<span item_type="fundamental" item_id="5d5e8cf07888933ddb68f60e1bd77881" counter_id="ST/US/SST" env="prod"></span><span item_type="announcement" item_id="647651937185896449" env="prod"></span><p>Revenue: As of FY2026 Q1, the actual value is USD 37.23 M, missing the estimate of USD 55.17 M.</p><p>EPS: As of FY2026 Q1, the actual value is USD -5.82.</p><p>EBIT: As of FY2026 Q1, the actual value is USD -44.41 M.</p><p></p><h3>Overall Financial Performance</h3><h4>Revenue</h4><p>Total revenue for the three months ended March 31, 2026, was $37,234 thousand, a 50% decline year-over-year from $74,513 thousand in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Operating Loss</h4><p>The company reported an operating loss of - $51,037 thousand for the three months ended March 31, 2026, which was significantly higher than the - $13,126 thousand operating loss in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Net Loss</h4><p>Net loss for the three months ended March 31, 2026, was - $57,591 thousand, compared to - $19,856 thousand in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Net loss attributable to System1, Inc. was - $47,067 thousand for the three months ended March 31, 2026, versus - $15,883 thousand for the same period in 2025 <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Adjusted Gross Profit</h4><p>Total adjusted gross profit decreased by - $12,895 thousand, or -30%, from $42,741 thousand in the three months ended March 31, 2025, to $29,846 thousand in the three months ended March 31, 2026 <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Adjusted EBITDA</h4><p>Adjusted EBITDA for the three months ended March 31, 2026, was $2.7 million, down from $12.1 million in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h3>Segment Performance</h3><h4>Marketing Segment</h4><p>Revenue in the Marketing segment decreased by - $33,859 thousand, or -65%, to $18,391 thousand for the three months ended March 31, 2026, compared to $52,250 thousand in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. This decrease was primarily due to the termination of the Adsense for Domains monetization arrangement with Google and a significant reduction in marketing activities for search monetization <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Active Marketing Partners (AMP) decreased by approximately 93, from 149 to 56, primarily due to the Google monetization arrangement termination <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Revenue per AMP increased by approximately $0.1 million, from $0.1 million to $0.2 million <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Marketing segment adjusted gross profit decreased by - $9,258 thousand, or -42%, from $21,787 thousand in Q1 2025 to $12,529 thousand in Q1 2026 <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Products Segment</h4><p>Revenue in the Products segment decreased by - $3,420 thousand, or -15%, to $18,843 thousand for the three months ended March 31, 2026, compared to $22,263 thousand in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. This was mainly due to a shift in the mix from higher RPS sessions to lower RPS sessions <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Products sessions increased by approximately 178.0 million, from 475.7 million to 653.7 million <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Products Revenue per Session (RPS) decreased by approximately - $0.02, from $0.05 to $0.03 <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Products segment adjusted gross profit decreased by - $3,637 thousand, or -17%, from $20,954 thousand in Q1 2025 to $17,317 thousand in Q1 2026 <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h3>Cash Flow</h3><h4>Operating Activities</h4><p>Net cash used in operating activities was - $26,134 thousand for the three months ended March 31, 2026, compared to - $15,949 thousand in the prior period <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. The 2026 outflow included $13.0 million for CouponFollow earnout obligations, while 2025 included $13.2 million for CouponFollow earnout obligations and $4.3 million in net interest paid <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Investing Activities</h4><p>Net cash used in investing activities was - $2,175 thousand for the three months ended March 31, 2026, primarily due to capitalized software development costs, compared to - $1,548 thousand in the prior period for the same reason <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Financing Activities</h4><p>Net cash used in financing activities was - $7,743 thousand for the three months ended March 31, 2026, primarily from a $7.5 million repayment on the Term Loan and - $0.2 million in share repurchases <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. In the prior period, net cash used was - $5,304 thousand, mainly for Term Loan principal and interest repayment <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h3>Other Key Metrics</h3><h4>Impairment of Long-Lived Assets</h4><p>Impairment of long-lived assets increased by $36,822 thousand for the three months ended March 31, 2026, due to an impairment expense at the Marketing asset group <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h4>Debt and Liquidity</h4><p>As of March 31, 2026, System1, Inc. had cash and cash equivalents of $51.5 million and negative net working capital of - $14.1 million <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. The company had $50.0 million outstanding under its revolving facility (maturing January 27, 2027) and $252.6 million of term debt outstanding on its term loan (maturing July 2027) <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. Management concluded that these factors raise substantial doubt about the company’s ability to continue as a going concern for the next twelve months <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p><h3>Outlook and Strategy</h3><p>System1, Inc. plans to continue exploring options to refinance all of its debt obligations, though management cannot assure successful implementation or obtaining sufficient liquidity <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>. The company’s operational strategy focuses on expanding advertising partners, optimizing bids, driving higher returns on advertising spend, and reducing cash operating expenses and debt service obligations <span class="superscript" item_id="0" item_type="announcement_file" value="1" url="https://www.sec.gov/Archives/edgar/data/1805833/000180583326000026/sst-20260331.htm"></span>.</p>

System1 | 10-Q: FY2026 Q1 Revenue Misses Estimate at USD 37.23 M