System1 Announces Fourth Quarter and Full Year 2024 Financial Results

Rhea-AI Summary

System1 (NYSE: SST) reported Q4 2024 financial results showing mixed performance. While revenue decreased 21% to $75.6 million, gross profit increased 28% to $31.8 million, and Adjusted EBITDA grew 79% to $17.9 million.

For full-year 2024, revenue declined 14% to $343.9 million, with gross profit down 2% to $101.3 million. The company's GAAP net loss improved, decreasing 13% to $97.3 million.

Notable achievements include a 500%+ increase in campaign launches through their RAMP platform and CouponFollow.com's 129% growth in organic sessions. System1 renewed its Google advertising arrangements, extending through 2027.

For Q1 2025, the company projects revenue between $69-71 million, gross profit of $25-27 million, and Adjusted EBITDA of $9-11 million.

Positive

• Gross profit increased 28% YoY in Q4 2024 to $31.8M
• Q4 Adjusted EBITDA grew 79% YoY to $17.9M
• RAMP platform achieved 500%+ YoY increase in campaign launches
• CouponFollow.com saw 129% YoY growth in organic sessions
• Google advertising agreements renewed through 2027
• 13% improvement in GAAP Net Loss for FY2024

Negative

• Q4 revenue declined 21% YoY to $75.6M
• FY2024 revenue decreased 14% to $343.9M
• FY2024 gross profit declined 2% to $101.3M
• Substantial net loss of $97.3M for FY2024 despite improvement
• Q1 2025 guidance suggests continued revenue decline from Q4 2024 levels

Insights

Financial Analyst

System1's Q4 2024 results present a paradoxical financial picture that merits careful analysis. While revenue decreased 21% YoY to $75.6 million, profitability metrics improved significantly with Adjusted EBITDA surging 79% to $17.9 million. This divergence between declining top-line and improving bottom-line reveals a strategic pivot toward operational efficiency.

The company's ability to expand gross margins in a shrinking revenue environment demonstrates effective cost discipline. Notably, gross profit increased 28% YoY despite the revenue decline, suggesting successful monetization of existing traffic and potential pruning of low-margin business segments following the divestiture of Total Security

Full-year results follow a similar pattern: revenue decline (-14%) accompanied by improved Adjusted EBITDA (+32%). The $97.3 million annual net loss remains concerning but shows a 13% improvement over prior year.

Q1 2025 guidance suggests continued revenue pressure with projected $69-71 million, but maintained focus on profitability with $9-11 million in Adjusted EBITDA. The substantial projected interest expense ($7.0-7.5 million) and depreciation/amortization ($20.5-21.0 million) will continue weighing on GAAP results.

The Google advertising arrangement renewals through 2027 provide important stability for their revenue model, while investments in AI-driven automation (evidenced by 500%+ increase in campaign launches) suggest a technological foundation for potential future growth without proportional cost scaling.

Business Strategy Expert

System1's financial results reflect a deliberate strategic recalibration toward efficiency over scale. The company appears to be executing a "profitable contraction" strategy - deliberately reducing lower-quality revenue streams while enhancing margins on remaining business.

The 500%+ increase in campaign launches through their RAMP platform demonstrates meaningful operational leverage through automation and AI implementation. This suggests System1 is retooling its fundamental business operations toward a more scalable, technology-driven approach rather than pursuing volume-based growth at any cost.

CouponFollow.com's 129% organic traffic growth represents a bright spot in their digital portfolio, indicating potential for asset-specific growth even amid broader company contraction. This suggests selective investments in high-potential properties within their network.

Management's renewal of Google advertising arrangements through 2027 provides critical stability in their core customer acquisition infrastructure. For an omnichannel marketing platform, maintaining these relationships represents a foundational business requirement.

The careful language around "optimizing capital structure" signals potential financial engineering ahead - likely debt refinancing or restructuring given their significant interest expense. With acquisition and restructuring costs projected at $2.5-3.0 million for Q1 alone, the transformation appears ongoing.

The cautious optimism for 2025 suggests management believes they've stabilized the business fundamentally but remain realistic about continued headwinds in the marketing technology space, which has faced significant disruption from privacy changes and evolving digital ecosystems.

Fourth Quarter Financial Highlights:

• Revenue Decreased 21% Over Prior Year to $75.6 million
• Gross Profit Increased 28% Over Prior Year to $31.8 million
• Adjusted Gross Profit Increased 19% Over Prior Year to $44.7 million
• GAAP Net Loss Decreased 29% Over Prior Year to $18.0 million
• Adjusted EBITDA Increased 79% Over Prior Year to $17.9 million

Fiscal Year 2024 Results:

• Revenue Decreased 14% Over Prior Year to $343.9 million
• Gross Profit Decreased 2% Over Prior Year to 101.3 million
• Adjusted Gross Profit Decreased 1% Over Prior Year to $152.3 million
• GAAP Net Loss Decreased 13% Over Prior Year to $97.3 million
• Adjusted EBITDA Increased 32% Over Prior Year to $38.6 million

LOS ANGELES--(BUSINESS WIRE)-- System1, Inc. (NYSE: SST) ("System1" or the "Company"), an omnichannel customer acquisition marketing platform, today announced its financial results for the fourth quarter and full year 2024.

"System1 closed out 2024 on a strong note, achieving solid growth in Adjusted Gross Profit and Adjust EBITDA. Our team remains committed to strong execution and delivering value for our partners and customers,” said Michael Blend, System1’s Co-Founder & Chief Executive Officer. “Looking ahead to 2025, we remain cautiously optimistic as we continue to navigate shifting marketing conditions. Our focus on disciplined expense management and strategic investments is positioning System1 for long-term, sustainable growth."

Tridivesh Kidambi, Chief Financial Officer of System1, commented, "We ended 2024 demonstrating financial discipline and operational efficiency in a volatile market. Throughout the year, we remained focused on optimizing our cost structure, enhancing monetization strategies, and driving profitability. As we move into 2025, we are cautiously optimistic about the opportunities ahead. Additionally, we are actively working to optimize our capital structure to ensure we are well-positioned for long-term growth and shareholder value creation."

Note: Unless otherwise noted, comparative financial results reflect the divestiture of Total Security Limited, the Company's anti-virus subscription business, which was completed on November 30, 2023. Adjusted Gross Profit and Adjusted EBITDA are non-GAAP metrics that are defined and reconciled at the end of this release.

Fourth Quarter Business Highlights

• RAMP platform continues to see major improvements from automation and AI initiatives, with a 500%+ increase in the number of campaign launches year-over-year in Q4 2024.
• CouponFollow.com continued strong forward momentum with a 129% year-over-year increase in organic sessions in Q4 2024, as well as continued expansion of key merchant relationships.
• In October 2024 and February 2025, the Company renewed both of its advertising arrangements with Google. The new agreements have termination dates in 2027.

First Quarter 2025 Guidance

The Company expects for the first quarter of 2025:

• Revenue between $69 million and $71 million
• Gross Profit between $25 million and $27 million
• Adjusted Gross Profit between $38 million and $40 million
• Adjusted EBITDA between $9 million and $11 million

In reliance on the unreasonable efforts exception for forward-looking information provided under Regulation S-K, the Company is not reasonably able to provide a quantitative reconciliation of Adjusted Gross Profit and Adjusted EBITDA to the most directly comparable GAAP financial measures without unreasonable effort due to uncertainties regarding stock-based compensation, taxes and other potential adjustments. The variability of these items could have an unpredictable, and potentially significant, impact on the Company's future GAAP financial results. For the first quarter of 2025, the Company expects interest expense in the range of $7.0 million to $7.5 million, depreciation and amortization expense in the range of $20.5 million to $21.0 million, and acquisition and restructuring costs to be in the range of $2.5 million to $3.0 million.

The Company's achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in its filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment.

About System1, Inc.

System1 combines best-in-class technology & data science to operate its advanced Responsive Acquisition Marketing Platform (RAMP). System1's RAMP is omnichannel and omnivertical, and built for a privacy-centric world. RAMP enables the building of powerful brands across multiple consumer verticals, the development & growth of a suite of privacy-focused products, and the delivery of high-intent customers to advertising partners. For more information, visit www.system1.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995, particularly any statements or materials regarding System1's future results. Forward-looking statements include, but are not limited to, statements regarding System1 or its management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause System1's actual financial results or operating performance to be materially different from those expressed or implied by these forward-looking statements. Readers or users of this press release should evaluate the risk factors summarized below, which summary list is not exclusive. Readers or users of this press release should also carefully review the "Risk Factors" and other information included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as our Form 10-Qs, Form 8-Ks and other reports filed with the Securities and Exchange Commission (the "SEC") from time to time. Please refer to these SEC filings for additional information regarding the risks and other factors that may impact System1's business, prospects, financial results and operating performance.

Such risks, uncertainties and assumptions include, but are not limited to: (1) our ability to maintain our key relationships with network partners and advertisers, including our monetization arrangements; (2) our ability to collect, process, effectively utilize and safely store the first party data that we obtain through our services; (3) The performance of our responsive acquisition marketing platform, or RAMP; (4) changes in customer demand for our services and our ability to incorporate to such changes; (5) our ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (6) our ability to improve and maintain adequate internal control over financial reporting and remediate identified material weaknesses; (7) our ability to successfully source and complete acquisitions and to integrate the operations of companies System1 acquires; (8) our ability to raise financing in the future as and when needed or on market terms; (9) our ability to compete with existing competitors and the entry of new competitors in the market; (10) changes in applicable laws or regulations impacting the business which we operate and our ability to maintain compliance with the various laws that our business and operations are subject to; and (11) our ability to protect our intellectual property rights; (12) other risks and uncertainties indicated from time to time in our filings with the SEC. The foregoing list of factors is not exclusive.

Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this press release. System1's independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the forward-looking statements for the purpose of their inclusion in this press release, and accordingly, do not express an opinion or provide any other form of assurance with respect thereto for the purpose of this press release. System1 will not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that such trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.

Non-GAAP Measures: Adjusted Gross Profit and Adjusted EBITDA

Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and represent key metrics used by System1's management and board of directors to measure the operational strength and performance of its core business, to establish budgets, and to develop operational goals for managing its business. Adjusted Gross Profit is defined as gross profit plus depreciation and amortization related to cost of revenues. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, deferred compensation, gain (loss) on extinguishment of debt, non-cash revaluation of warrant liability and acquisition and restructuring costs.

System1 believes Adjusted Gross Profit and Adjusted EBITDA are relevant and useful metrics for investors because it allows investors to view performance in a manner similar to the method used by management. There are limitations on the use of Adjusted Gross Profit and Adjusted EBITDA and it may not be comparable to similarly titled measures of other companies. Other companies, including companies in System1's industry, may calculate non-GAAP financial measures differently than System1 does, limiting the usefulness of those measures for comparative purposes.

Adjusted Gross Profit should not be considered a substitute for revenue. Adjusted EBITDA should not be considered a substitute for income (loss) from operations, net income (loss), or net income (loss) attributable to System1 on a consolidated basis that System1 reports in accordance with GAAP. Although System1 uses Adjusted Gross Profit and Adjusted EBITDA as financial measures to assess the performance of its business, such use is limited because it does not include certain costs necessary to operate System1's business. System1's presentation of Adjusted Gross Profit and Adjusted EBITDA should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items.

Consolidated Statements of Operations (in thousands)
	For The Three Months Ended December 31,								For The Year Ended December 31,
		2024				2023				2024				2023
Revenue	$	75,595			$	96,120			$	343,925			$	401,971
Operating expenses:
Cost of revenue (excluding depreciation and amortization)		30,894				58,550				191,561				248,745
Salaries and benefits		25,915				24,609				113,512				106,505
Selling, general, and administrative		10,457				12,303				47,346				54,307
Depreciation and amortization		20,232				19,737				80,107				78,403
Total operating expenses		87,498				115,199				432,526				487,960
Operating loss		(11,903	)			(19,079	)			(88,601	)			(85,989	)
Other expense (income):
Interest expense, net		7,764				11,956				31,562				48,745
Gain on extinguishment of debt		—				—				(20,109	)			—
Loss on extinguishment of related-party debt		—				1,385				—				2,004
Change in fair value of warrant liabilities		(915	)			1,764				(2,386	)			(5,109	)
Total other expense, net		6,849				15,105				9,067				45,640
Loss before income tax		(18,752	)			(34,184	)			(97,668	)			(131,629	)
Income tax benefit		(729	)			(8,757	)			(370	)			(20,371	)
Net loss from continuing operations		(18,023	)			(25,427	)			(97,298	)			(111,258	)
Net loss from discontinued operations, net of tax		—				(11,105	)			—				(174,327	)
Net loss		(18,023	)			(36,532	)			(97,298	)			(285,585	)
Less: Net loss from continuing operations attributable to non-controlling interest		(3,862	)			(7,002	)			(22,625	)			(25,531	)
Less: Net loss from discontinued operations attributable to non-controlling interest		—				(1,901	)			—				(32,833	)
Net loss attributable to System1, Inc.	$	(14,161	)		$	(27,629	)		$	(74,673	)		$	(227,221	)

Consolidated Balance Sheets (In thousands, except for par values)
	December 31, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	63,607			$	135,343
Restricted cash, current		3,970				3,813
Accounts receivable, net		62,916				56,093
Prepaid expenses and other current assets		3,984				6,754
Total current assets		134,477				202,003
Restricted cash, non-current		371				4,294
Property and equipment, net		2,104				3,084
Internal-use software development costs, net		14,436				11,425
Intangible assets, net		222,341				297,001
Goodwill		82,407				82,407
Operating lease right-of-use assets		2,644				4,732
Other non-current assets		349				524
Total assets	$	459,129			$	605,470
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,401			$	9,499
Accrued expenses and other current liabilities		76,200				59,314
Operating lease liabilities, current		2,089				2,333
Debt, net		16,405				15,271
Total current liabilities		105,095				86,417
Operating lease liabilities, non-current		1,365				3,582
Long-term debt, net		255,118				334,232
Warrant liability		302				2,688
Deferred tax liability		6,199				8,307
Other non-current liabilities		6,054				929
Total liabilities		374,133				436,155
Stockholders’ equity:
Class A common stock - $0.0001 par value; 500,000 shares authorized, 73,653 and 65,855 Class A shares issued and outstanding as of December 31, 2024 and 2023, respectively		7				7
Class C common stock - $0.0001 par value; 25,000 shares authorized, 18,704 and 21,513 Class C shares issued and outstanding as of December 31, 2024 and 2023, respectively		2				2
Additional paid-in capital		863,033				843,112
Accumulated deficit		(782,335	)			(707,662	)
Accumulated other comprehensive loss		(443	)			(181	)
Total stockholders' equity attributable to System1, Inc.		80,264				135,278
Non-controlling interest		4,732				34,037
Total stockholders' equity		84,996				169,315
Total liabilities and stockholders' equity	$	459,129			$	605,470

The following tables reconcile net loss to Adjusted EBITDA for the periods presented (in millions):
	For The Three Months Ended December 31,								For The Year Ended December 31,
		2024				2023				2024				2023
Net loss from continuing operations	$	(18.0	)		$	(25.4	)		$	(97.3	)		$	(111.3	)
Plus:
Income tax benefit		(0.7	)			(8.8	)			(0.4	)			(20.4	)
Interest expense		7.8				12.0				31.6				48.7
Depreciation and amortization		20.2				19.7				80.1				78.4
Other expense		(0.1	)			0.2				(0.1	)			1.0
Stock-based compensation & distributions to members		4.6				5.8				15.8				21.2
Gain on extinguishment of debt		—				—				(20.1	)			—
Loss on extinguishment of related-party debt		—				1.4				—				2.0
Non-cash revaluation of warrant liability		(0.9	)			1.8				(2.4	)			(5.1	)
Acquisition and restructuring costs		5.0				3.3				31.4				14.7
Adjusted EBITDA	$	17.9			$	10.0			$	38.6			$	29.2

The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented (in millions):
	For The Three Months Ended December 31,								For The Year Ended December 31,
		2024				2023				2024				2023
Revenue	$	75.6			$	96.1			$	343.9			$	402.0
Less: Cost of revenue (excluding depreciation and amortization)		(30.9	)			(58.6	)			(191.6	)			(248.7	)
Less: Depreciation and amortization related to cost of revenue		(12.9	)			(12.6	)			(51.0	)			(49.9	)
Gross profit		31.8				24.9				101.3				103.4
Add: Depreciation and amortization related to cost of revenue		12.9				12.6				51.0				49.9
Adjusted Gross Profit	$	44.7			$	37.5			$	152.3			$	153.3

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250310398800/en/

Investors:

Brett Milotte

ICR, Inc.

Brett.milotte@icrinc.com

Source: System1, Inc.

FAQ

What were System1's (SST) Q4 2024 revenue and profit figures?

System1's Q4 2024 revenue was $75.6M (down 21% YoY), with gross profit of $31.8M (up 28% YoY) and Adjusted EBITDA of $17.9M (up 79% YoY).

How did System1 (SST) perform in full-year 2024?

System1's FY2024 revenue was $343.9M (down 14% YoY), gross profit was $101.3M (down 2%), with net loss improving to $97.3M (13% decrease).

What is System1's (SST) guidance for Q1 2025?

System1 expects Q1 2025 revenue of $69-71M, gross profit of $25-27M, and Adjusted EBITDA of $9-11M.

What operational improvements did System1 (SST) achieve in Q4 2024?

System1's RAMP platform saw 500%+ increase in campaign launches YoY, and CouponFollow.com achieved 129% growth in organic sessions.

How long did System1 (SST) extend its Google advertising agreements?

System1 renewed its Google advertising arrangements in October 2024 and February 2025, extending them through 2027.