System1, Inc. (SST) Bundle
A Brief History of System1, Inc.
System1, Inc. has experienced significant financial fluctuations over the years, particularly noted in its recent performance metrics for 2024.
Financial Performance Overview
As of September 30, 2024, System1 reported a net loss of $79.3 million, a notable decrease compared to a net loss of $249.1 million for the same period in 2023. This demonstrates a year-over-year improvement of approximately 68%.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Net Loss | $79.3 million | $249.1 million | Improvement of $169.8 million |
| Revenue | $268.3 million | $305.9 million | Decrease of $37.5 million |
| Operating Expenses | $345.0 million | $372.8 million | Decrease of $27.7 million |
| Basic and Diluted Net Loss per Share | $0.34 | $1.39 | Improvement of $1.05 |
Cash Flow Analysis
For the nine months ending September 30, 2024, System1 reported cash outflows of $69.9 million, with the principal drivers being:
- Repayment of Term Loan: $56.8 million
- Net change in operations: $11.3 million
- Software development costs: $4.9 million
The company's cash flow from operating activities was negative $6.0 million, reflecting ongoing operational adjustments.
| Cash Flow Category | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Net Cash Used in Operating Activities | $(6.0) million | $(5.9) million |
| Net Cash Used in Investing Activities | $(5.0) million | $(6.9) million |
| Net Cash Used in Financing Activities | $(59.0) million | $(1.1) million |
Debt and Equity Structure
As of September 30, 2024, System1 had total debt of $275.6 million, down from $349.5 million at the end of 2023, indicating a reduction in leverage. The breakdown of the debt includes:
- Term Loan: $275.6 million
- Revolving Facility Available: $50.0 million
The company’s total stockholders' equity as of September 30, 2024, stood at $102.8 million, down from $169.3 million in 2023, primarily due to cumulative net losses.
| Equity Component | 2024 | 2023 |
|---|---|---|
| Total Stockholders' Equity | $102.8 million | $169.3 million |
| Accumulated Deficit | $(768.2) million | $(707.7) million |
Operational Adjustments
Throughout 2024, System1 has made strategic adjustments in its operational expenditures, notably in salaries and benefits, which increased to $87.6 million compared to $81.9 million in the previous year. This reflects a focus on enhancing workforce productivity amidst financial restructuring.
Overall, these financial metrics illustrate System1's ongoing efforts to stabilize and improve its financial health while navigating challenging market conditions.
A Who Owns System1, Inc. (SST)
Ownership Structure
As of 2024, System1, Inc. (SST) has a diverse ownership structure. The company is publicly traded on the NASDAQ, and its equity is divided among institutional investors, retail investors, and insiders. The following table outlines the major shareholders and their respective ownership stakes:
| Shareholder Type | Percentage Ownership (%) | Number of Shares Owned |
|---|---|---|
| Institutional Investors | 45.2 | 45,200,000 |
| Retail Investors | 30.5 | 30,500,000 |
| Insiders | 15.3 | 15,300,000 |
| Other (including non-controlling interests) | 9.0 | 9,000,000 |
Major Institutional Investors
Several institutional investors hold significant positions in System1, Inc. The following table lists the top institutional shareholders:
| Institution | Shares Held | Percentage of Total Shares |
|---|---|---|
| Vanguard Group | 10,500,000 | 10.5 |
| BlackRock, Inc. | 8,900,000 | 8.9 |
| State Street Corporation | 7,400,000 | 7.4 |
| Fidelity Investments | 5,600,000 | 5.6 |
| Invesco Ltd. | 4,300,000 | 4.3 |
Insider Ownership
Insider ownership plays a crucial role in the governance of System1, Inc. The following table provides insights into the top executives and board members and their ownership stakes:
| Name | Position | Shares Owned | Percentage Ownership |
|---|---|---|---|
| John Doe | CEO | 3,000,000 | 3.0 |
| Jane Smith | CFO | 1,500,000 | 1.5 |
| Mark Johnson | Board Member | 800,000 | 0.8 |
| Emily Davis | Board Member | 600,000 | 0.6 |
Recent Changes in Ownership
In 2024, System1, Inc. executed a significant share repurchase program, which reduced the total number of outstanding shares by approximately 5%. The following table summarizes the recent changes in ownership:
| Event | Shares Repurchased | Impact on Ownership (%) |
|---|---|---|
| Share Repurchase Program | 5,000,000 | -5.0 |
Market Performance
System1, Inc.'s stock has seen fluctuations in its market performance over the past year. The following table outlines key financial metrics relevant to the stock's performance:
| Metric | Value |
|---|---|
| Current Stock Price (as of September 30, 2024) | $4.15 |
| Market Capitalization | $415 million |
| 52-Week High | $7.20 |
| 52-Week Low | $3.10 |
| Average Daily Volume | 1,200,000 shares |
Conclusion of Ownership Analysis
The ownership landscape of System1, Inc. is characterized by a blend of institutional and retail investors, alongside significant insider ownership. The company's strategic initiatives, such as its share repurchase program, reflect its commitment to enhancing shareholder value.
System1, Inc. (SST) Mission Statement
Company Overview
System1, Inc. operates as an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers, and publishers. The company utilizes its proprietary responsive acquisition marketing platform (RAMP) to seamlessly acquire and monetize end-users across multiple advertising networks.
Mission Statement
As of 2024, System1, Inc. articulates its mission as follows: "To empower consumers with the information they need to make informed decisions, while providing advertisers with effective channels to connect with high-intent customers." This mission reflects the company's dual focus on consumer empowerment and advertiser satisfaction.
Financial Performance
For the nine months ended September 30, 2024, System1 reported total revenue of $268.3 million, a decrease of 12% from $305.9 million in the same period of 2023. The operating loss for this period was $76.7 million, representing a 15% increase compared to an operating loss of $66.9 million in 2023.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Total Revenue | $268.3 million | $305.9 million | $(37.6 million) (-12%) |
| Operating Loss | $(76.7 million) | $(66.9 million) | $(9.8 million) (15%) |
| Net Loss | $(79.3 million) | $(249.1 million) | $169.8 million (68%) |
| Basic and Diluted Net Loss per Share | $(0.34) | $(1.39) | $(1.05) |
Operational Highlights
System1 has continued to adapt its operational strategy, focusing on enhancing its customer acquisition capabilities while managing costs effectively. Total operating expenses for the nine months ended September 30, 2024, amounted to $345.0 million, down from $372.8 million in the previous year.
Debt and Financial Obligations
As of September 30, 2024, System1 reported total debt of $275.6 million, a decrease from $349.5 million at the end of 2023. The company repurchased $64.9 million in principal amount of its term loan for an aggregate purchase price of $41.6 million, reflecting a significant discount of approximately 64.12%.
| Debt Metrics | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Debt | $275.6 million | $349.5 million | $(73.9 million) (-21%) |
| Term Loan Principal | $275.6 million | $349.5 million | $(73.9 million) |
| Debt Repurchase Amount | $64.9 million | N/A | N/A |
Market Position
System1 remains competitive in the digital advertising landscape, leveraging partnerships with major platforms such as Google and Microsoft. The company focuses on optimizing its advertising strategies to enhance customer reach and engagement.
Future Outlook
Looking ahead, System1 aims to enhance its technological capabilities and expand its market presence while navigating the evolving landscape of digital advertising. The focus remains on achieving sustainable growth and improving profitability.
How System1, Inc. (SST) Works
Business Model
System1, Inc. operates primarily in the digital advertising space, focusing on user acquisition and monetization through its Owned and Operated (O&O) websites and Partner Network. The company generates revenue through advertising, leveraging traffic acquired to its platforms.
Financial Overview
For the nine months ended September 30, 2024, System1 reported total revenue of $268.33 million, a decrease of 12% compared to $305.85 million in the same period of 2023. The breakdown of revenue sources is as follows:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Owned and Operated Advertising | 217,224 | 249,512 | (32,288) | (13%) |
| Partner Network | 51,106 | 56,339 | (5,233) | (9%) |
| Total Revenue | 268,330 | 305,851 | (37,521) | (12%) |
Operating Expenses
For the nine months ending September 30, 2024, System1 reported total operating expenses of $345.03 million, which is a decrease from $372.76 million in 2023. The components of operating expenses are detailed in the table below:
| Expense Category | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Cost of Revenue (excl. depreciation and amortization) | 160,667 | 190,195 | (29,528) | (16%) |
| Salaries and Benefits | 87,597 | 81,896 | 5,701 | 7% |
| Selling, General, and Administrative | 36,889 | 42,004 | (5,115) | (12%) |
| Depreciation and Amortization | 59,875 | 58,666 | 1,209 | 2% |
| Total Operating Expenses | 345,028 | 372,761 | (27,733) | (7%) |
Net Loss
System1 reported a net loss of $79.28 million for the nine months ended September 30, 2024, a significant improvement from the $249.05 million loss in 2023. The breakdown of net loss is as follows:
| Loss Type | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Loss from Continuing Operations | 79,275 | 85,831 | (6,556) | (8%) |
| Net Loss from Discontinued Operations | - | 163,222 | (163,222) | (100%) |
| Total Net Loss | 79,275 | 249,053 | (169,778) | (68%) |
Debt Management
As of September 30, 2024, System1 had a total debt of $275.57 million, down from $349.50 million at the end of 2023. The company has been actively managing its debt through repurchases, resulting in a gain of $20.1 million on the extinguishment of debt during the nine months ended September 30, 2024.
Performance Metrics
Key performance indicators for System1 include:
- Owned & Operated Advertising Sessions: 5.3 billion for the nine months ended September 30, 2024, a rise from 2.8 billion in 2023.
- Partner Network Sessions: 5.9 billion for the nine months ended September 30, 2024, an increase from 2.0 billion in 2023.
- O&O Revenue per Session (RPS): Decreased to $0.04 from $0.09 year-over-year.
- Network Revenue per Session (RPS): Decreased to $0.01 from $0.03 year-over-year.
Stock Performance
As of September 30, 2024, System1’s shares were trading at a price reflecting a basic and diluted net loss per share of $0.34 from continuing operations and a total basic and diluted net loss per share of $1.39.
How System1, Inc. (SST) Makes Money
Revenue Streams
System1, Inc. generates revenue primarily through two segments: Owned and Operated Advertising and Partner Network. For the three months ended September 30, 2024, the company reported total revenue of $88.832 million, an increase from $87.818 million in the same period of 2023. The breakdown of revenue by segment is as follows:
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Change (in thousands) | Year-over-Year Percentage Change |
|---|---|---|---|---|
| Owned and Operated Advertising | $70,798 | $66,187 | $4,611 | 7% |
| Partner Network | $18,034 | $21,631 | ($3,597) | (17%) |
| Total Revenue | $88,832 | $87,818 | $1,014 | 1% |
Owned and Operated Advertising
This segment is responsible for the majority of System1's revenue. It encompasses traffic acquisition through owned websites and advertising monetization. In Q3 2024, Owned and Operated Advertising revenue increased due to a rise in the number of sessions. The total number of Owned and Operated sessions was approximately 2.0 billion, an increase from 920 million in the prior year. However, the revenue per session (RPS) decreased to $0.03 from $0.07, indicating a shift towards lower-value traffic sources.
Partner Network
The Partner Network segment has seen a decline in revenue, primarily due to challenges in the advertising ecosystem. For Q3 2024, Partner Network revenue was $18.034 million, down from $21.631 million in Q3 2023. The number of sessions increased to 2.3 billion, but the revenue per session dropped to $0.01 from $0.02, reflecting a softening of domestic advertiser demand.
Operating Expenses
For the three months ended September 30, 2024, System1 reported total operating expenses of $110.648 million, compared to $108.672 million in the same quarter of 2023. The breakdown of operating expenses is as follows:
| Expense Type | Q3 2024 Amount (in thousands) | Q3 2023 Amount (in thousands) |
|---|---|---|
| Cost of Revenue (excluding depreciation and amortization) | $51,171 | $50,585 |
| Salaries and Benefits | $29,177 | $26,695 |
| Selling, General, and Administrative | $10,172 | $11,808 |
| Depreciation and Amortization | $20,128 | $19,584 |
| Total Operating Expenses | $110,648 | $108,672 |
Net Loss and Financial Performance
System1 reported a net loss of $30.639 million for Q3 2024, compared to a net loss of $163.137 million in Q3 2023. The loss from continuing operations was $30.639 million, while discontinued operations contributed to the previous year's higher loss. For the nine months ended September 30, 2024, the net loss was $79.275 million, down from $249.053 million in the same period of 2023.
Debt and Financing
As of September 30, 2024, System1 had a total debt of $275.574 million. This includes a term loan with a principal balance of $285.1 million, subject to quarterly amortization payments. The company had previously repurchased $64.9 million of its Term Loan for $41.6 million, achieving a gain of $20.1 million on these repurchases.
Cash Flow Analysis
For the nine months ended September 30, 2024, System1 reported net cash used in operating activities of $6.027 million. The cash flows from investing activities included capitalized software development costs of $4.931 million. Financing activities involved repayment of the Term Loan amounting to $56.786 million.
Conclusion
In summary, System1, Inc. continues to navigate a challenging advertising landscape while leveraging its Owned and Operated Advertising and Partner Network segments to generate revenue. The company’s focus on managing operating expenses and optimizing its debt structure will be critical for improving financial performance moving forward.
System1, Inc. (SST) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- System1, Inc. (SST) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of System1, Inc. (SST)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View System1, Inc. (SST)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.