

Douglas Valenti

Thank you, John.

Operator

Thank you. And our next question comes from Robert Breza with Northland Capital Markets.

Robert Breza

Hi. Good afternoon. Thanks for taking my question. Wanted to dig into the mortgage side of the business with the refinancing. Obviously, it's harder due to rates. So there's probably not a lot to do there. But maybe Doug or Greg, could you talk a little bit about the education vertical with - I'm assuming when you're talking about the customer restructuring, you're talking about DCEH [ph].

Can you speak to that vertical, and what you expect from those guys from a customer point of view and how we should think about that vertical? I know it was up in 5% range in your prepared remarks. Thank you.

Douglas Valenti

You bet, Rob. And I think you're on a - on mortgage, the cyclical into the refi cycle is the main thing going on there. There's been a little bit of relief from that recently as rates has stabilized and it went back down a little in mortgage, but not enough to really turn that business back up in a meaningful way. And the clients themselves have already adjusted to the reduced demand, so they have not returned to the market in terms of budget increases and/or capacity.

Frankly, they cut their capacity in response to the market. So, yes, mortgages, not a lot we can do there. We have a lot of initiatives to continue to gain share of what's left. But I think that the overall effect from the cyclical downturn is going to continue to be significant weakness in mortgage for us on a comparables basis year-over-year for the rest of this fiscal year. And then we'll look and see what happens going out in 2020.

In terms of education, we have a lot of initiatives underway to continue to make progress, and we've made good progress there. If you look at operational and strategic initiatives, product initiatives, obviously the loss of DCEH, which was our largest client, which was a not-for-profit that had acquired the assets at EDMC, the old EDMC for-profit, is a blow.

They had big business issues that they acquired in those assets. And then the assets were soft and they feel like we're represented to them when they acquired them. So that's unfortunate, but we were able to do great work for them and really pilot QMP the way we want it to. And I think got a lot of learnings and got a lot of progress there, and we're going to roll that into other clients in this segment.

So, a lot of actually relatively positive things going on in education. Just they're going to be masked for a little while until we've lap the DCEH loss. And we've taken DCEH completely out of the back-half forecast. They're going through restructuring where they're transferring assets to new owners.

The good news is that they are cash generating assets and they are transferring them to new owners. So we have some receivables outstanding with them in the single-digit millions of dollars. But we feel like we're - because of cash generating assets and they are being transferred to new ownership, we're in a great position to collect and we fully expect to collect. So, I think education is going to be, as you've heard me say over and over again for quarters now, a volatile place.

But if you step back far enough, it's still a big market. We have great assets. We made good progress, lot of good initiatives. I do not expect this to be the beginning of a new only downward trend in education. I'm actually and I said this a couple of quarters ago, kind of more positive in education than I've been in a long time. We're just going to have to lap the loss of DCEH budget here over the next few quarters.

Robert Breza

Great. Thanks for taking my questions.

Douglas Valenti

Thank you, Rob.

Operator

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

Chris Sakai

Hi, Greg.

Gregory Wong

Hey, Chris.

Chris Sakai

I just had a question as well on education segment. I know, with the loss it just grew 5%. Can you guys sort of provide any color or guidance on what would be a normalized growth rate going forward? You guys have a target, something that we can look forward to?

Douglas Valenti

Yes, I think - and, Chris, this is Doug. But in the second half of this fiscal year, we have forecast education to be down pretty significantly, because of the loss of the DCEH budget and the broader impact that has on our media buying efficiency.

In terms of a go-forward look, and again, with the big caveat, that you've heard me say over and over again, this is still an industry in transition from an online marketing standpoint and from an asset ownership and leadership standpoint, primarily going from the marketing budgets being dominated by big for-profit education institutions to a market that is growingly going to be dominated by budgets from online programs, from not-for-profit education institutions, including the likes of Southern New Hampshire, Arizona State, Purdue University Global and folks like that; and the new inclusion of new programs like coding camps, trade school, certifications and things like that, which I think is a very positive trend for society, quite frankly.

I don't think we need folks going out and spending $150,000 on four-year degrees that don't necessarily provide them with skills for the new workplace. I think, when you add all that up, it's going to be noisy for a while. We believe that it's still going a - it's still a very attractive market. We have great assets in it, we're making good progress against all those new dimensions. We're dominant. We have mostly not-for-profit budgets now. We have - we're positioned well for the new - for the new programs. We have good traffic for that.

So, I'd say, net-net, we - I can't give you a target growth. I mean, our target growth rate would be double digits like everything else for as far as the eye can see. I think, we don't get back to that probably at least until we lap the DCEH loss, which would give us another two to three quarters probably down at best flat, maybe three quarters out, and then I think we get back on the growth trend.

And the target would be like all of our verticals. We think we can grow at double digits for as far as the eye can see. So we want - we don't want them to drag that down. So, we will figure that out. And we have a lot of initiatives to continue to progress that business, again as I said, some strategic, some operational and we will pursue all those angles on that to make sure we bring shareholder value out of that business.

Chris Sakai

Okay, great. Thanks for that color.

Douglas Valenti

Thanks, Chris.

Operator

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

Adam Klauber

Thanks. Good afternoon. A couple of different questions. What was the growth in the insurance vertical year-over-year? And then what grew faster progressive or the rest of the companies?

Douglas Valenti

I didn't get the second half of the question, Adam, what about progressive?

Adam Klauber

Within the insurance vertical did progressive grow faster than the average? Or did some of the other companies - some of the other large companies actually grow faster than progressive?

Douglas Valenti

We don't - I don't have the specifics in terms of growth here in insurance. We're in the - it was solid double digits, is how I would characterize it. The progressive grew at about the average rate of all of our clients in the vertical. We did have a number of large carriers, they grew at significantly higher rates than progressive, which isn't surprising given the scale of progressive has gotten to and they're being so much further up the curve. So by the same characteristics, we've seen frankly last few quarters.

Adam Klauber

Okay. Okay. And - sort of similar with some of those other large carriers as they've looked at their budget for 2019, are you getting the sense that the percent of digital spend is going up with those other large carriers?

Douglas Valenti

I would say generally, yes. And I say generally because, of course, there are exceptions and there's a lot of variation in terms of behavior strategies budgets. But my general short answer would be, yes.

Adam Klauber

Okay. Okay. And then within the other Financial Services could you give us, I guess, some idea when you're talking with the credit cards, the deposit takers. Are they expanding their digital presence? And how is their outlook for 2019 versus 2018?

Douglas Valenti

We're seeing a lot of momentum in both credit cards and banking, when banking, of course, includes the source of funds folks. And I would say, pretty exceptional momentum in both, and I think the - they are both seeking to expand as aggressive as they can from our experience and observation, their presence in digital media. And we're working hard at it and really focused on it. So there's a lot and lot of good momentum there and there's still - credit cards certainly further long than banking, but both have a long way yet to run.

Adam Klauber

Okay. And then in the Other, obviously, a strong quarter. In Home Services, did you see some of the others? I know, of your initiatives in a number of new products, could you talk or some of those other products beginning to take off and which ones are they?

Douglas Valenti

I don't like to talk about the specific sub-verticals in Home Services only, because it's competitively sensitive. But we do - we are in notionally about 10 verticals in Home Services. I think over the past three quarters, we've had a couple of new verticals do very well for us and to add pretty meaningfully to that footprint. The growth rate in Home Services has accelerated meaningfully. I talked, I think the last couple of quarters that, that was about how that was a strategic initiative for us.

And then we expected to try and grow along two vectors in Home Services: one was to work on expanding from those 10 verticals that we were in to about 100 that we've identified as attractive for our business model, and to continue to really much more aggressively penetrate client budgets and media and the verticals we're already in.

And I would say that we are doing both quite effectively in Home Services and that's why you saw the - whatever 38% growth at a pretty good scale. And it was one of our four largest businesses anyway. But we think Home Services, as Greg said, I think in his prepared remarks is a very, very big market opportunity for us and we are making good progress getting deployed against that market opportunity and we want to keep scaling that business and we want to do so at accelerated rates. So we feel very good about our progress and the opportunity in Home Services.

Adam Klauber

Okay. And then finally in Education, what was the growth of the not-for-profit segment?

Douglas Valenti

Gosh, hard to - we don't have. I just looked at Greg, he has given me the headshake. He doesn't have the numbers in front of him. I don't have them in front of me either but I would point out that DCEH was technically a not-for-profit, because remember, that's the old EDMC for-profit assets that were acquired by not-for-profit entities set up to - to absorb and manage those, called Dream Center Education Holdings or DCEH, so it would be skewed. So that the - it would - the growth over there for the year-over-year would probably be muted by that. And the overall growth for Education was 5%. So my guess should be in that range, but I do not have those numbers, to get it out, in front of me.

Adam Klauber

Okay. Thank you very much.

Douglas Valenti

Thank you, Adam.

Operator

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

Jason Kreyer

Hey, gentlemen, good afternoon.

Douglas Valenti

Hey, Jason.

Jason Kreyer

Just wanted to ask a quick question, following up on the mortgage business, can you just talk about the cadence of how things progressed across Q4 - I'm sorry, calendar Q4? I know, we talked about that last quarter a little bit of a weakening. So just wondering if that headwind intensified as the quarter progressed?

Gregory Wong

Yes, Jason. We did talked about it when we - it's pretty well noted industry wide about the softness in that industry that's been seen from the cyclical nature of the refi cycle ending. But yes, I think, what we saw in the quarter was it did intensify and it was more challenging than our original expectation was at the beginning of the quarter.

Jason Kreyer

Got it. And then on the personal loans business, you talked about good performance there and good performance from AmOne. Just wondering 90 days post that acquisition, if you can talk a little bit about what you think about the long-term opportunity there?

Douglas Valenti

Sure. I would say we are very, very optimist and enthusiastic about the long-term opportunity in personal loans, particularly with the added capabilities of AmOne and the mix. As you know, they represent coverage and capabilities and 30% plus portion of the market, where we did not have great coverage. And we were already really good at personal loans, before we acquired them. So the data we have on the combined capabilities and the effects that they can - that we can have in media from those combined capabilities continues to be extraordinarily strong, and point to very, very big opportunity.

So we like that market, because again it's a huge consumer segment meeting a big consumer demand for unsecured loans, that the banks pretty much gotten away from historically, although a lot of the banks are now clients and personal loans, again. But the consolidation of credit cards, consolidation of student loans, the availability of unsecured loans for small businesses and individuals for a variety of projects, including home improvement, by the way, which is a nice overlap with our Home Services business, are all very big, very promising segments, and the penetrations early.

So we are - we like the market, we like the value proposition for consumers, because that consolidation for consumers can represent significant interest, say interest rate savings, and we love our position and capabilities in that market. So you will continue to hear a lot from us, I think, about personal loans and about the opportunity there. And I think it will soon be our second biggest business. It's breathing down the neck of our current number two business, and of course, it's not yet in range of insurance. But we expect it to be and it is showing the opportunity to be a very big business opportunity for us.

Jason Kreyer

Just on the integration with AmOne. Are you - have you started integrating that and using the tools that you got from AmOne to supplement, what you guys were already doing, previously? Or is the philosophy kind of let these two businesses operate independently and integrate them more over the long-term?

Douglas Valenti

We have begun the integration. It's early. We're only testing it in one media segment now. It did take some time technically to get the combined capabilities into the same flows. We launched that about two weeks ago, and we have tested it, and again, one segment at media, when the early indications are very strong. We're pretty close to the end. We probably have another week to two, before we feel comfortable enough with those results to begin to more aggressively expand that combined capability into more of our media segments.

So we're early in it, but pressing it as fast as we can prudently do so. So we do not intend to take too long to go after. We're going after it as fast as we can.

Jason Kreyer

Okay. Thank you.

Gregory Wong

Thank you, Jason.

Operator

Thank you. [Operator Instructions] Our next question comes from Jim Goss with Barrington Research.

James Goss

Thanks. First, I am wondering in the Education side. Is there any way of measuring the pricing power you have on the not-for-profit schools versus the for-profit educational institutions?

Douglas Valenti

Not really at a general level, Jim. It really comes down to school by school and program by program. And as you know, the way we think about it, segment by segment in media. So there's - the economics aren't generally different, but they do depend on the mix of the various clients and most of the not-for-profit clients, including those represented by the [OPMs] [ph] are still a lot earlier in their media penetration curve on the digital media side. And so there is - there are different behaviors and different budgets and allocations.

But in the longer run, I don't think that the economics in general will be that different from a media and client standpoint, for the degree programs, between the not-for-profits and the for-profits.

The for-profits were better, were further in their media development and media penetration and they were better at their enrollment processes, if you define better as the ability to convert media or prospects at a higher rate.

The not-for-profits are earlier in that and so therefore their economics are not as good yet in media and they are earlier in their penetration demand for media anyway. So it's coming, but it's not a direct substitute yet, because it's coming kind of a lag rate based on what I just described.

So super promising in long-run, a little frustrating in the short-run, as you have the declines in for-profits or former for-profits in the case of, say, DCEH, outpacing the ramp of the not-for-profits. But in the long-run, the not-for-profits are 85% of the market. And they were - and they are very aggressively building and seeking to grow their online programs and online programs beget marketing budget. That's kind of - and so that's the part of the curve we're on.

We're just - I think, we'll have to let some - as I've said many times, I expect the transition for the reasons I just talked about and others to be relatively volatile, but we will eventually stabilize on that - on the new growth curve, and I think that will continue to be a very attractive overall market for us and others.

James Goss

And does the emergence of the OPMs give you any more confidence in the sustainability of that business, so that you're less concerned about whether changes in administrations politically, that could hamper the progress you made?

Douglas Valenti

I'm not sure. I'm not sure of that - I think it's - I mean, I understand the question. I think in some cases the answer is yes. And I think in other cases, will be more confident where they don't have an OPM involved, but where the school itself has made a significant long-term commitment to their online or adult programs. Examples, I would cite there, of course, is great work being done at Arizona State, Southern New Hampshire University, Purdue University Global now, and others, where there is more of a direct management of the channel there, rather than through an OPM. And those folks are all doing great work, both, and most importantly on behalf of the student, but also in terms of their systems and processes for media buying and enrollment.

So I think it kind of depends on the school. But if the OPMs can professionalize and help schools that don't have these or that capability of commitment then that's a good thing. And then there will be other schools, like the ones I mentioned, that don't need any help, they are doing a great job on their own.

James Goss

Okay. And then in the Financial Services side, am I understanding it correctly that there will be a drag on the mortgages side, but it won't be so great as to totally offset the growth you will get in the other categories. But then in insurance, you're probably testing some limits in terms of growth, because of the substantial size of that relative to others. And then the other categories would grow faster and that would probably be - they would be the drivers, either the personal loans, or the credit cards and banking, as the ones to drive their category for now?

Gregory Wong

I think that insurance still has a lot of capacity for good strong growth for a long time to come. Most of our clients there are not nearly as far along in their commitment and their execution in digital media as our one largest client. And that represents huge capacity for scale growth for lot of years to come. So I would - that's how I would characterize insurance.

That said, we certainly are further along in insurance than we are in some of the other verticals and we are seeing faster growth, albeit at lower but still meaningful scale, in some of the other verticals as you get kind of early adoption characteristics and penetrated. So, I wouldn't make the general statement that other financial services verticals are necessarily going to over medium- to long-term, grow more rapidly than insurance, but I certainly think we'll go through periods where that's the case.

And right now, we do have a couple that are growing triple-digits at scale, as they - as you see the combined effects of clients getting more aggressive in the vertical - I mean, in the channel, and our rolling the new product set into those verticals and getting that initial inflection like we did in insurance. So it's - but I would say, we see very big scale growth potential in a number of and probably all of the financial services verticals we named today over the medium to long term. And we certainly aren't done in insurance.

James Goss

Okay. One last question, within insurance, are any of the other insurers besides Progressive getting to the point where their revenue contribution will require them to be broken out the way Progressive is?

Douglas Valenti

No, not as far as we can currently see.

Gregory Wong

No, and I wouldn't expect that. I would say that similar to the past number of quarters, we have a number of large clients that are growing at a much faster rate, year-over-year rate than Progressive, just not at the same scale; but no, not to the point where we will have to break it out.

James Goss

Okay. Thanks a lot.

Douglas Valenti

Thank you, Jim.

Operator

Thank you. And we have no further questions in the queue at this time.

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