System1, Inc.
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
SST$1.72-2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001805833-25-000008
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001805833-25-000015
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 102 current paragraphs.
74 unchanged; 21 reworded; 7 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
We operates several flagship brands across multiple consumer verticals, including shopping, travel and search, and a best-in-class customer acquisition and marketing platform powered by AI and machine learning. The Company's platform is omnichannel and omnivertical, delivering high-intent customers to its advertising partners to maximize their reach and effectiveness.
Current report
Income tax (benefit) expense
Current report
Marketing revenue decreased for the three and nine months ended September 30, 2025 as compared to the comparative periods. This was driven by a decrease in TAC, where for the three months ended September 30, 2025, compared to the prior year comparative period, TAC decreased by $26.8 million to $84.0 million from $110.8 million. This was slightly offset by an increase in RTAC of 2% to 120% from 118%. Similarly, for the nine months ended September 30, 2025, compared to the prior year comparative period, TAC decreased by $53.3 million to $284.8 million from $338.1 million, which was slightly offset by an increase in RTAC of 1% to 120% from 119%.
Current report
Salaries and benefits expense decreased for the three and nine months ended September 30, 2025 compared to the comparative periods.
Current report
For the three months ended September 30, 2025, the $7.8 million decrease is primarily related to recognition of $7.2 million CouponFollow shared-based liability expense in the comparative period when all tier targets were determined to be probable of being achieved and a $1.4 million reduction in stock-based compensation related to reduced restricted stock unit issuances. This was offset by an increase of $0.8 million in stock-based compensation expense related to the vesting of Tranche I stock appreciation right awards issued in the current period and the expense of Tranche II stock appreciation right awards.
Current report
For the nine months ended September 30, 2025, the $15.0 million decrease is primarily related to recognition of $17.6 million reduction in CouponFollow share-based liability expense in the comparative period when all tier targets were determined to be probable of being achieved and a $6.2 million reduction in stock-based compensation related to reduced restricted stock units issuances. This was offset by an increase of $4.4 million in stock-based compensation expense related to the vesting of Tranche I stock appreciation right awards and continued accrual of Tranche II stock appreciation right awards, a $3.0 million increase in retention bonus expense, and a $1.3 million increase in severance expense.
Current report
Income tax (benefit) expense
Removed paragraphs (5)
Previous report
We operate an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers and publishers.
Previous report
Income tax benefit
Previous report
Marketing revenue decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods. For the three months ended June 30, 2025, compared to the prior year comparative period, traffic acquisition cost decreased by approximately $5.3 million to $114.9 million from $120.2 million and RTAC decreased by approximately 3% to 117% from 120%. For the six months ended June 30, 2025, compared to the prior year comparative period, TAC decreased by approximately $26.5 million to $200.9 million from $227.3 million and RTAC increased by approximately 2% to 121% from 119%.
Previous report
Salaries and benefits expense decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods. The decrease was primarily related to $11.1 million and $11.2 million reduction in CouponFollow share-based liability accruals and an approximate ten percent reduction in headcount, for the three and six months ended June 30, 2025, respectively. For the three months ended June 30, 2025 this was offset by $2.2 million recognized for employee benefits and a net increase in stock based compensation of $1.1 million of which $3.5 million related to expense recognized for the vesting of certain stock appreciation right awards offset by $2.3 million reduction in restricted stock unit awards that had vested. For the six months ended June 30, 2025, this was offset by $3.5 million related to vesting of certain stock appreciation right awards.
Previous report
Income tax benefit
Reworded paragraphs (21)
Previous wording
On August 1, 2024, we undertook a corporate reorganization, the result of which was that all of the assets and business operations of the company are now held by System1 Holdings, LLC ("System1 Holdings"), a newly formed intermediate holding company of which we maintain the controlling interest and in which the non-controlling interest is owned by the holders of our Class C common stock. Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco, the previous intermediate holding company with the non-controlling interests, and 100% of S1 Media, LLC (“S1 Media”), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with our Products businesses, which include NextGen Shopping, Inc., Startpage and Mapquest, and (c) S1 Holdco held our remaining assets and business operations associated with our Marketing businesses, including our proprietary RAMP platform. S1 Holdco and its subsidiaries remain obligors and guarantors under our Term Loan and 2022 Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.
Current wording
On August 1, 2024, we undertook a corporate reorganization, the result of which was that all of the assets and business operations of the company are now held by System1 Holdings, LLC ("System1 Holdings"), a newly formed intermediate holding company of which we maintain the controlling interest and in which the non-controlling interest is owned by the holders of our Class C common stock. Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco, the previous intermediate holding company with the non-controlling interests, and 100% of S1 Media, LLC (“S1 Media”), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with our Products businesses, which include CouponFollow, Startpage and MapQuest, and (c) S1 Holdco holds our assets related to our Marketing businesses. System1 Holdings holds our remaining assets and business operations. S1 Holdco and its subsidiaries remain obligors and guarantors under our Term Loan and 2022 Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.
Previous wording
We earn revenue by directly acquiring traffic to our owned and operated websites and utilizing our RAMP platform and additional services to monetize end-users for our Advertising Partners. For this revenue stream, we are the principal in the transaction and report revenue on a gross basis for the amounts received from Advertising Partners. We have determined that we are the principal since we direct the use of our owned and operating websites, and as such have risk of loss on the user-traffic that we are acquiring for monetization with our Advertising Partners. Additionally, we maintain the website, provide the content and bear the cost and risk of loss associated with the digital online inventory available on our website.
Current wording
We earn revenue by directly acquiring traffic to our owned and operated websites and utilizing our RAMP platform and additional services to monetize end-users for our Advertising Partners. For this revenue stream, wehave a single performance obligation and have determined that weare the principal in the transaction and report revenue on a gross basis for the amounts received from Advertising Partners. We have determined that we are the principal since we direct the use of our owned and operating websites, and as such have risk of loss on the user-traffic that we are acquiring for monetization with our Advertising Partners. Additionally, we maintain the website, provide the content and bear the cost and risk of loss associated with the digital online inventory available on our website.
Previous wording
The following table sets forth our consolidated results of operations and our consolidated results of operations as a percentage of revenue for the periods presented (in thousands).
Current wording
The following tables set forth our condensed consolidated results of operations and condensed consolidated results of operations as a percentage of revenue and comparative period changes for the periods presented (in thousands):
Previous wording
We define RTAC as platform revenue divided by traffic acquisition cost (“TAC”). Platform revenue is GAAP revenue plus Network Partner revenue share. TAC is defined as the sum of total advertising spend, agency fees and Network Partner revenue share. Advertising spend is the amount of advertising that is spent to acquire traffic. Agency fees are the amount of costs for agencies acquiring traffic to Owned and Operated websites. We believe RTAC is a relevant measure to evaluate our effectiveness and efficiency in deploying capital to acquire monetizable traffic to our Marketing segment.
Current wording
We define RTAC as platform revenue divided by traffic acquisition cost. Platform revenue is Revenue plus Network Partner revenue share. Traffic Acquisition Cost ("TAC") is defined as the sum of total advertising spend, agency fees and Network Partner revenue share. Advertising spend is the amount of advertising that is spent to acquire traffic. Agency fees are the amount of costs for agencies acquiring traffic to Owned and Operated websites. We believe RTAC is a relevant measure to evaluate our effectiveness and efficiency in deploying capital to acquire monetizable traffic to our Marketing segment.
Previous wording
Products revenue increased for the three and six months ended June 30, 2025 as compared to the prior comparative periods. For the three months ended June 30, 2025, compared to the prior year comparative period, Products sessions increased by approximately 57.6 million to 522.5 million from 464.9 million and Products RPS increased by approximately $0.01 to $0.05 from $0.04. For the six months ended June 30, 2025, compared to the prior year comparative period, Products sessions increased by approximately 97.4 million to 998.2 million from 900.8 million and Products RPS increased by approximately $0.01 to $0.05 from $0.04.
Current wording
Products revenue increased for the three and nine months ended September 30, 2025 as compared to the comparative periods. The increase was driven by an increase in Products sessions, where for the three months ended September 30, 2025, compared to the prior year comparative period, Products sessions increased by 111.3 million to 584.7 million from 473.4 million while Products RPS remained flat at $0.04. Similarly, for the nine months ended September 30, 2025, compared to the prior year comparative period, Products sessions increased by 208.6 million to 1,582.8 million from 1,374.2 million and Products RPS remained flat at $0.04.
Previous wording
Cost of revenue decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods. The decrease in advertising spend and agency fees is correlated with the decrease in revenue.
Current wording
Cost of revenue decreased for the three and nine months ended September 30, 2025 as compared to the comparative periods. The decrease in advertising spend and agency fees is correlated with the decrease in revenue.
Previous wording
Amortization expense for our RAMP platform increased$0.4 million and $0.8 million for thethree and six months ended June 30, 2025, respectively compared to the prior comparative periods primarily dueto increased amortization for our continued investment in developed technology and internally developed software.
Current wording
Amortization expense for our marketing platforms increased$0.5 million and $1.3 million for thethree and nine months ended September 30, 2025, respectively compared to the prior comparative periods primarily dueto increased amortization for our continued investment in developed technology and internally developed software.
Previous wording
Our chief operating decision maker measures and evaluates reportable segments based on segment operating revenue and segment adjusted gross profit. We define and calculate segment adjusted gross profit as revenue less traffic acquisition costs incurred to acquire users. The remaining cost of revenue consists of non-advertising expenses such as set-up costs, royalties, fees and amortization related to our RAMP platform. We exclude the following items from segment adjusted gross profit: other cost of revenue (total cost of revenue excluding traffic acquisition cost), salaries and benefits, selling, general and administrative expenses and, at times, certain other transactions or adjustments.
Current wording
Our chief operating decision maker measures and evaluates reportable segments based on segment operating revenue and segment adjusted gross profit. We define and calculate segment adjusted gross profit as revenue less traffic acquisition costs incurred to acquire users. The remaining cost of revenue consists of non-advertising expenses such as set-up costs, royalties, fees and amortization related to our marketing platforms. We exclude the following items from segment adjusted gross profit: other cost of revenue (total cost of revenue excluding traffic acquisition cost), salaries and benefits, selling, general and administrative expenses and, at times, certain other transactions or adjustments.
Previous wording
Selling, general, and administrative expense decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods. The decrease was primarily related to the $4.3 million and $7.3 million reduction in professional services and consulting fees for the three and six months ended June 30, 2025, respectively.
Current wording
Selling, general, and administrative expense decreased for the three and nine months ended September 30, 2025 as compared to the prior comparative periods. The decrease was primarily related to a $0.5 million and $7.9 million reduction in professional services and consulting fees for the three and nine months ended September 30, 2025, respectively.
Previous wording
Interest expense, net decreased for the three and six months ended June 30, 2025 ascompared to the prior comparative periods primarily due to a lower outstanding debt balance.
Current wording
Interest expense, net decreased for the three and nine months ended September 30, 2025 ascompared to the prior comparative periods primarily due to a lower outstanding debt balance.
Previous wording
Gain on extinguishment of debt decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods due to the repurchase of our principal debt balances via a Dutch auction in the first quarter and repurchase of debt in the second quarter of 2024. There was no repurchase of debt in the first or second quarter of 2025.
Current wording
Gain on extinguishment of debt decreased for the nine months ended September 30, 2025 as compared to the prior comparative period due to the repurchase of our principal debt balances via a Dutch auction in the first quarter and repurchase of principal debt in the second quarter of 2024. There was no repurchase of debt during the third quarter of 2024 or during 2025.
Previous wording
Change in fair value of warrant liabilities decreased for the three and six months ended June 30, 2025 as compared to the prior comparative periods due to the fair value remeasurement of Warrants which have been delisted from the New York Stock Exchange.
Current wording
Change in fair value of warrant liabilities increased for the three months ended September 30, 2025 and decreased for the nine months ended September 30, 2025 as compared to the prior comparative periods due to the fair value remeasurement of Warrants which have been delisted from the New York Stock Exchange.
Previous wording
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. We are currently assessing its impact on our consolidated financial statements.
Current wording
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Company does not expect these tax law changes to have a material impact on the Company's financial statements; however, the Company will continue to evaluate their impact as further information becomes available.
Previous wording
As of June 30, 2025, we had unrestricted cash and cash equivalents of $63.6 million and $50.0 million available to borrow on our 2022 Revolving Facility. For the six months ended June 30, 2025, we had cash outflows of $2.7 million. The principal drivers of our cash outflows were $8.5 million net inflows for changes in operations, which included $13.2 million in outflows related to the payment of an earnout obligation for the CouponFollow acquisition and $19.9 million in inflows related to timing of payments to revenue share partners, $10.0 million principal repayment of our Term Loan and $2.8 million of capitalized software development costs.
Current wording
As of September 30, 2025, we had unrestricted cash and cash equivalents of $54.6 million and $50.0 million available to borrow on our 2022 Revolving Facility. For the nine months ended September 30, 2025, we had cash outflows of $11.7 million.
Previous wording
Our cash flows from operating activities are primarily impacted by growth in our operations, timing of collections from our partners and related payments to our suppliers for advertising inventory and data. We typically pay suppliers in advance of collections from our clients and our collection and payment cycles can vary from period to period. In addition, seasonality may impact cash flows from operating activities on a sequential quarterly basis during the year.
Current wording
Our operating cash flow activities are primarily impacted by growth in our operations, timing of payments to our suppliers for advertising inventory and data and related collections from our partners. Payment and collection cycles can vary from period to period. In addition, seasonality may impact cash flows from operating activities on a sequential quarterly basis during the year.
Previous wording
In the six months ended June 30, 2025, cash provided by operating activities was $8.5 million. The principal drivers of our cash inflow from operations were related to timing of revenue share payments to our partners.
Current wording
In the nine months ended September 30, 2025, cash provided by operating activities was $6.5 million. The principal drivers of our cash inflow from operations primarily from favorable changes in net income, excluding the impact of non-cash items offset by unfavorable changes in working capital balances. The unfavorable changes in working capital balances included $13.2 million in outflows related to the payment of an earnout obligation for the CouponFollow acquisition offset by an decrease in account receivable balances.
Previous wording
In the six months ended June 30, 2024, cash used in operating activities was $6.0 million resulted primarily from favorable changes in net income, excluding the impact of non-cash items offset by favorable changes in working capital balances. The favorable changes in working capital balances included an increase in accrued expenses and other current liabilities offset by an increase in account receivable balances.
Current wording
In the nine months ended September 30, 2024, cash used in operating activities was $6.0 million resulted primarily from favorable changes in net income, excluding the impact of non-cash items offset by favorable changes in working capital balances. The favorable changes in working capital balances included an increase in accrued expenses and other current liabilities offset by an increase in account receivable balances.
Previous wording
In the six months ended June 30, 2025 and 2024, cash used in investing activities was $3.1 million and $3.2 million resulted primarily from costs capitalized for internally developed software, respectively.
Current wording
In the nine months ended September 30, 2025 and 2024, cash used in investing activities was $5.1 million and $5.0 million resulted primarily from costs capitalized for internally developed software, respectively.
Previous wording
In the six months ended June 30, 2025, cash used in financing activities was $8.1 million of which $10.0 million was related to the repayment of the 2022 Term Loan, offset by $2.3 million of cash received from the private placement with our founders family foundation.
Current wording
In the nine months ended September 30, 2025, cash used in financing activities was $13.1 million of which $15.0 million was related to the repayment of the 2022 Term Loan, offset by $2.3 million of cash received from the private placement with our founders' family foundation.
Previous wording
In the six months ended June 30, 2024, cash used in financing activities was $53.9 million was primarily related to the repurchase of the 2022 Term Note via a Dutch auction in the amount of $51.8 million.
Current wording
In the nine months ended September 30, 2024, cash used in financing activities was $59.0 million was primarily related to the repayment of the 2022 Term Note in the amount of $56.8 million.
Previous wording
In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million annually between July 2023 and June 2026. As of June 30, 2025, we remain contractually obligated to spend a remaining $5.0 million towards this commitment.
Current wording
In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million annually between July 2023 and June 2026. As of September 30, 2025, we remain contractually obligated to spend a remaining $3.4 million towards this commitment.