--- title: "System1 | 10-Q: FY2026 Q1 Revenue Misses Estimate at USD 37.23 M" type: "News" locale: "en" url: "https://longbridge.com/en/news/286153060.md" datetime: "2026-05-12T20:30:36.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286153060.md) - [en](https://longbridge.com/en/news/286153060.md) - [zh-HK](https://longbridge.com/zh-HK/news/286153060.md) --- # System1 | 10-Q: FY2026 Q1 Revenue Misses Estimate at USD 37.23 M Revenue: As of FY2026 Q1, the actual value is USD 37.23 M, missing the estimate of USD 55.17 M. EPS: As of FY2026 Q1, the actual value is USD -5.82. EBIT: As of FY2026 Q1, the actual value is USD -44.41 M. ### Overall Financial Performance #### Revenue 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 . #### Operating Loss 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 . #### Net Loss Net loss for the three months ended March 31, 2026, was - $57,591 thousand, compared to - $19,856 thousand in the prior period . 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 . #### Adjusted Gross Profit 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 . #### Adjusted EBITDA Adjusted EBITDA for the three months ended March 31, 2026, was $2.7 million, down from $12.1 million in the prior period . ### Segment Performance #### Marketing Segment 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 . 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 . Active Marketing Partners (AMP) decreased by approximately 93, from 149 to 56, primarily due to the Google monetization arrangement termination . Revenue per AMP increased by approximately $0.1 million, from $0.1 million to $0.2 million . 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 . #### Products Segment 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 . This was mainly due to a shift in the mix from higher RPS sessions to lower RPS sessions . Products sessions increased by approximately 178.0 million, from 475.7 million to 653.7 million . Products Revenue per Session (RPS) decreased by approximately - $0.02, from $0.05 to $0.03 . 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 . ### Cash Flow #### Operating Activities 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 . 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 . #### Investing Activities 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 . #### Financing Activities 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 . In the prior period, net cash used was - $5,304 thousand, mainly for Term Loan principal and interest repayment . ### Other Key Metrics #### Impairment of Long-Lived Assets 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 . #### Debt and Liquidity 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 . 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) . Management concluded that these factors raise substantial doubt about the company’s ability to continue as a going concern for the next twelve months . ### Outlook and Strategy System1, Inc. plans to continue exploring options to refinance all of its debt obligations, though management cannot assure successful implementation or obtaining sufficient liquidity . 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