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]

Revenue Performance - Revenue for the three months ended March 31, 2024, was $84,917, a decrease of 30% compared to $121,118 in the same period of 2023[120] - Owned and Operated Advertising revenue decreased by 35% to $69,030 for the three months ended March 31, 2024, from $106,025 in the prior year[124] - Partner Network revenue increased by 7% to $10,919,000 for the three months ended March 31, 2024, compared to $10,217,000 in the prior year[130] - Total adjusted gross profit decreased by 17% to $33,381,000 for the three months ended March 31, 2024, down from $40,056,000 in the prior year[130] Operating Expenses - Operating expenses totaled $110,713 for the three months ended March 31, 2024, down 24% from $145,347 in the prior year[120] - The cost of revenue (excluding depreciation and amortization) was $53,698 for the three months ended March 31, 2024, a decrease of 35% from $82,953 in the same period of 2023[120] - Salaries and benefits decreased by $1.9 million in stock-based compensation and $1.8 million in salary expense due to lower headcount for the three months ended March 31, 2024[131] - Selling, general, and administrative expenses decreased by $1.7 million for the three months ended March 31, 2024, primarily due to reduced advisory and consulting fees[132] Net Loss and Financial Changes - The net loss from continuing operations for the three months ended March 31, 2024, was $13,791, a reduction of 55% compared to $30,393 in the same period of 2023[120] - Interest expense, net, decreased by 30% to $7,970 for the three months ended March 31, 2024, from $11,402 in the prior year[120] - The gain from debt extinguishment was $19,676 for the three months ended March 31, 2024, compared to no gain in the same period of 2023[120] - The change in fair value of warrant liabilities improved by 82%, decreasing to $251 from $1,409 in the prior year[120] - Total other income expense, net, was $(11,957) for the three months ended March 31, 2024, compared to $9,993 in the same period of 2023, reflecting a significant change of 220%[120] Cash Flow and Financing - Cash outflows from operations were $16,000,000 for the three months ended March 31, 2024, compared to $5,801,000 in the prior year[152] - The company had unrestricted cash and cash equivalents of $69.9 million as of March 31, 2024[143] - The principal amount outstanding on the Term Loan was $296.3 million as of March 31, 2024, following a repurchase of $63.7 million in principal amount[145][148] - Cash used in financing activities was $48,158,000 for the three months ended March 31, 2024, primarily due to repayment of the 2022 Term Note[157] - The company expects existing cash and cash equivalents and cash flows from operations to be sufficient to fund operating activities for at least the next 12 months[141] Strategic Focus - The company is focused on expanding the number of advertising partners and optimizing bids to drive higher returns on advertising spend[142] - The number of Owned & Operated Advertising sessions increased by 183 million to 1,209 million from 1,026 million compared to the prior year[125]

Exhibit 99.1 System1 Announces First Quarter 2024 Financial Results All Key Financial Results Above the High-End of Guidance Range LOS ANGELES, CA – May 9, 2024 – System1, Inc. (NYSE: SST) ("System1" or the "Company"), an omnichannel customer acquisition marketing platform, announced its financial results for the first quarter of 2024. "We are pleased to report a strong start to the year, with our headline Q1 results exceeding the top end of our guidance ranges for Revenue, Adjusted Gross Profit and Adjuste ...

System1, Inc. (NYSE:SST) Q4 2023 Results Conference Call March 18, 2024 8:00 AM ET Company Participants Kyle Ostgaard - Vice President, Finance Michael Blend - Co-Founder and Chief Executive Officer Tridivesh Kidambi - Chief Financial Officer Conference Call Participants Dan Kurnos - The Benchmark Company Thomas Forte - Maxim Group Operator Good morning. My name is Christa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the System1 Fourth Quarter and Full Year ...

[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) System1 reported strong Q4 2023 results exceeding guidance, with full-year revenue of **$402.0 million** and management expressing optimism for 2024 [Fourth Quarter 2023 Financial Highlights](index=1&type=section&id=1.1.%20Fourth%20Quarter%202023%20Financial%20Highlights) System1 reported Q4 2023 financial results exceeding guidance, showing QoQ growth in Revenue, Gross Profit, and Adjusted EBITDA Fourth Quarter 2023 Financial Highlights (QoQ Change) | Metric | Q4 2023 Value | QoQ Change | | :-------------------- | :------------ | :--------- | | Revenue | $96.1 million | Increased 9% | | Gross Profit | $25 million | Increased 1% | | Adjusted Gross Profit | $37.5 million | Increased 1% | | GAAP Net Loss | $25 million | Decreased 2% | | Adjusted EBITDA | $10 million | Increased 24% | [Fiscal Year 2023 Financial Highlights](index=1&type=section&id=1.2.%20Fiscal%20Year%202023%20Financial%20Highlights) For FY 2023, System1 reported total revenue of **$402.0 million** and Adjusted EBITDA of **$29.2 million**, reflecting overall performance Fiscal Year 2023 Financial Highlights | Metric | FY 2023 Value | | :-------------------- | :------------ | | Revenue | $402.0 million | | Gross Profit | $103.4 million | | Adjusted Gross Profit | $153.3 million | | GAAP Net Loss | $111.3 million | | Adjusted EBITDA | $29.2 million | [Management Commentary](index=1&type=section&id=1.3.%20Management%20Commentary) Management expressed satisfaction with Q4 results, citing strategic focus, AI integration, and a streamlined cost structure for 2024 optimism - Q4 results exceeded guidance for Revenue, Adjusted Gross Profit, and Adjusted EBITDA despite a challenging online advertising environment[4](index=4&type=chunk) - Optimistic about 2024 and beyond, expecting benefits from increased advertiser demand, deprecation of third-party cookies, AI integration in RAMP, resurgence in Partner Network, and streamlined strategic focus after Total Security sale[4](index=4&type=chunk) - Entered 2024 with a streamlined cost structure, a capital-efficient advertising business, and substantial liquidity, with a focus on investing for growth and strategically deploying capital to reduce leverage[4](index=4&type=chunk) [Business Updates & Outlook](index=2&type=section&id=2.%20Business%20Updates%20%26%20Outlook) System1 completed a major divestiture and debt reduction, issued Q1 2024 guidance, and detailed its RAMP-driven customer acquisition platform [Fourth Quarter 2023 and Subsequent Business Highlights](index=2&type=section&id=2.1.%20Fourth%20Quarter%202023%20and%20Subsequent%20Business%20Highlights) System1 divested Total Security for **$240 million**, retired **29.1M** Class A shares, repaid **$155 million** in debt, and introduced product enhancements - Sold subscription business segment (Total Security) for **$240 million** gross cash and retired approximately **29.1M** Class A shares[10](index=10&type=chunk) - Successfully completed a modified "Dutch auction" tender offer in January 2024, repurchasing **$63.7 million** of term debt for **$40.9 million**, contributing to a total debt repayment of **$155 million** between November 2023 and January 2024[10](index=10&type=chunk) - Introduced new enhancements to Owned & Operated product offerings, including a "proof of delivery" feature for the RoadWarrior app, and announced a strategic partnership to power Ecosia's search results[10](index=10&type=chunk) [First Quarter 2024 Guidance](index=2&type=section&id=2.2.%20First%20Quarter%202024%20Guidance) For Q1 2024, System1 anticipates revenue between **$82 million** and **$84 million**, with Adjusted EBITDA projected between **$(2) million** and **$(1) million** First Quarter 2024 Guidance | Metric | Range (Millions) | | :-------------------- | :--------------- | | Revenue | $82 - $84 | | Gross Profit | $15 - $17 | | Adjusted Gross Profit | $28 - $30 | | Adjusted EBITDA | $(2) - $(1) | - Expects interest expense in the range of **$7.5 million** to **$8.0 million**, depreciation and amortization expense in the range of **$20 million** to **$21 million**, and acquisition and restructuring costs in the range of **$2.0 million** to **$2.5 million** for Q1 2024[7](index=7&type=chunk) [About System1, Inc.](index=2&type=section&id=2.3.%20About%20System1%2C%20Inc.) System1, Inc. operates an advanced Responsive Acquisition Marketing Platform (RAMP), an omnichannel, omnivertical platform built for a privacy-centric world - System1 operates an advanced Responsive Acquisition Marketing Platform (RAMP) that is omnichannel, omnivertical, and built for a privacy-centric world[9](index=9&type=chunk) - RAMP facilitates the building of powerful brands, the development and growth of privacy-focused products, and the delivery of high-intent customers to advertising partners[9](index=9&type=chunk) [Financial Statements](index=4&type=section&id=3.%20Financial%20Statements) This section details System1's Q4 2023 and FY 2023 statements of operations and consolidated balance sheets [Unaudited Condensed Statements of Operations (Q4 2023 vs. Q4 2022)](index=4&type=section&id=3.1.%20Unaudited%20Condensed%20Statements%20of%20Operations%20%28Q4%202023%20vs.%20Q4%202022%29) In Q4 2023, System1's revenue decreased to **$96.1 million**, with an operating loss of **$(19.1) million** and a net loss of **$(27.6) million** Unaudited Condensed Statements of Operations (Q4) | Metric (in thousands) | Q4 2023 | Q4 2022 (As Revised) | | :-------------------- | :------ | :------------------- | | Revenue | $96,120 | $140,071 | | Operating income (loss) | $(19,078) | $(45,720) | | Net loss from continuing operations | $(25,426) | $(29,801) | | Net loss attributable to System1, Inc. | $(27,628) | $(32,751) | [Consolidated Statements of Operations (FY 2023 vs. FY 2022)](index=5&type=section&id=3.2.%20Consolidated%20Statements%20of%20Operations%20%28FY%202023%20vs.%20FY%202022%29) For FY 2023, System1's revenue was **$402.0 million**, with an operating loss of **$(86.0) million** and a net loss of **$(227.2) million** Consolidated Statements of Operations (FY) | Metric (in thousands) | FY 2023 | FY 2022 (Successor, As Revised) | | :-------------------- | :------ | :------------------------------ | | Revenue | $401,971 | $612,229 | | Operating income (loss) | $(85,989) | $(457,683) | | Net loss from continuing operations | $(111,258) | $(384,363) | | Net loss attributable to System1, Inc. | $(227,221) | $(330,392) | [Consolidated Balance Sheets (Dec 31, 2023 vs. Dec 31, 2022)](index=6&type=section&id=3.3.%20Consolidated%20Balance%20Sheets%20%28Dec%2031%2C%202023%20vs.%20Dec%2031%2C%202022%29) As of Dec 31, 2023, System1's total assets decreased to **$605.5 million**, cash increased to **$135.3 million**, and total liabilities decreased to **$436.2 million** Consolidated Balance Sheets | Metric (in thousands) | Dec 31, 2023 | Dec 31, 2022 (As Revised) | | :-------------------- | :----------- | :------------------------ | | Total assets | $605,470 | $1,160,456 | | Cash and cash equivalents | $135,343 | $8,905 | | Total liabilities | $436,155 | $689,785 | | Long-term debt, net | $334,232 | $399,504 | | Total stockholders' equity | $169,315 | $470,671 | [Non-GAAP Financial Measures](index=3&type=section&id=4.%20Non-GAAP%20Financial%20Measures) This section defines and reconciles System1's key non-GAAP financial measures, Adjusted Gross Profit and Adjusted EBITDA, for Q4 and FY 2023 [Definition and Limitations](index=3&type=section&id=4.1.%20Definition%20and%20Limitations) This section defines Adjusted Gross Profit and Adjusted EBITDA as non-GAAP measures, outlining their use by management and their inherent limitations - Adjusted Gross Profit is defined as gross profit plus depreciation and amortization related to cost of revenues[15](index=15&type=chunk) - Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation, deferred compensation, management fees, minority interest, restructuring charges, impairment, and certain discrete items[15](index=15&type=chunk) - These non-GAAP measures are used by management to measure operational strength and performance but have limitations, including potential non-comparability with other companies and not being a substitute for GAAP measures[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) [Adjusted EBITDA Reconciliation (Q4 2023 vs. Q4 2022)](index=7&type=section&id=4.2.%20Adjusted%20EBITDA%20Reconciliation%20%28Q4%202023%20vs.%20Q4%202022%29) Adjusted EBITDA for Q4 2023 was **$10.0 million**, a decrease from **$14.3 million** in Q4 2022, despite a lower net loss Adjusted EBITDA Reconciliation (Q4) | Metric ($ in millions) | Q4 2023 | Q4 2022 (As Revised) | | :--------------------- | :------ | :------------------- | | Net loss | $(25.4) | $(29.8) | | Income tax benefit | $(8.8) | $(15.3) | | Interest expense | $12.0 | $9.7 | | Depreciation and amortization | $19.7 | $19.1 | | Impairment of goodwill | - | $26.6 | | Stock-based compensation & distributions to members | $5.8 | $6.9 | | Acquisition and restructuring costs | $3.3 | $6.2 | | **Adjusted EBITDA** | **$10.0** | **$14.3** | [Adjusted EBITDA Reconciliation (FY 2023 vs. FY 2022)](index=8&type=section&id=4.3.%20Adjusted%20EBITDA%20Reconciliation%20%28FY%202023%20vs.%20FY%202022%29) For FY 2023, Adjusted EBITDA was **$29.2 million**, a significant decrease from **$68.4 million** in 2022, reflecting various adjustments to net loss Adjusted EBITDA Reconciliation (FY) | Metric ($ in millions) | FY 2023 | FY 2022 (Successor, As Revised) | | :--------------------- | :------ | :------------------------------ | | Net loss | $(111.3) | $(384.4) | | Income tax benefit | $(20.4) | $(108.7) | | Interest expense | $48.7 | $31.6 | | Depreciation and amortization | $78.4 | $69.5 | | Impairment of goodwill | - | $372.7 | | Stock-based compensation & distributions to members | $21.2 | $22.2 | | Acquisition and restructuring costs | $14.7 | $26.6 | | **Adjusted EBITDA** | **$29.2** | **$68.4** | [Adjusted Gross Profit Reconciliation (Q4 2023 vs. Q4 2022)](index=8&type=section&id=4.4.%20Adjusted%20Gross%20Profit%20Reconciliation%20%28Q4%202023%20vs.%20Q4%202022%29) In Q4 2023, Adjusted Gross Profit was **$37.5 million**, down from **$43.0 million** in Q4 2022, reflecting decreased revenue and gross profit Adjusted Gross Profit Reconciliation (Q4) | Metric ($ in millions) | Q4 2023 | Q4 2022 (As Revised) | | :--------------------- | :------ | :------------------- | | Revenue | $96.1 | $140.1 | | Less: Cost of revenues (excluding D&A) | $(58.6) | $(97.1) | | Less: Depreciation and amortization related to cost of revenues | $(12.6) | $(12.4) | | Gross profit | $24.9 | $30.6 | | Add: Depreciation and amortization related to cost of revenues | $12.6 | $12.4 | | **Adjusted Gross Profit** | **$37.5** | **$43.0** | [Adjusted Gross Profit Reconciliation (FY 2023 vs. FY 2022)](index=9&type=section&id=4.5.%20Adjusted%20Gross%20Profit%20Reconciliation%20%28FY%202023%20vs.%20FY%202022%29) For FY 2023, Adjusted Gross Profit was **$153.3 million**, a decrease from **$173.4 million** in 2022, consistent with overall revenue decline Adjusted Gross Profit Reconciliation (FY) | Metric ($ in millions) | FY 2023 | FY 2022 (Successor, As Revised) | | :--------------------- | :------ | :------------------------------ | | Revenue | $402.0 | $612.2 | | Less: Cost of revenues (excluding D&A) | $(248.7) | $(438.8) | | Less: Depreciation and amortization related to cost of revenues | $(49.9) | $(45.6) | | Gross profit | $103.4 | $127.8 | | Add: Depreciation and amortization related to cost of revenues | $49.9 | $45.6 | | **Adjusted Gross Profit** | **$153.3** | **$173.4** | [Legal & Risk Disclosures](index=2&type=section&id=5.%20Legal%20%26%20Risk%20Disclosures) This section provides cautionary statements regarding forward-looking information and outlines key risks and uncertainties impacting System1's business operations [Cautionary Statement Regarding Forward-Looking Statements](index=2&type=section&id=5.1.%20Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section cautions readers on forward-looking statements, noting actual results may differ due to risks and uncertainties, and advises against undue reliance - This press release includes "forward-looking statements" regarding System1's future results, expectations, hopes, beliefs, intentions, or strategies, identified by words like "anticipate," "believe," "expect," "intend," "may," "plan," "project," and similar expressions[10](index=10&type=chunk)[11](index=11&type=chunk) - Actual financial results or operating performance may differ materially from forward-looking statements due to a number of risks, uncertainties, or other assumptions, some of which are beyond the company's control[12](index=12&type=chunk) - Readers are advised to review risk factors in SEC filings (Form S-4, 10-K, 10-Q/As, 8-K) and should not place undue reliance on these statements, as System1 does not undertake any obligation to update or revise them[12](index=12&type=chunk)[14](index=14&type=chunk) [Risks and Uncertainties](index=3&type=section&id=5.2.%20Risks%20and%20Uncertainties) Key risks include maintaining partner relationships, utilizing first-party data, RAMP performance, competition, acquisitions, financing, compliance, and intellectual property protection - Ability to maintain key relationships with network partners and advertisers, including monetization arrangements[13](index=13&type=chunk) - Ability to collect, process, effectively utilize, and safely store first-party data obtained through services[13](index=13&type=chunk) - Performance of the Responsive Acquisition Marketing Platform (RAMP) and ability to adapt to changes in customer demand[13](index=13&type=chunk) - Ability to compete with existing and new competitors, successfully source and integrate acquisitions, and raise future financing on market terms[13](index=13&type=chunk) - Changes in applicable laws or regulations impacting the business and the ability to maintain compliance, as well as the ability to protect intellectual property rights[13](index=13&type=chunk) [Company Information](index=9&type=section&id=6.%20Company%20Information) This section provides contact information for investor relations inquiries [Investor Relations Contact](index=9&type=section&id=6.1.%20Investor%20Relations%20Contact) Investor inquiries can be directed to Brett Milotte at ICR, Inc - Investor contact: Brett Milotte, ICR, Inc., Brett.milotte@icrinc.com[27](index=27&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from __________ to __________ Commission file number 001-39331 System1, Inc. (Exact name of registrant as specified in its charter) Delaware 92-3978051 (State or other juri ...