System1(SST) - 2024 Q3 - Earnings Call Transcript

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$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$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]