Financial Data and Key Metrics Changes - For Q4 2024, the company reported revenue of $76 million and gross profit of $45 million, with adjusted EBITDA of $17.9 million, reflecting a 79% year-over-year increase [7][37] - Total owned and operated revenue reached $65 million, a 19% year-over-year decline and a 9% sequential decrease, while adjusted gross profit increased to $32 million, marking a 20% year-over-year increase [14][15] - Advertising spend declined by 26% sequentially due to lower monetization from Google [10][41] Business Line Data and Key Metrics Changes - Owned and operated products generated $27.1 million in revenue, up 60% year-over-year and 30% sequentially, while marketing businesses saw a 40% year-over-year revenue decline [39][14] - Partner Network revenue was $11 million, with adjusted gross profit of $14 million, both up 10% year-over-year and sequentially [31] Market Data and Key Metrics Changes - International revenue represented 36% of total owned and operated revenue, up from 26% in Q4 2023 [16] - Total sessions across owned and operated properties totaled 1.9 billion, down 8% from Q3 but up 79% year-over-year [15][41] Company Strategy and Development Direction - The company is focusing on AI integrations across all facets of its operations, particularly within the RAMP platform, to enhance efficiency and scale [12][13] - A strategic shift is underway from Google's AdSense for Domains (AFD) to the newer Related Search on Content (RSOC) product, with the company well-positioned to navigate this transition [20][81] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing volatility due to changes in Google's Search Partner Network, which has impacted advertising spend and revenue [9][10] - The company remains cautiously optimistic about 2025, expecting to leverage its core products in private search, mapping, and couponing for growth [34][47] Other Important Information - The company ended the quarter with $63.6 million in unrestricted cash and $280 million in term loan debt, with a net consolidated leverage of approximately 5.6 times [44][66] - Q1 revenue guidance is estimated between $69 million and $71 million, with adjusted gross profit expected to grow 25% year-over-year [45][46] Q&A Session Summary Question: Thoughts on AI and investment in RAMP - Management noted that advancements in AI are significantly reducing costs and improving operational efficiency, with engineers experiencing productivity improvements of two to four times [53][59] Question: Balance sheet and capital structure management - The company is focused on improving its capital structure, with a net leverage of 5.6 times, which is higher than desired, but management is optimistic about future growth and refinancing opportunities [66] Question: Impact of political advertising on business model - Management indicated that the end of the political advertising season is favorable, as it typically leads to lower advertising costs for the company [68] Question: Readiness for RSOC shift - The company has invested heavily in RSOC and believes it is well-positioned to lead in this new product area, despite expected short-term revenue bumps [80][81] Question: International market growth potential - Management highlighted the increasing percentage of revenue from international markets and the potential for growth in areas like CouponFollow and MapQuest [92][94] Question: Trajectory for adjusted EBITDA margin - The company expects gross profit growth to translate into expanded adjusted EBITDA margins, driven by disciplined operating expense management [96][98]

Revenue Performance - Revenue for Q4 2024 decreased by 21% year-over-year to $75.6 million, while full-year revenue decreased by 14% to $343.9 million[7]. - Revenue for Q4 2024 was $75.6 million, down 21.0% from $96.1 million in Q4 2023; annual revenue decreased from $402.0 million in 2023 to $343.9 million in 2024, a decline of 14.4%[23]. Profitability Metrics - Adjusted Gross Profit for Q4 2024 increased by 19% year-over-year to $44.7 million, and for the full year, it decreased by 1% to $152.3 million[7]. - Adjusted EBITDA for Q4 2024 increased by 79% year-over-year to $17.9 million, while for the full year, it increased by 32% to $38.6 million[7]. - Adjusted EBITDA improved to $17.9 million in Q4 2024 compared to $10.0 million in Q4 2023, and for the year, it increased from $29.2 million in 2023 to $38.6 million in 2024[22]. - Gross profit for Q4 2024 was $31.8 million, up from $24.9 million in Q4 2023; annual gross profit slightly decreased from $103.4 million in 2023 to $101.3 million in 2024[23]. Net Loss and Financial Position - GAAP Net Loss for Q4 2024 decreased by 29% year-over-year to $18.0 million, and for the full year, it decreased by 13% to $97.3 million[7]. - The company reported a net loss from continuing operations of $18.0 million in Q4 2024, an improvement from a loss of $25.4 million in Q4 2023; annual net loss improved from $111.3 million in 2023 to $97.3 million in 2024[22]. - The accumulated deficit increased from $707,662,000 in 2023 to $782,335,000 in 2024, reflecting a worsening financial position[21]. Asset and Liability Changes - Total assets decreased from $605,470,000 in 2023 to $459,129,000 in 2024, a decline of approximately 24.2%[21]. - Total liabilities decreased from $436,155,000 in 2023 to $374,133,000 in 2024, a reduction of approximately 14.2%[21]. - Cash and cash equivalents dropped significantly from $135,343,000 in 2023 to $63,607,000 in 2024, a decrease of about 53%[21]. Strategic Initiatives and Growth - The company expects Q1 2025 revenue to be between $69 million and $71 million, with Adjusted Gross Profit projected between $38 million and $40 million[6][16]. - The RAMP platform saw a 500%+ increase in campaign launches year-over-year in Q4 2024 due to automation and AI initiatives[8]. - CouponFollow.com experienced a 129% year-over-year increase in organic sessions in Q4 2024, indicating strong user engagement[8]. - The company renewed advertising arrangements with Google in October 2024 and February 2025, with agreements extending to 2027[8]. - The company is focused on optimizing its capital structure and enhancing monetization strategies for long-term growth[4]. - System1's operational efficiency and financial discipline were highlighted as key factors in navigating a volatile market[4]. Shareholder Equity - Class A common stock shares issued and outstanding increased from 65,855 in 2023 to 73,653 in 2024[21]. - Additional paid-in capital rose from $843,112,000 in 2023 to $863,033,000 in 2024, indicating increased investment in the company[21].

Revenue Dependence - 78% of the total revenue for the year ended December 31, 2024, was attributable to agreements with Google[94] - Revenue and operating results depend on the effectiveness of the Responsive Acquisition Marketing Platform (RAMP) to acquire users with commercial intent[92] - Changes in Google's advertising practices could adversely affect the company's revenue and operating results[96] - A decrease in mobile, display, and video advertising usage could harm growth prospects and financial condition[131] - Revenue is significantly affected by third-party website publishers; any decline in available media could lead to revenue loss[163] Operational Risks - The company has a limited operating history since its formation in 2013, which increases investment risks[90] - The company faces risks related to data security breaches, which could lead to reputational harm and financial liabilities[99] - Operational issues with the platform, including potential outages and performance errors, could adversely affect financial results and brand reputation[116] - The company must continuously innovate and invest in research and development to remain competitive in a rapidly changing market[121] - The company faces significant risks related to intellectual property claims, which could lead to substantial monetary liabilities or operational restrictions[175] Marketing and Advertising Challenges - The company relies on large-scale acquisition marketing channels, including Google, Meta, Outbrain, and TikTok, for significant consumer Internet traffic[107] - The company has made significant expenditures for search engine marketing, which may not be cost-effective[108] - Advertising spend remains concentrated in traditional media, and a cultural shift towards online marketing is necessary for growth[126] - The company’s marketing efforts may not be successful due to reliance on performance metrics that are subject to change[111] Financial and Compliance Issues - The company’s credit facilities contain covenants that restrict business and financing activities, potentially limiting operational flexibility[112] - The company must comply with various privacy laws and regulations, which may be costly and complex[104] - The company identified material weaknesses in internal control over financial reporting, which could lead to inaccurate financial results and loss of investor confidence[136] - The management team has limited experience in managing a public company, which may affect compliance with reporting and internal control obligations[166] - The company incurs significant expenses related to compliance with public company regulations, which may divert management's attention from business operations[231] International Operations and Expansion - International expansion may incur significant operating expenses and expose the company to economic and political instability, potentially affecting financial results[153] - The company has a limited operating history outside the U.S., which poses challenges in managing international operations and securing quality ad inventory[152] - International operations expose the company to increased management costs, long payment cycles, and regulatory compliance challenges[154] Cybersecurity and Data Privacy - Cybersecurity risks threaten the integrity and availability of the company's IT systems, which could result in significant operational and reputational damage[145] - Privacy and data protection laws may incur unexpected costs and require changes to the business model, potentially adversely affecting operations[178] - The California Consumer Privacy Act (CCPA) imposes civil penalties of up to $7,500 per violation, which could significantly impact financial results[179] - Concerns about data privacy and security could damage the company's reputation and deter clients from using its services[200] Financial Resources and Capital Structure - The company anticipates continued growth will require substantial financial resources for technology improvements and market expansion[128] - The company may issue additional shares or convertible securities in the future, which could dilute existing shareholders' ownership and negatively affect stock prices[219] - The company does not intend to pay dividends on its common stock for the foreseeable future, retaining all available funds for business development and growth[234] Market and Economic Conditions - The company faces risks from unfavorable global economic conditions, including increasing interest rates and inflation, which could weaken demand for its software products[135] - The company is exposed to market risks including interest rate and foreign currency exchange risk, which could materially affect its financial condition and results of operations[354] Technology and Innovation - The company is investing heavily in AI Tools, including machine learning algorithms, to enhance its advertising services, but there are risks associated with the implementation and data quality[215] - The market for AI Tools is rapidly evolving, and the company faces competition that may develop superior or more cost-effective technologies[217] - The company is dependent on third-party data suppliers for its machine learning algorithms, and any withdrawal of data could adversely impact its service offerings and revenue[218]

Financial Data and Key Metrics Changes - System1 reported Q3 2024 revenue of approximately $89 million, with a gross profit of $38 million and adjusted EBITDA of $10.3 million, exceeding the high end of guidance [6][36] - Adjusted EBITDA grew 28% year-over-year and 4% quarter-over-quarter [36] - Total revenue was $88.8 million, representing a 1% year-over-year increase but a 6% sequential decline [36][37] Business Line Data and Key Metrics Changes - Owned and operated products generated $71 million in revenue, up 7% year-over-year but down 9% sequentially [10][37] - Revenue from marketing-driven business lines decreased due to underperformance in the Google Search Partner Network [8][30] - Partner Network revenue was $18 million, down 17% year-over-year but up 5% sequentially [30][37] Market Data and Key Metrics Changes - International revenue represented 35% of owned and operated revenue, up from 24% in Q3 2023 [12][70] - Total sessions on owned and operated properties exceeded 2 billion, up 125% year-over-year [10] - RPS (Revenue Per Session) and CPS (Cost Per Session) both decreased sequentially, indicating lower monetization rates [11][39] Company Strategy and Development Direction - The company is focused on integrating AI into its RAMP platform to enhance marketing campaign efficiency and effectiveness [9][28] - System1 aims to improve its owned and operated products while navigating the volatility in marketing-driven businesses [18][33] - The company is optimistic about the recovery of its Google-related businesses in 2025 [8][30] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing volatility in the advertising marketplace, leading to the decision not to provide Q4 guidance at this time [34][45] - The company expressed confidence in its ability to capitalize on long-term opportunities despite short-term challenges [46] - Management highlighted the importance of the Google Search Partner Network's recovery for future growth [32][68] Other Important Information - Operating expenses decreased by 5% sequentially, reflecting the company's focus on cost control [9][42] - The company ended the quarter with $69.1 million in unrestricted cash and $285 million in term loan debt, with a net leverage of approximately seven times [44] Q&A Session Summary Question: What has enabled the resurrection of MapQuest? - Management explained that improvements in technology and features, along with a focus on user experience, have revitalized MapQuest [48][50] Question: How does the end of the election cycle affect advertising? - Management indicated that the end of election-related advertising should normalize the marketplace, potentially lowering costs for buying ads [53][54] Question: What adjustments have been made to the RAMP platform? - Management confirmed that significant improvements have been made to RAMP, enhancing its effectiveness in creating engaging ads [57][60] Question: How ready is the company to capitalize on market disruptions? - Management expressed confidence in thriving during market disruptions and welcomed potential advertising spend pullbacks [68]

Revenue Performance - Revenue increased 1% year-over-year to $88.8 million, exceeding guidance[1] - Revenue for the three months ended September 30, 2023, was $88.8 million, compared to $87.8 million for the same period in 2022, representing a year-over-year increase of 1.14%[17] Profitability Metrics - GAAP net loss increased by $4.7 million year-over-year to $30.6 million[1] - Net loss attributable to System1, Inc. was $23.6 million for the quarter, down from $131.5 million in the same quarter last year[13] - Adjusted EBITDA rose 27% year-over-year to $10.3 million[1] - Gross profit for the three months ended September 30, 2023, was $24.8 million, slightly up from $24.7 million in the prior year, indicating a growth of 0.4%[17] - Adjusted Gross Profit for the three months ended September 30, 2023, was $37.6 million, compared to $37.2 million in the same period last year, reflecting an increase of 1.07%[17] Operating Expenses - Total operating expenses for Q3 2024 were $110.6 million, compared to $108.7 million in Q3 2023[13] - Cost of revenue (excluding depreciation and amortization) for the three months ended September 30, 2023, was $51.2 million, up from $50.6 million in the previous year[17] - Depreciation and amortization related to cost of revenue for the three months ended September 30, 2023, was $12.8 million, compared to $12.5 million in the same period last year[17] Cash and Assets - Cash and cash equivalents decreased to $69.1 million from $135.3 million at the end of the previous year[14] - Total assets decreased to $479.3 million from $605.5 million at the end of the previous year[14] User Engagement and Product Development - CouponFollow.com saw over 100% year-over-year increase in organic sessions, with users of savings-focused browser extensions more than doubling[3] - Startpage launched its Private Browser app for Android, achieving over 200,000 downloads across Android and iOS[3] - MapQuest finalized a multi-year deal with HERE for backend mapping technology, improving user experience and offering cost savings[4]

Revenue and Financial Performance - Revenue for the three months ended September 30, 2024, was $88,832,000, representing a 1% increase from $87,818,000 in the same period of 2023[115] - Total revenue for the nine months ended September 30, 2024, was $268,330 million, a decrease of $37,521 million or 12% compared to $305,851 million in the same period of 2023[116] - Owned and Operated Advertising revenue for the three months ended September 30, 2024, was $70,798 million, an increase of $4,611 million or 7% year-over-year[122] - Partner Network revenue for the nine months ended September 30, 2024, was $51,106 million, a decrease of $5,233 million or 9% compared to $56,339 million in the same period of 2023[123] Operating Loss and Expenses - Operating expenses totaled $110,648,000 for the three months ended September 30, 2024, a 2% increase from $108,672,000 in the prior year[115] - The operating loss for the three months ended September 30, 2024, was $21,816,000, compared to an operating loss of $20,854,000 in the same period of 2023[115] - Operating loss for the nine months ended September 30, 2024, was $(76,698) million, an increase in loss of $9,788 million or 15% compared to $(66,910) million in the same period of 2023[116] - Salaries and benefits increased by $5.5 million for the three months ended September 30, 2024, primarily due to share-based liabilities[130] Net Loss - Net loss from continuing operations for the three months ended September 30, 2024, was $30,639,000, an 18% increase from $25,928,000 in the prior year[115] - The company reported a net loss attributable to System1, Inc. of $23,602,000 for the three months ended September 30, 2024, compared to a net loss of $131,490,000 in the same period of 2023, reflecting an 82% improvement[115] - Net loss attributable to System1, Inc. for the nine months ended September 30, 2024, was $(60,512) million, a decrease of $139,080 million or 70% compared to $(199,592) million in the same period of 2023[116] - The company experienced a net loss of $249.1 million for the nine months ended September 30, 2023, adjusted for noncash items[146] Interest Expense - Interest expense, net, decreased by 39% to $7,957,000 for the three months ended September 30, 2024, down from $13,053,000 in the prior year[115] - Interest expense, net decreased by $12,991 million or 35% for the nine months ended September 30, 2024, compared to the same period in 2023[116] Cash Flow and Liquidity - As of September 30, 2024, the company had unrestricted cash and cash equivalents of $69.1 million and $50.0 million available to borrow on its 2022 Revolving Facility[141] - For the nine months ended September 30, 2024, the company reported cash outflows of $69.9 million, primarily due to $56.8 million repayment of its Term Loan[141] - Cash used in operating activities for the nine months ended September 30, 2024 was $6.0 million, influenced by favorable changes in net income and working capital balances[145] - Cash used in investing activities for the nine months ended September 30, 2024 was $5.0 million, primarily for costs capitalized for internally developed software[147] - Cash used in financing activities for the nine months ended September 30, 2024 was $59.0 million, mainly related to the repayment of the 2022 Term Note[148] - The company is focused on improving liquidity by expanding advertising partners and optimizing advertising spend[140] Business Operations - The company ingested over 13 billion rows of data daily across approximately 40 advertising vertical categories during the three months ended September 30, 2024[99] - As of September 30, 2024, the company owned and operated approximately 40 websites, including leading search engines and digital media publishing sites[101] - The company completed the sale of its Protected business on November 30, 2023, with results presented as net loss from discontinued operations[106] - The company operates primarily in the United States, with additional operations in Canada and the Netherlands, facing various geopolitical and economic risks[104] Advertising Performance - Owned and Operated Advertising sessions increased by approximately 2.5 billion to 5.3 billion for the nine months ended September 30, 2024, compared to 2.8 billion in the prior year[124] - Network sessions increased approximately 3.9 billion to 5.9 billion for the nine months ended September 30, 2024, compared to 2.0 billion in the prior year[125] Future Commitments and Risks - The company remains contractually obligated to spend a remaining $8.0 million towards a service agreement commitment through June 2026[151] - Adverse macroeconomic conditions may impact advertising demand, affecting financial condition and operating results[140] - The company does not have any off-balance sheet arrangements that could materially affect its financial statements[150]

Financial Data and Key Metrics Changes - System1 reported Q2 2024 revenue of $95 million and gross profit of $39 million, with adjusted EBITDA at $9.9 million, which was 42% higher than the high end of guidance [5][21] - Total owned and operated revenue was $77 million, flat year-over-year but up 12% from the previous quarter, while adjusted gross profit was $27 million, up 22% quarter-over-quarter [5][21] - Partner Network revenue was $17 million, down 12% year-over-year but up 8% sequentially, with adjusted gross profit decreasing 9% year-over-year but increasing 24% sequentially [9][22] Business Line Data and Key Metrics Changes - Owned and operated products generated over 2 billion sessions, a 145% year-over-year increase and a 66% quarter-over-quarter increase, although revenue per session declined nearly 60% year-over-year [6][22] - Partner Network total sessions were 2 billion, up 203% year-over-year and 33% sequentially, but revenue per session declined 71% year-over-year [10][22] - Organic products, including CouponFollow and MapQuest, saw revenue up 17% year-over-year and gross profit up 18% year-over-year, with a sequential increase of 21% in revenue and 26% in gross profit [23][24] Market Data and Key Metrics Changes - International revenue represented approximately 36% of owned and operated revenue, up from 29% in the first quarter, indicating strong international growth [7][22] - The company noted significant growth in programmatic markets, particularly with partnerships in Asia, South America, and Europe [34][35] Company Strategy and Development Direction - System1 plans to invest in its RAMP platform focusing on AI integration, expanding buy-side capabilities for partners, and launching new products [11][12] - The company aims to enter under-indexed segments such as shopping and subscription products, with plans to partner with large advertising networks for shopping and explore subscription offerings [16][17] - The restructuring of corporate reporting will allow for better visibility into the performance of product businesses, which are less dependent on paid advertising [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the digital advertising market and noted that Q2 performance was in line with expectations [28][37] - The company does not anticipate significant contributions from new initiatives in 2024 but is optimistic about future growth from these efforts [30][31] - Management highlighted the importance of international growth and the positive trends observed in programmatic markets [34][35] Other Important Information - Operating expenses were reduced by 16% year-over-year, contributing to improved adjusted EBITDA of $9.9 million [21][25] - The company ended the quarter with $75.7 million in unrestricted cash and a net leverage of approximately 7.5 times [25] Q&A Session Summary Question: Concerns about marketplace conditions and future contributions from new initiatives - Management indicated no concerns regarding marketplace conditions and confirmed that Q2 performance aligned with expectations [28][29] Question: Impact of Google's decision on third-party cookies on CPMs - Management does not anticipate significant changes in CPMs due to Google's decision, noting that the industry may experience relief but their business outlook remains unchanged [32][33] Question: Success in international markets and future growth contributions - Management expressed optimism about international growth, particularly in programmatic markets, and expects continued contributions to overall revenue [34][35]

Revenue Performance - Revenue for the three months ended June 30, 2024, was $94,581,000, a decrease of 2% compared to $96,914,000 in the same period of 2023[106]. - Total revenue for the six months ended June 30, 2024, was $179,498 million, a decrease of 18% compared to $218,032 million in the same period of 2023[112]. - Owned and Operated Advertising revenue for the six months ended June 30, 2024, was $146,426 million, down 20% from $183,325 million in the prior year[113]. - Partner Network revenue decreased by 12% for the three months ended June 30, 2024, totaling $17,185 million compared to $19,614 million in the same period of 2023[112]. Operating Loss and Expenses - Operating loss for the three months ended June 30, 2024, was $(29,086,000), representing 31% of total revenue, compared to $(21,825,000) or 23% of total revenue in 2023[106]. - Total operating expenses for the three months ended June 30, 2024, were $123,667,000, an increase of 4% from $118,739,000 in the same period of 2023[106]. - Operating loss for the six months ended June 30, 2024, was $(54,882) million, an increase in loss of 19% from $(46,054) million in the prior year[112]. - Salaries and benefits expenses increased by 25% to $33,937,000 in Q2 2024, up from $27,054,000 in Q2 2023[106]. - Salaries and benefits increased by $3,219 million for the six months ended June 30, 2024, primarily due to share-based liabilities[119]. Net Loss - Net loss from continuing operations for the three months ended June 30, 2024, was $(34,845,000), compared to $(29,507,000) in the same period of 2023, an increase of 18%[106]. - Net loss attributable to System1, Inc. for the six months ended June 30, 2024, was $(36,910) million, a decrease of 46% compared to $(68,103) million in the same period of 2023[112]. - The company experienced a net loss of $85.9 million for the six months ended June 30, 2023, despite cash provided by operating activities of $1.4 million[131]. Cash Flow and Liquidity - As of June 30, 2024, the company had unrestricted cash and cash equivalents of $75.7 million and $50.0 million available to borrow on its 2022 Revolving Facility[127]. - For the six months ended June 30, 2024, the company reported cash outflows of $63.2 million, primarily driven by a net loss of $48.6 million and a $51.8 million repayment of its Term Loan[127]. - Cash used in operating activities for the six months ended June 30, 2024, was $6.0 million, influenced by changes in net income and working capital balances[130]. - Cash used in investing activities for the six months ended June 30, 2024, was $3.2 million, mainly for costs capitalized for internally developed software[132]. - Cash used in financing activities for the six months ended June 30, 2024, was $53.9 million, primarily related to the repayment of the 2022 Term Note[133]. Business Operations - As of June 30, 2024, the company processes approximately 175 million daily advertising campaign optimizations and ingests over 13 billion rows of data daily across approximately 41 advertising vertical categories[92]. - The company operates approximately 40 owned and operated websites, including leading search engines and digital media publishing sites[94]. - The company is contractually obligated to spend a remaining $10.0 million under a multi-year service agreement through June 2026[136]. Market Conditions and Risks - The company is subject to various risks in international operations, including changes in tax laws and regulatory frameworks[97]. - The company's revenue is significantly dependent on two key advertising partners, Google and Microsoft[127]. - Adverse macroeconomic conditions have impacted advertising demand, potentially affecting future financial performance[126]. - The company is focused on reducing cash operating expenses and optimizing advertising spend to improve liquidity[126]. Interest Expense - Interest expense, net, decreased by 36% to $7,871,000 in Q2 2024, down from $12,334,000 in Q2 2023[106]. - Interest expense, net decreased by 33% for the six months ended June 30, 2024, totaling $15,841 million compared to $23,736 million in the prior year[122].

Revenue and Profitability - Revenue for Q2 2024 increased by $9.7 million over the prior quarter to $94.6 million[1] - Gross profit rose 40% over the prior quarter to $26.1 million[1] - Adjusted EBITDA increased by $9.5 million over the prior quarter to $9.9 million[1] - Adjusted Gross Profit for Q2 2024 was $38.8 million, reflecting a 24% increase over the prior quarter[1] - Revenue for Q2 2024 was $94.6 million, down from $96.9 million in Q2 2023, representing a decrease of about 2.4%[18] - Gross profit for Q2 2024 was $26.1 million, compared to $27.8 million in Q2 2023, reflecting a decrease of approximately 6.1%[18] - Adjusted EBITDA for Q2 2024 was $9.9 million, an increase from $6.1 million in Q2 2023[17] Losses and Financial Position - GAAP net loss increased by 152% over the prior quarter to $34.8 million[1] - Net loss from continuing operations for Q2 2024 was $34.8 million, compared to a net loss of $29.5 million in Q2 2023[17] - Accumulated deficit increased to $(744,572,000) from $(707,662,000) over the period[16] - Total current assets decreased to $148,624,000 from $202,003,000, a decline of approximately 26.4%[16] - Total liabilities decreased to $382,057,000 from $436,155,000, a reduction of about 12.4%[16] - Cash and cash equivalents decreased to $75,651,000 from $135,343,000, a decline of approximately 44.6%[16] - Long-term debt decreased to $263,338,000 from $334,232,000, a reduction of about 21.2%[16] - Total stockholders' equity attributable to System1, Inc. decreased to $109,412,000 from $135,278,000, a decline of approximately 19.1%[16] User Engagement and Product Development - CouponFollow.com saw a 36% year-over-year increase in organic visitors, with over 15 million monthly active users[3] - Startpage's Private Browser app launched with over 50,000 downloads and received over 2,000 five-star ratings[3] - MapQuest experienced 10% year-over-year growth in organic visits due to investments in new content and improved data quality[3] Future Outlook - The company expects Q3 2024 revenue guidance between $86 million and $88 million[4] - The company renewed a primary monetization relationship with Google[3]

Financial Data and Key Metrics Changes - System1 reported revenue of $85 million and gross profit of $31 million for Q1 2024, with adjusted EBITDA at $423,000, reflecting a 30% year-over-year decline in revenue and a 12% sequential decline [2][58] - Owned and operated revenue was $69 million, down 35% year-over-year and down 13% from the previous quarter [2][58] - Adjusted EBITDA was $422,000 compared to $5.2 million in the same quarter last year, exceeding the high end of the guidance range by $1.4 million [22][58] Business Line Data and Key Metrics Changes - Partner network revenue was $16 million, with a gross profit of $11 million, representing a 5% year-over-year increase but a 5% sequential decline due to seasonality [11] - Total sessions processed by RAMP increased to 2.26 million, up 22% sequentially and 53% year-over-year [43] - Average revenue per partner decreased by 9% sequentially due to Q1 seasonality, with total active partners growing by 5% to over 250 [35] Market Data and Key Metrics Changes - International revenue represented approximately 29% of owned and operated revenue, up from 25% in Q4 2023 [31] - The advertising marketplace showed initial weakness in January but improved as the quarter progressed, with March exceeding expectations [9][19] - Partner network revenue per session declined 55% year-over-year and 28% quarter-over-quarter due to marketplace headwinds [34] Company Strategy and Development Direction - The company is focusing on investing in its RAMP platform, expanding its subscription business, and exploring M&A opportunities as the digital market stabilizes [16][17] - System1 aims to enhance its buy-side capabilities and open up its platform to partners primarily using it for sell-side monetization [16][95] - The management expressed confidence in returning to growth mode, driven by improved execution and product enhancements [18][93] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the digital advertising market stabilizing in 2024, despite ongoing uncertainties [24][41] - The delay in cookie deprecation by Google is viewed as a potential tailwind for the company, as it may enhance the effectiveness of contextual advertising [26] - The company expects Q2 revenue to be between $88 million and $90 million, representing an 8% year-over-year decline at the midpoint [45] Other Important Information - The company ended the quarter with $69.9 million in unrestricted cash and a term loan balance of $296 million, with a net leverage of approximately 9.19 times [22] - Management emphasized the importance of aligning with long-term shareholders and maintaining a focus on maximizing equity value [40][60] Q&A Session Summary Question: How does the company view the impact of cookie deprecation? - Management believes cookie deprecation will be a tailwind, enhancing contextual advertising effectiveness, and expressed disappointment over the delay to 2025 [26] Question: What opportunities does the company see in international markets? - Management noted that international revenue is under-indexed, particularly in the EU, and sees significant growth potential in these regions [49] Question: How is the company navigating the current consumer spending environment? - Management indicated stability in consumer spending and does not see a significant decline, with a focus on adapting to changing consumer demands [82] Question: What is the company's outlook regarding the upcoming presidential election and its impact on advertising? - Management does not anticipate significant changes in their marketplaces due to the election, focusing instead on stability and growth in the second half of 2024 [83][84]