Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 08, 2024 | Jun. 30, 2023 | |
Cover | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-39331 | ||
Entity Registrant Name | System1, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 92-3978051 | ||
Entity Address, Address Line One | 4235 Redwood Avenue | ||
Entity Address, City or Town | Marina Del Rey | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 90066 | ||
City Area Code | 310 | ||
Local Phone Number | 924-6037 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | true | ||
Document Financial Statement Restatement Recovery Analysis [Flag] | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 118,737,000 | ||
Documents Incorporated by Reference | The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the registrant’s proxy statement relating to its annual meeting of stockholders to be filed by April 29 th 2024. The proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. | ||
Entity Central Index Key | 0001805833 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A Common Stock | |||
Cover | |||
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | ||
Trading Symbol | SST | ||
Security Exchange Name | NYSE | ||
Entity Common Stock, Shares Outstanding | 68,420,666 | ||
Redeemable warrants, each whole warrant exercisable for one Class A common stock at an exercise price of $11.50 per share | |||
Cover | |||
Title of 12(b) Security | Redeemable warrants, each whole warrant exercisable for one Class A common stock at an exercise price of $11.50 per share | ||
Trading Symbol | SST.WS | ||
Security Exchange Name | NYSE | ||
Class C common stock | |||
Cover | |||
Entity Common Stock, Shares Outstanding | 21,203,676 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Firm ID | 238 |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | Los Angeles, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 135,343 | $ 8,905 |
Restricted cash, current | 3,813 | 5,717 |
Accounts receivable, net | 56,093 | 80,428 |
Prepaid expenses and other current assets | 6,754 | 11,166 |
Current assets held for sale from discontinued operations | 0 | 20,292 |
Total current assets | 202,003 | 126,508 |
Restricted cash, non-current | 4,294 | 5,395 |
Property and equipment, net | 3,084 | 3,162 |
Internal-use software development costs, net | 11,425 | 6,948 |
Intangible assets, net | 297,001 | 371,661 |
Goodwill | 82,407 | 82,407 |
Operating lease right-of-use assets | 4,732 | 6,484 |
Other non-current assets | 524 | 2,822 |
Assets held for sale from discontinued operations | 0 | 555,069 |
Total assets | 605,470 | 1,160,456 |
Current liabilities: | ||
Accounts payable | 9,499 | 6,707 |
Accrued expenses and other current liabilities | 59,314 | 85,780 |
Operating lease liabilities, current | 2,333 | 2,149 |
Debt, net | 15,271 | 15,021 |
Current liabilities held for sale from discontinued operations | 0 | 101,418 |
Total current liabilities | 86,417 | 211,075 |
Operating lease liabilities, non-current | 3,582 | 5,875 |
Long-term debt, net | 334,232 | 399,504 |
Warrant liability | 2,688 | 7,798 |
Deferred tax liability | 8,307 | 29,396 |
Other liabilities | 929 | 1,661 |
Liabilities held for sale from discontinued operations | 0 | 34,476 |
Total liabilities | 436,155 | 689,785 |
Commitments and contingencies (Note 10) | ||
STOCKHOLDERS’ EQUITY | ||
Additional paid-in capital | 843,112 | 831,566 |
Accumulated deficit | (707,662) | (439,296) |
Accumulated other comprehensive loss | (181) | (260) |
Total stockholders' equity attributable to System1, Inc. | 135,278 | 392,021 |
Non-controlling interest | 34,037 | 78,650 |
Total stockholders' equity | 169,315 | 470,671 |
Total liabilities and stockholders' equity | 605,470 | 1,160,456 |
Class A common stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock value | 7 | 9 |
Class C common stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock value | $ 2 | $ 2 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 65,855,000 | 91,674,000 |
Common stock outstanding (in shares) | 65,855,000 | 91,674,000 |
Class C common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock issued (in shares) | 21,513,000 | 21,747,000 |
Common stock outstanding (in shares) | 21,513,000 | 21,747,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Income Statement [Abstract] | |||
Revenue | $ 52,712 | $ 612,229 | $ 401,971 |
Operating expenses: | |||
Cost of revenue (excluding depreciation and amortization) | 41,507 | 438,839 | 248,745 |
Salaries and benefits | 31,181 | 138,045 | 106,505 |
Selling, general, and administrative | 15,665 | 50,831 | 54,307 |
Depreciation and amortization | 1,000 | 69,469 | 78,403 |
Impairment of goodwill | 0 | 372,728 | 0 |
Total operating expenses | 89,353 | 1,069,912 | 487,960 |
Operating loss | (36,641) | (457,683) | (85,989) |
Other (income) expense: | |||
Interest expense, net | 1,049 | 31,609 | 48,745 |
Loss on extinguishment of related-party debt | 0 | 0 | 2,004 |
Change in fair value of Warrant liabilities | 0 | 3,751 | (5,109) |
Total other expense | 1,049 | 35,360 | 45,640 |
Loss before income tax | (37,690) | (493,043) | (131,629) |
Income tax benefit | (629) | (108,680) | (20,371) |
Net loss from continuing operations | (37,061) | (384,363) | (111,258) |
Net loss from discontinued operations, net of tax | 0 | (56,959) | (174,327) |
Net loss | (37,061) | (441,322) | (285,585) |
Less: Net loss from continuing operations attributable to non-controlling interest | 0 | (99,841) | (25,531) |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | (11,089) | (32,833) |
Net loss attributable to System1, Inc. | (37,061) | (330,392) | (227,221) |
Net loss from continuing operations | (37,061) | (284,522) | (85,727) |
Net loss from discontinued operations | $ 0 | $ (45,870) | $ (141,494) |
Basic net loss per share, continuing operations (in dollars per share) | $ (3.19) | $ (0.94) | |
Diluted net loss per share, continuing operations (in dollars per share) | (3.19) | (0.94) | |
Basic net loss per share, discontinuing operations (in dollars per share) | (0.51) | (1.54) | |
Diluted net loss per share, discontinuing operations (in dollars per share) | (0.51) | (1.54) | |
Basic net loss per share (in dollars per share) | (3.70) | (2.48) | |
Diluted net loss per share (in dollars per share) | $ (3.70) | $ (2.48) | |
Weighted average number of shares outstanding - basic (in shares) | 89,310 | 91,454 | |
Weighted average number of shares outstanding - diluted (in shares) | 89,310 | 91,454 | |
Basic net loss per unit (in dollars per share) | $ (1.81) | ||
Diluted net loss per unit (in dollars per share) | $ (1.81) | ||
Weighted average units outstanding - basic (in shares) | 20,488 | ||
Weighted average units outstanding - diluted (in shares) | 20,488 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (37,061) | $ (441,322) | $ (285,585) |
Other comprehensive income (loss) | |||
Foreign currency translation income (loss) | 87 | (394) | 35 |
Comprehensive loss | (36,974) | (441,716) | (285,550) |
Comprehensive loss attributable to non-controlling interest | 0 | (110,930) | (58,364) |
Comprehensive loss attributable to System1, Inc. | $ (36,974) | $ (330,786) | $ (227,186) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Class A common stock | Common Stock Class A common stock | Common Stock Class C common stock | Common Stock Class D common stock | Additional Paid-In-Capital | Additional Paid-In-Capital Class A common stock | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit Class A common stock | Accumulated Other Comprehensive Income | Non-Controlling Interest | Non-Controlling Interest Class A common stock |
Beginning balance (in shares) at Jan. 25, 2022 | 51,750 | 0 | 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Effect of the Merger (in shares) | 29,017 | 22,077 | 1,450 | |||||||||||
Effect of the Merger | $ 347,055 | $ 3 | $ 2 | $ 0 | $ 148,359 | $ 0 | $ 0 | $ 198,691 | ||||||
Beginning balance at Jan. 25, 2022 | 466,211 | $ 5 | $ 0 | $ 0 | 574,003 | (107,797) | 0 | 0 | ||||||
Ending balance (in shares) at Jan. 26, 2022 | 80,767 | 22,077 | 1,450 | |||||||||||
Ending balance at Jan. 26, 2022 | 813,266 | $ 8 | $ 2 | $ 0 | 722,362 | (107,797) | 0 | 198,691 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss | (441,322) | (330,392) | (110,930) | |||||||||||
Exercise of warrants (in shares) | 3,969 | |||||||||||||
Exercise of warrants | 27,989 | 34,348 | (6,359) | |||||||||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 968 | |||||||||||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,089) | (2,687) | 598 | |||||||||||
Issuance of common stock in connection with Merger, net of offering costs, underwriting discounts and commissions (in shares) | 930 | |||||||||||||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 661 | 2,397 | (1,736) | |||||||||||
Issuance of common stock in connection with the acquisition of business (in shares) | 2,000 | |||||||||||||
Issuance of common stock in connection with the acquisition of business | 25,500 | 29,234 | (3,734) | |||||||||||
Issuance of market-based restricted stock units (in shares) | (1,450) | |||||||||||||
Issuance of market-based restricted stock units | 0 | |||||||||||||
Conversion of Class D shares to Class A shares (in shares) | 2,900 | (2,900) | ||||||||||||
Conversion of Class D shares to Class A shares | 1 | $ 1 | 5,414 | (5,414) | ||||||||||
Conversion of Class C shares to Class A shares (in shares) | 330 | (330) | ||||||||||||
Conversion of Class C shares to Class A shares | 0 | 2,734 | (2,734) | |||||||||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | (41) | (41) | ||||||||||||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (7,753) | (7,910) | 157 | |||||||||||
Other comprehensive income | (394) | (417) | 23 | |||||||||||
Stock-based compensation | 57,471 | 45,451 | 12,020 | |||||||||||
Distribution to members | (1,511) | (1,511) | ||||||||||||
Class A common stock repurchases (in shares) | (190) | |||||||||||||
Class A common stock repurchases | $ (1,107) | $ 264 | $ (1,107) | $ (264) | ||||||||||
Ending balance (in shares) at Dec. 31, 2022 | 91,674 | 21,747 | 0 | |||||||||||
Ending balance at Dec. 31, 2022 | $ 470,671 | $ 9 | $ 2 | $ 0 | 831,566 | (439,296) | (260) | 78,650 | ||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss | $ (285,585) | (227,221) | (58,364) | |||||||||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 2,615 | |||||||||||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,118) | $ 1 | (1,108) | (1,011) | ||||||||||
Issuance of common stock in connection with the acquisition of business (in shares) | 407 | |||||||||||||
Issuance of common stock in connection with the acquisition of business | 1,658 | 1,818 | (160) | |||||||||||
Conversion of Class C shares to Class A shares (in shares) | 234 | (234) | ||||||||||||
Conversion of Class C shares to Class A shares | 0 | 1,048 | (1,048) | |||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC interest ownership exchanges and the issuance of common stock from equity incentive plans | 286 | 286 | ||||||||||||
Common stock cancelled in connection with disposition of business (in shares) | (29,075) | |||||||||||||
Common stock cancelled in connection with disposition of business | (40,820) | $ (3) | (13,570) | (40,818) | 13,571 | |||||||||
Other comprehensive income | 35 | 79 | (44) | |||||||||||
Stock-based compensation | 25,612 | 23,072 | 2,540 | |||||||||||
Distribution to members | (97) | (97) | ||||||||||||
Ending balance (in shares) at Dec. 31, 2023 | 65,855 | 21,513 | 0 | |||||||||||
Ending balance at Dec. 31, 2023 | $ 169,315 | $ (327) | $ 7 | $ 2 | $ 0 | $ 843,112 | $ (707,662) | $ (327) | $ (181) | $ 34,037 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Members’ Deficit - 1 months ended Jan. 26, 2022 - USD ($) $ in Thousands | Total | Members’ Deficit | Accumulated Other Comprehensive Income |
Beginning balance at Dec. 31, 2021 | $ (28,401) | $ (28,829) | $ 428 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | (37,061) | (37,061) | |
Accumulated other comprehensive income | 87 | 87 | |
Stock-based compensation | 23,705 | 23,705 | |
Ending balance at Jan. 26, 2022 | $ (41,670) | $ (42,185) | $ 515 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Cash Flows from Operating Activities | |||
Net loss | $ (37,061) | $ (441,322) | $ (285,585) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,000 | 118,652 | 105,208 |
Stock-based compensation | 23,705 | 108,323 | 53,085 |
Impairment of goodwill | 0 | 372,728 | 115,483 |
Impairment of assets held for sale | 0 | 0 | 3,276 |
Loss on sale of business | 0 | 0 | 4,247 |
Amortization of debt issuance costs | 0 | 4,836 | 6,418 |
Noncash lease expense | 115 | 1,532 | 1,680 |
Change in fair value of Warrant liabilities | 0 | 3,751 | (5,109) |
Deferred tax benefits | (816) | (118,048) | (22,330) |
Loss on extinguishment of related-party debt | 0 | 0 | 2,004 |
Other | (9) | 661 | 2,042 |
Changes in operating assets and liabilities | |||
Accounts receivable | 11,118 | 4,602 | 20,857 |
Prepaids and other assets | 1,069 | (3,348) | 5,207 |
Accounts payable | (67,600) | 2,121 | (6,796) |
Accrued expenses and other liabilities | 57,488 | (22,034) | (19,438) |
Deferred revenue | 311 | 9,008 | 15,273 |
Long-term earnout liabilities | 0 | (20,000) | (20,000) |
Other long-term liabilities | 77 | (18,145) | (264) |
Net cash provided by (used in) operating activities | (10,603) | 3,317 | (24,742) |
Cash Flows from Investing Activities | |||
Purchases of property and equipment | 0 | (3,546) | (2,353) |
Capitalized software development costs | (441) | (6,389) | (5,607) |
Proceeds from sale of business, net of cash sold | 0 | 0 | 211,139 |
Acquisition of businesses, net of cash acquired | 0 | (444,074) | 0 |
Net cash provided by (used in) investing activities | (441) | (454,009) | 203,179 |
Cash Flows from Financing Activities | |||
Proceeds from Term Loan and 2022 Revolving Facility | 0 | 450,000 | 0 |
Proceeds from related-party loan, net of lender fees | 0 | 0 | 11,278 |
Repayments of related party loan, inclusive of lender fees | 0 | 0 | (2,699) |
Proceeds from 2023 Revolving Note | 0 | 0 | 64,000 |
Repayment of 2023 Revolving Note, inclusive of lender fees | 0 | 0 | (66,400) |
Repayment of Term Loan | 0 | (187,488) | (20,000) |
Repayment of 2022 Revolving Facility | 0 | 0 | (50,000) |
Payments for financing costs | 0 | (24,845) | 0 |
Payment of acquisition holdback | 0 | (1,715) | (1,935) |
Payment of promissory note | 0 | 0 | (5,156) |
Taxes paid related to net settlement of stock awards | 0 | (2,090) | (3,063) |
Redemptions of Class A common stock | 0 | (510,469) | 0 |
Proceeds from Warrant exercises | 0 | 5,027 | 0 |
Purchases of treasury stock | 0 | (1,122) | 0 |
Cash received from the Backstop | 0 | 246,484 | 0 |
Distributions to members | 0 | (1,511) | (97) |
Net cash used in financing activities | 0 | (27,729) | (74,072) |
Effect of exchange rate changes in cash, cash equivalent and restricted cash | (19) | (57) | 10 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (11,063) | (478,478) | 104,375 |
Cash and cash equivalents and restricted cash, beginning of the period | 48,639 | 37,576 | 39,075 |
Cash and cash equivalents and restricted cash, end of the period | 37,576 | 39,075 | 143,450 |
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: | |||
Cash and cash equivalents | 36,833 | 8,905 | 135,343 |
Restricted cash | 743 | 11,112 | 8,107 |
Cash and restricted cash included in assets held for sale from discontinued operations | 0 | 19,058 | 0 |
Total cash, cash equivalents and restricted cash | 37,576 | 39,075 | 143,450 |
Supplemental cash flow information: | |||
Cash paid for income taxes | 241 | 8,298 | 7,102 |
Cash paid for interest | 932 | 25,993 | 42,875 |
Cash paid for operating lease liabilities | 175 | 2,199 | 2,141 |
Operating lease assets obtained in exchange for operating lease liabilities | 7,987 | 2,064 | 0 |
Tenant improvements paid by lessor | 0 | 636 | 0 |
Stock-based compensation included in capitalized software development costs | 0 | 817 | 2,008 |
Equity issuance to settle intercompany loan | 941 | 0 | 0 |
Settlement of incentive plan through issuance of common stock | 0 | 0 | 1,658 |
Restructuring of holdback liability to promissory note | 0 | 0 | 5,156 |
Deferred consideration for acquisition | $ 0 | $ 6,850 | $ 0 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business System1, Inc. and subsidiaries (the “Company”, “we”, “our” or “us”) operates an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers and publishers. We provide our omnichannel customer acquisition platform services through our proprietary responsive acquisition marketing platform (“RAMP”) . Operating seamlessly across major advertising networks and advertising category verticals to acquire end-users, RAMP allows us to monetize such end users through our relationships with third party advertisers and advertising networks (“A dvertising Partners ”) . RAMP also allows third party advertising platforms and publishers (“ Network Partners ”) , to send user traffic to, and monetize end user traffic on, our owned and operated websites or through our monetization agreements . RAMP operates across our network of owned and operated websites and related products, allowing us to monetize user traffic that we source from various acquisition marketing channels, including Google, Facebook, Zemanta, Taboola, and TikTok. Our primary operations are in the United States, and we also have operations in Canada and the Netherlands. Operations outside the United States are subject to risks inherent in operating under different legal systems, as well as various political and economic environments. Among these risks are changes in existing tax laws changes in the regulatory framework in foreign jurisdictions , data privacy laws, possible limitations on foreign investment and income repatriation, government foreign exchange controls, exposure to currency exchange fluctuations and employment laws impacting foreign employees . We do not engage in hedging activities to mitigate our exposure to fluctuations in foreign currency exchange rates. We, through Total Security Limited, formerly known as Protected.net Group Limited (“Protected”), also provided antivirus software solutions, offering customers a single packaged solution that provides protection and reporting to the end user. On September 6, 2023, we announced that we had received a non-binding indication of intent from Just Develop It Limited (“JDI”), one of our significant shareholders, which is principally owned and managed by certain members of the Protected management team ("Purchasing Parties"), related to the potential acquisition of Protected. Subsequently, on November 30, 2023, we completed the sale of Protected, including our antivirus and consumer privacy software solutions, pursuant to the terms of a share purchase agreement (“Share Purchase Agreement”). Pursuant to the Share Purchase Agreement, the Purchasing Parties acquired all of the outstanding preference and ordinary shares (“Protected Disposition”) of Protected for total consideration comprised: (a) $240.0 million in cash, subject to certain adjustments, (b) the return and subsequent cancellation of approximately 29.1 million shares of our Class A common stock, par value $0.0001 per share, owned by the Purchasing Parties and (c) confirmation from JDI, Protected and the CEO of the Total Security business that the financial performance benchmarks related to certain contingent earnout payments (the "Protected Incentive Plan") based on the future performance of Protected’s business in an aggregate amount of up to $60.0 million contemplated by the Business Combination Agreement related to the Merger (see Note 3, Merger), will, as a result of the Protected Disposition, no longer be achievable. The results of operations of our Protected business prior to its sale are presented as net loss from discontinued operations in our consolidated statements of operations for all periods presented, and the assets and liabilities for our Protected business prior to its sale have been classified as held for sale from discontinued operations and segregated for all periods presented in the consolidated balance sheets (see Note 19, Discontinued Operations). We have two reportable segments: Owned and Operated Advertising and Partner Network ( see Note 16, Segment Reporting) . Going Concern Considerations The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern. The going concern basis of presentation assumes that we will continue in operation one year after the date these consolidated financial statements are issued and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. As of June 1, 2023, we had not delivered audited financial statements for the fiscal year ended December 31, 2022 to Bank of America as required by the covenants of the Term Loan. The failure to timely deliver the audited financial statements resulted in an event of default under the Term Loan and provided Bank of America the ability to immediately call the outstanding principal balances of the Term Loan and Revolving Facility of $430.0 million, at the request of, or with the consent of, the required majority of lenders until the time that the 2022 audited financial statements were delivered to Bank of America. We did not have sufficient liquidity to settle the outstanding principal balances should they be called, nor had we identified sufficient alternative sources of capital. As a result, this matter raised substantial doubt about our ability to continue as a going concern. We delivered the 2022 audited financial statements to Bank of America on June 6, 2023, resulting in the remediation of the event of default. Accordingly, Bank of America no longer had the ability to call the outstanding principal balances on the Term Loan and Revolving Facility. Starting in the third quarter of 2022 and continuing into 2023, we experienced declining cash flows and financial performance as a result of deteriorating macroeconomic conditions, resulting in reductions in both advertiser and overall consumer demand for our marketing services. In response to these conditions, we obtained additional financing in the second quarter of 2023 which was expected to provide us with sufficient liquidity to manage through the current business environment. However, subsequent to the quarter ended June 30, 2023, we experienced increased customer acquisition costs in addition to the loss of a significant Network Partner, both of which further negatively impacted our future cash forecasts and negatively impacted our forecasted compliance with the maximum leverage ratio covenant of the Term Loan (see Note 11, Debt, Net). Accordingly, we determined that there was substantial doubt about our ability to continue as a going concern as of June 30, 2023 and September 30, 2023. We had an accumulated deficit of $707.7 million as of December 31, 2023, a net loss of $285.6 million for the year ended December 31, 2023, and had cash outflows from operations of $24.7 million for the year ended December 31, 2023. On November 30, 2023, we completed the sale of Protected, which resulted in a net inflow of cash of $180.3 million , net of transaction expenses and after mandatory and voluntary debt payoffs (see Note 19, Discontinued Operations). As of December 31, 2023, we have paid off or paid down all of our outstanding notes, revolvers and loans (see Note 11, Debt, Net and Note 12, Related-Party Transactions), with the exception of the Term Loan and had unrestricted cash on hand of $135.3 million. On January 17, 2024, we completed the repurchase of $63.7 million in principal amount of our Term Loan for an aggregate purchase price of $40.9 million pursuant to a Dutch auction tender offer (see Note 11, Debt, Net ) . Following the repurchase, the outstanding principal amount of the Term Loan was $301.3 million . We have principal and interest payments due of approximately $5.0 million and $6.6 million, respectively, per quarter on our Term Loan, and as of the date of this filing, we have available capacity of $50.0 million under the 2022 Revolving Note, subject to maximum leverage ratio covenant (see Note 11, Debt, Net). In addition, we have implemented a significant reduction in headcount in both the second quarter of 2023 and in early September 2023, resulting in approximately $14.5 million of annualized prospective cash savings. As a result of the net cash inflow from the sale of Protected and an evaluation of our forecasted future cash flows from operating activities (including the impact of the headcount reductions taken in the second and third quarters of 2023), we believe that we have sufficient resources to continue as a going concern for the twelve-month period following the date these financial statements are issued. Accordingly, we have alleviated the substantial doubt regarding our ability to continue as a going concern that previously existed as of September 30, 2023, and we will have sufficient liquidity to meet our obligations as they become due over the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation We were a special purpose acquisition company originally incorporated as a Cayman Islands exempted company on February 11, 2020 under the name Trebia Acquisition Corp. (“Trebia”). We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On January 27, 2022, we consummated a business combination ("Merger"), which resulted in the acquisition of S1 Holdco, LLC ("S1 Holdco") and Protected. We were deemed the accounting acquirer in the Merger, and S1 Holdco was deemed to be the predecessor entity. Accordingly, the historical financial statements of S1 Holdco became the historical financial statements of ours, upon the consummation of the Merger. As a result, the financial statements included in this report reflect (i) the historical operating results of S1 Holdco prior to the Merger ("Predecessor") and (ii) the combined results of our, including S1 Holdco and Protected following the closing of the Merger ("Successor"). The accompanying financial statements include a Predecessor period, which was the period January 1, 2022 through January 26, 2022, concurrent with completion of the Merger and Successor periods from January 27, 2022 through December 31, 2022, and thereafter. As a result of the Merger, the results of operations, financial position and cash flows of the Predecessor and Successor may not be directly comparable. A black-line between the Successor and Predecessor periods has been placed in the consolidated financial statements and in the tables to the notes to the consolidated financial statements to highlight the lack of comparability between these two periods as the Merger resulted in a new basis of accounting for S1 Holdco. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of System1, Inc. and its subsidiaries for the Successor periods, and S1 Holdco for the Predecessor period. All intercompany accounts and transactions have been eliminated in the consolidation of the financial statements. Revision of Previously Issued Consolidated Financial Statements During the fourth quarter of 2023, we identified errors related to our previously issued financial statements as of and for the year ended December 31, 2022 as follows: a. Goodwill and deferred tax liabilities were understated by $6.4 million on the opening balance sheet as of the Merger in the first quarter of 2022 due to an error in the determining the outside basis difference in S1 Holdco. The goodwill recorded was subsequently impaired in the third and fourth quarters of 2022. The error impacted the consolidated balance sheets, consolidated statements of operations, and consolidated statement of cash flows. b. Accrued expenses and other current liabilities were understated by $0.8 million, additional paid-in capital was understated by $2.3 million and salaries and benefits expense was understated by $3.1 million as a result of our not accelerating expenses upon forfeiture of certain cash and equity Replacement Awards granted during the Merger that impacted the consolidated balance sheet, consolidated statements of operations, the consolidated statements of changes in stockholders' equity, and consolidated statement of cash flows. c. We did not appropriately account for changes in equity and earnings per share, specifically: (i) the carrying amount of non-controlling interest was not updated as changes in ownership events occurred during each reporting period, (ii) certain equity replacement awards granted during the Merger were not properly considered in the allocation of net income (loss) to controlling and non-controlling interest and earnings per share. These errors impact the consolidated balance sheets, consolidated statement of operations, consolidated statements of changes in stockholders' equity, and consolidated statement of cash flows. d. We made additional corrections for other immaterial errors. e. We adjusted for the tax impacts of the errors described above. We concluded that the errors were not material, either individually or in the aggregate, to our previously issued consolidated financial statements for each of the impacted periods. To correct the immaterial errors, we have revised our previously issued Consolidated Financial Statements as of and for the period ended December 31, 2022. We have revised the consolidated balance sheet, consolidated statement of operations, consolidated statement of comprehensive income (loss), consolidated statement of changes in stockholders' equity, and consolidated statement of cash flows for the period ended December 31, 2022, as well as the associated Notes to the consolidated financial statements to reflect the correction of these immaterial errors in this Annual Report on Form 10-K for the year ended December 31, 2023. With respect to the impact of the errors on the previously issued unaudited quarterly financial information for fiscal year 2022 and 2023, we concluded that the errors identified in each interim period were immaterial to the respective unaudited interim condensed consolidated financial statements and were consistent in nature to the revisions discussed above, with the addition of a $6.8 million misclassification as of June 30, 2023, between cash and cash equivalents and restricted cash – current, which understated cash and cash equivalents and overstated restricted cash. The restricted cash related to Protected and will be presented as Cash and restricted cash included in assets held for sale from discontinued operations in the June 30, 2024 Form 10-Q. As such, we have not included disclosure of the impact of the revisions and the impact of reporting Discontinued Operations related to the sale of Protected, for the 2022 or 2023 unaudited interim condensed consolidated financial statements within this Form 10-K. We will present the revisions of our previously issued 2023 unaudited interim condensed consolidated financial statements and associated Notes to the condensed consolidated financial statements in connection with the future filings of our 2024 interim reporting on Form 10-Q for the periods ended March 31, 2024, June 30, 2024 and September 30, 2024. The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued consolidated balance sheet as of December 31, 2022: Successor December 31, 2022 As Previously Reported Revision Adjustments As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Accrued expenses and other current liabilities 95,447 790 (b) 96,237 (10,457) 85,780 Total current liabilities 210,285 790 211,075 — 211,075 Deferred tax liability 43,355 1,327 (a) (e) 44,682 (15,286) 29,396 Total liabilities 687,668 2,117 689,785 — 689,785 Additional paid-in capital 829,687 1,879 (b) (c) 831,566 — 831,566 Accumulated deficit (445,301) 6,005 (b) (c) (439,296) (439,296) Accumulated other comprehensive loss (417) 157 (e) (260) — (260) Total stockholders' equity attributable to System1, Inc. 383,980 8,041 392,021 — 392,021 Non-controlling interest 88,808 (10,158) (c) 78,650 — 78,650 Total stockholders' equity 472,788 (2,117) 470,671 — 470,671 Total liabilities and stockholders' equity $ 1,160,456 $ — $ 1,160,456 $ — $ 1,160,456 The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued consolidated statement of operations, for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Salaries and benefits 194,976 3,074 (b) 198,050 (60,005) 138,045 Impairment of goodwill 366,309 6,419 (a) 372,728 — 372,728 Total operating expenses 1,282,194 9,493 1,291,687 (221,775) 1,069,912 Operating loss (508,254) (9,493) (517,747) 60,064 (457,683) Total other expense 35,801 — 35,801 (441) 35,360 Loss before income tax (544,055) (9,493) (553,548) 60,505 (493,043) Income tax benefit (101,976) (10,250) (a) (e) (112,226) 3,546 (108,680) Net loss from continuing operations (442,079) 757 (441,322) 56,959 (384,363) Net loss from discontinued operations, net of tax — — — (56,959) (56,959) Net loss (442,079) 757 (441,322) — (441,322) Less: Net loss from continuing operations attributable to non-controlling interest (105,682) (5,248) (c) (110,930) 11,089 (99,841) Less: Net loss from discontinued operations attributable to non-controlling interest — — — (11,089) (11,089) Net loss attributable to System1, Inc. $ (336,397) $ 6,005 $ (330,392) $ — $ (330,392) Amounts attributable to System1, Inc.: Net loss from continuing operations $ (336,397) $ 6,005 (c) $ (330,392) $ 45,870 $ (284,522) Net loss from discontinued operations — — (45,870) (45,870) Net loss attributable to System1, Inc. $ (336,397) $ 6,005 $ (330,392) $ — $ (330,392) Basic and diluted net loss per share: Continuing operations $ (3.77) $ 0.07 (c) $ (3.70) $ (0.51) $ (3.19) Discontinued operations — — — (0.51) (0.51) Basic and diluted net loss per share $ (3.77) $ 0.07 $ (3.70) $ — $ (3.70) Weighted average number of shares outstanding - basic and diluted 89,251 59 (c) 89,310 89,310 The following table reflects the revisions related to the sale of Protected to the previously issued consolidated statement of comprehensive loss for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Revised and Currently Reported Net loss $ (442,079) $ 757 (a) (b) (e) $ (441,322) Other comprehensive income (loss) Foreign currency translation income (loss) (394) — (394) Comprehensive loss (442,473) 757 (441,716) Comprehensive loss attributable to non-controlling interest (105,682) (5,248) (c) (110,930) Comprehensive loss attributable to System1, Inc. $ (336,791) $ 6,005 $ (330,786) The following tables reflects the revisions to the previously issued consolidated statement of changes in stockholders' equity for the period from January 27, 2022 through December 31, 2022. Although the impact is pervasive throughout the consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant impact is an additional net loss of $0.8 million, a reduction of non-controlling interest of $10.2 million, an increase in accumulated deficit of $6.0 million and an increase in additional paid-in-capital of $1.9 million Successor Class A Common Stock Class C Common Stock Class D Common Stock Shares Amount Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Deficit Accumulated Other Comprehensive Income Non-Controlling Interest Total Stockholders’ As Previously Reported Balance at January 27, 2022 80,767 $ 8 22,077 $ 2 1,450 $ — $ 722,362 $ (107,797) $ — $ 198,691 $ 813,266 Net loss — — — — — — — (336,397) — (105,682) (442,079) Exercise of warrants 3,969 — — — — — 27,989 — — — 27,989 Issuance of restricted stock, net of forfeitures and shares withheld for taxes 968 — — — — — (2,089) — — — (2,089) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions 930 — — — — — 661 — — — 661 Issuance of common stock in connection with the acquisition of business 2,000 — — — — — 25,500 — — — 25,500 Issuance of market-based restricted stock units — — — — 1,450 — — — — — — Conversion of Class D shares to Class A shares 2,900 1 — — (2,900) — — — — — 1 Conversion of Class C shares to Class A shares 330 — (330) — — — 2,714 — — (2,714) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — — — (41) — — — (41) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (2,596) — — — (2,596) Other comprehensive income — — — — — — — — (417) 24 (393) Stock-based compensation — — — — — — 55,187 — — — 55,187 Distribution to members — — — — — — — — — (1,511) (1,511) Class A common stock repurchases (190) — — — — — — (1,107) — — (1,107) Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 — $ — $ 829,687 $ (445,301) $ (417) $ 88,808 $ 472,788 Revision Adjustments Net loss — — — — — — — 6,005 — (5,248) 757 (a) (b) (c) (e) Exercise of warrants — — — — — — 6,359 — — (6,359) — (c) Issuance of restricted stock, net of forfeitures and shares withheld for taxes — — — — — — (598) — — 598 — (b) (c) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions — — — — — — 1,736 — — (1,736) — (c) Issuance of common stock in connection with the acquisition of business — — — — — — 3,734 — — (3,734) — (c) Conversion of Class D shares to Class A shares — — — — — — 5,414 — — (5,414) — (c) Conversion of Class C shares to Class A shares — — — — — — 20 — — (20) — (c) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (5,314) — 157 — (5,157) (e) Other comprehensive income — — — — — — — — (1) (1) (e) Stock-based compensation — — — — — — (9,736) — — 12,020 2,284 (b) (c) Class A common stock repurchases — — — — — — 264 — — (264) — (c) Balance at December 31, 2022 — $ — — $ — — $ — $ 1,879 $ 6,005 $ 157 $ (10,158) $ (2,117) As Revised Net loss — — — — — — — (330,392) — (110,930) (441,322) Exercise of warrants 3,969 — — — — — 34,348 — — (6,359) 27,989 Issuance of restricted stock, net of forfeitures and shares withheld for taxes 968 — — — — — (2,687) — — 598 (2,089) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions 930 — — — — — 2,397 — — (1,736) 661 Issuance of common stock in connection with the acquisition of business 2,000 — — — — — 29,234 — — (3,734) 25,500 Issuance of market-based restricted stock units — — — — 1,450 — — — — — — Conversion of Class D shares to Class A shares 2,900 1 — — (2,900) — 5,414 — — (5,414) 1 Conversion of Class C shares to Class A shares 330 — (330) — — — 2,734 — — (2,734) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — — — (41) — — — (41) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (7,910) — 157 — (7,753) Other comprehensive income — — — — — — — — (417) 23 (394) Stock-based compensation — — — — — — 45,451 — — 12,020 57,471 Distribution to members — — — — — — — — — (1,511) (1,511) Class A common stock repurchases (190) — — — — — 264 (1,107) — (264) (1,107) Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 — $ — $ 831,566 $ (439,296) $ (260) $ 78,650 $ 470,671 The following table reflects the revisions to the previously issued consolidated statement of cash flows for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Currently Reported Cash Flows from Operating Activities Net loss $ (442,079) $ 757 (a) (b) (e) $ (441,322) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock-based compensation 106,943 1,380 (b) (d) 108,323 Impairment of goodwill 366,309 6,419 (a) 372,728 Deferred tax benefits (107,798) (10,250) (a) (e) (118,048) Changes in operating assets and liabilities Accrued expenses and other liabilities (13,478) (8,556) (b) (d) (22,034) Other long-term liabilities (28,395) 10,250 (a) (e) (18,145) Net cash provided by (used in) operating activities $ 3,317 $ — $ 3,317 Risks and Concentrations We are subject to certain business and operational risks, including competition from alternative technologies, as well as dependence on key Advertising Partners, key employees, key contracts, and growth to achieve our business and operational objectives. Concentrations The following table illustrates the concentration as a percentage of total revenue for our key Advertising Partners: Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Google 85 % 86 % 88 % As of December 31, 2023 (Successor), we had (i) two paid search advertising partnership agreements with Google, and (ii) one paid search advertising partnership agreement with Microsoft. The Google agreements are in effect through February 28, 2025, and March 31, 2024, respectively. The agreement with Microsoft (our next largest Advertising Partner by revenue) is in effect through June 30, 2025. Under certain circumstances, each of these agreements may be terminated by either us or the respective Advertising Partner immediately, or with minimal notice. Accounts receivable are primarily derived from Advertising Partners located within the United States. As of December 31, 2023 (Successor), Google and Yahoo, represented 69% and 6%, respectively, of our accounts receivables balance. As of December 31, 2022 (Successor), these two Advertising Partners represented 68% and 11%, respectively, of our accounts receivables balance. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management’s estimates are based on historical information available as of the date of the consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, valuation of goodwill, acquired intangible assets, assets held for sale and long-lived assets, valuation and recognition of stock-based compensation awards, income taxes, contingent consideration and determination of the fair value of the warrant liabilities. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Cash and Cash Equivalents Cash and cash equivalents consist of amounts held as bank deposits. Cash is deposited with high-credit-quality financial institutions and, at times, such balances with any one financial institution may exceed the insurance limits of the prevailing regulatory body. Historically, we have not experienced any losses related to these cash balances and we believe that there is minimal risk of expected future losses. However, there can be no assurance that there will not be losses on these deposits. Accounts Receivable, Net We maintain an allowance for doubtful accounts receivable for expected credit losses. In estimating the required allowance, we take into consideration the overall quality and aging of the receivable portfolio, creditworthiness of customers based on ongoing credit evaluation, the number of customers, specifically identified customer risks, historical write-off experience and the current economic environment, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. The payment term for our accounts receivable is typically 30 days. Foreign Currency The functional currency of our wholly-owned subsidiaries is the currency of the primary economic environment in which they operate. Assets and liabilities are translated into U.S. dollars using exchange rates prevailing at the balance sheet date, while revenue and expenses are translated at average exchange rates during the year. Gains and losses resulting from the translation of our consolidated balance sheets are recorded as a component of accumulated other comprehensive (loss) income. Foreign currency transaction gains and losses are recorded in other income (expense), net on our consolidated statement of operations. Warrant Liability We account for the Public Warrants and Private Placement Warrants (collectively “Warrants”), as liabilities measured at fair value each balance sheet date, with changes in fair value recorded in Change in fair value of warrant liabilities in the consolidated statements of operations. Refer to Note 13, Warrants and Note 14, Fair Value Measurement. Fair Value of Financial Instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure fair value based on a three-level hierarchy of inputs, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs when measuring fair value. A financial instrument’s level within the three-level hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three-level hierarchy of inputs is as follows: Level 1 : Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 : Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions about current market conditions and require significant management judgment or estimation. Financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, and warrant liabilities. Cash equivalents and restricted cash are stated at fair value on a recurring basis. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. As of December 31, 2023 and 2022 (Successor), our outstanding debt included a Term Loan, for which fair value was estimated using an observable market quotation (Level 2). Our liabilities measured at fair value relate to the Public Warrant liabilities (Level 1), Private Placement Warrant liabilities (Level 2), the former CEO of S1 Holdco's equity profits interest liability (Level 3) and contingent consideration (Level 3). Certain assets, including goodwill, intangible assets, assets held for sale and other long-lived assets, are also subject to measurement at fair value on a nonrecurring basis if they are deemed to be impaired as a result of an impairment review. We determine the fair value by applying Level 3 unobservable inputs. Restricted Cash Our restricted cash as of December 31, 2023 (Successor) and December 31, 2022 (Successor) primarily related to; (i) cash collateralized letter of credit we maintain in connection with our corporate office lease, (ii) escrow account related to unvested equity awards as of the closing of the Merger that will be cash settled, (iii) escrow account related to the indemnification of obligations related to the RoadWarrior acquisition and (iv) escrow account related to the postcombination compensation arrangement related to the CouponFollow acquisition. Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Repairs and maintenance are charged to expense as incurred, while improvements are capitalized. Upon the sale or retirement of property and equipment, the accounts are relieved of the cost and the related accumulated depreciation, and any resulting gain or loss is included in selling, general, and administrative expense on the consolidated statements of operations. The estimated useful lives of our property and equipment for purposes of computing depreciation are as follows (in years): Computer equipment 3 Office equipment 3 Furniture, fixtures and equipment 3 - 7 Leasehold improvements Shorter of the remaining lease term or estimated useful life for leasehold improvements. Internal-Use Software Development Costs, Net Internal-use software development costs are stated at cost, less accumulated amortization. We capitalize certain internal-use software development costs associated with creating and enhancing internally developed software related to our technology infrastructure, including continuing to develop and deploy our RAMP platform. Deployment activities focus on enhancement of our customer acquisition capabilities, including website enhancements and tools for marketing support, and upgrades of dashboards and reporting tools. These costs are comprised of personnel costs, which include salaries, bonuses, stock-based compensation and employee benefits’ expenses for employees who are directly associated with, and who devote significant time to, software projects, as well as external direct costs of materials and services consumed in developing or obtaining the software. Internal-use software development costs that do not meet the qualification for capitalization are expensed as incurred, and are recorded in salaries and benefits expense on the consolidated statement of operations. Internal-use software development activities generally consist of three stages: (i) the planning stage, (ii) the application and infrastructure development stage, and (iii) the post-implementation stage. Costs incurred in the planning and post-implementation stages of software development, including costs associated with the post configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. Costs incurred in the application and infrastructure development stage, including significant enhancements and upgrades, are capitalized once the preliminary project stage is completed, management has authorized further funding for the completion of the project, and it is probable that the project will be completed and the software will perform as intended. Capitalization ends once a project is substantially complete, and the software and technologies are ready for their intended purpose(s). Internal-use software development costs are amortized using a straight-line method over an estimated useful life of three years, commencing when the software is ready for our intended use, which approximates the period over which the expected benefits will be derived. We do not transfer ownership of or software or lease our software to third parties. Intangible Assets Intangible assets primarily consist of acquired technology, customer relationships and trade names/trademarks. We determine the appropriate useful life based on management’s estimate of the applicable intangible asset’s remaining economic useful life at the time of acquisition. Intangible assets are generally amortized over their estimated economic useful lives using a straight-line method, which approximates the pattern in which the economic benefits are consumed . The fair value of the intangible assets acquired in a business combination are determined as follows; (i) trademarks using the relief from royalty method under the income-based approach. Key assumptions include forecasted revenue, an estimated royalty rate applicable to the trademarks, and a discount rate; (ii) customer relationships using an excess-earnings method utilizing distributor inputs. Key assumptions include customer attrition rate, revenue growth rate, existing customer revenue, deferred revenue, and a discount rate; and (iii) technology using the excess-earnings method. Key assumptions include forecasted revenue, technology migration rate and a discount rate. The estimated useful lives of our intangible assets are as follows (in years): Useful Life Developed technology 4 Customer relationships 3 - 5 Trademarks and trade names 10 Other intangibles 4 Impairment of Long-Lived Assets We assess the recoverability of our long-lived assets when events or changes in circumstances indicate that their carrying value may not be recoverable. Such events or changes in circumstances may include a significant adverse change in the extent or manner in which a long-lived asset is being used; significant adverse changes in legal factors or in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset; current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. We assess recoverability of our long-lived assets by determining whether the carrying value of the asset group can be recovered through projected undiscounted cash flows over their remaining useful lives inclusive of an estimated residual value. If the carrying value of the asset group exceeds the forecasted undiscounted cash flows, an impairment loss is recognized and measured as the amount by which the carrying amount exceeds the estimated fair value. An impairment loss is charged to operations in the period in which management determines such impairment has occurr ed. Refer to Note 6, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net. Assets and Liabilities Held for Sale We report a business as held for sale when management has received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the ensuing year and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less costs to sell, which is required to be remeasured each reporting period. If the carrying amount of the business exceeds its estimated fair value, which is based on the estimated sales price of the transaction, less costs to sell, a loss is recognized. Depreciation and amortization is not recorded on assets of a business classified as held for sale. Refer to Note 19, Discontinued Operations. Discontinued Operations We present discontinued operations when there is a disposal of a component or a group of components that represents a strategic shift that will have a major effect on operations and financial results. The results of discontinued operations are reported in net income from discontinued operations in the consolidated statements of operations for all periods presented, commencing in the period in which the business is either disposed of or is classified as held for sale, including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less costs to sell. Assets and liabilities related to a business classified as held for sale which also meets the criteria for discontinued operations are segregated in the consolidated balance sheets for the current and prior periods presented. Refer to Note 19, Discontinued Operations. Business Combinations We allocate the consideration transferred to the fair value of assets acquired and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such val |
Merger
Merger | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Merger | Merger On June 28, 2021, we entered into a Business Combination Agreement (as amended on November 30, 2021, January 10, 2022 and January 25, 2022) (“Business Combination Agreement”), by and among S1 Holdco, Trebia, and Protected (collectively, “Companies”). On January 26, 2022 (“Closing Date”), we consummated the business combination ("Merger") pursuant to the Business Combination Agreement. Following the consummation of the Merger, the combined company is organized via an “Up-C” structure, in which substantially all of the assets and business operations of System1 are held by S1 Holdco. Until the disposition of Protected in November 2023, the combined Companies’ business continued to operate through the subsidiaries of S1 Holdco and Protected. Additionally, Trebia’s ordinary shares and public Warrants ceased trading on the NYSE, and System1 Inc.'s Class A common stock and the Public Warrants began trading on the NYSE on January 28, 2022 under the symbols “SST” and “SST.WS,” respectively. The consideration paid to the existing equity holders of S1 Holdco and Protected in connection with the Merger consisted of the following: • Cash; • Class A common stock; • Class C common stock; • Replacement Awards. The aggregate cash consideration was $440.2 million. The aggregate equity consideration paid and/or retained for S1 Holdco Class B Units was $610.1 million, consisting of (a) the aggregate equity consideration payable under the Business Combination Agreement, consisting of shares of Class A common stock and Replacement Awards, and (b) the aggregate Class B Units in S1 Holdco retained by S1 Holdco equity holders at the Closing. The fair value of the Class A common stock was determined by utilizing the transaction closing price per share per the Business Combination Agreement of $10.00 and a discount of 10%, as the shares were not immediately available for sale upon issuance and this restriction is viewed to be a function of the security characteristics. Additionally, the aggregate Class B units in S1 Holdco retained by S1 Holdco equity holders at the Closing Date resulted in a non-controlling interest. The 22.1 million Class B units in S1 Holdco and the corresponding Class C common stock in us were determined to have an estimated value of $198.7 million . As the Class B units in S1 Holdco together with the corresponding shares of our Class C common stock are exchangeable for shares of Class A common stock on a one-for-one basis, the fair value was determined using the same method as for the shares of Class A common stock, utilizing the transaction closing price of $10.00 and a discount of 10% (as the units and the corresponding shares of Class C common stock were not immediately available for sale upon issuance and this restriction is viewed to be a function of the security characteristics). The fair value of $198.7 million was included in non-controlling interest on the consolidated balance sheets and consolidated statements of changes in stockholders' equity. In connection with the Merger, System1 and Cannae Holdings, Inc. (“Cannae”), an investor in the Sponsor of Trebia, entered into a backstop agreement (“Backstop Agreement”) on June 28, 2021, as amended on January 10, 2022, whereby Cannae agreed, to subscribe for up to 25.0 million shares of Trebia Class A common stock in order to fund up to $250.0 million of redemptions by shareholders of Trebia. See discussion below regarding the Amended and Restated Sponsor Agreement, which was amended in conjunction with the Backstop Agreement. As a result of shareholder redemptions, Cannae provided $246.5 million of the cash used to fund the Closing Cash Consideration pursuant to its obligations under the Backstop Agreement and in exchange received 24.6 million shares of Class A common stock ("Backstop shares"). Additionally, pursuant to the Backstop Agreement, the Selling Shareholders (i.e., certain shareholders of S1 Holdco and Protected prior to the Merger) agreed that, in the event shareholders of Trebia requested redemption of Trebia outstanding equity immediately prior to the Merger in excess of a certain dollar value threshold, certain equity holders of S1 Holdco and Protected would reduce their cash consideration and proportionally increase their equity consideration for the Merger, which is referred to as the “Seller Backstop Election”. In the event that the Seller Backstop Election was made, the Sponsors would forfeit their shares to allow us to then issue shares to the Selling Shareholders. The Seller Backstop Election was triggered and, as a result, the Sponsors forfeited 0.9 million shares of Trebia Class B ordinary shares which were converted at time of Merger, at a one-to-one ratio, into shares of Class A common stock of System1 and delivered to the various selling shareholders of S1 Holdco (“Sponsor Promote Shares”). The total consideration amount, in a combination of cash and equity consideration, did not change from the amount agreed in the Business Combination Agreement due to this Seller Backstop Election. We recorded $7.7 million in Salaries and benefits expense and $0.7 million in S elling, general and administrative expense for Sponsor Promote Shares during the period January 27, 2022 through March 31, 2022 (Successor). In connection with the execution of the Business Combination Agreement and the Backstop Agreement, on June 28, 2021, as amended on January 10, 2022, the sponsors of Trebia entered into the Amended and Restated Sponsor Agreement whereby the sponsors agreed to forfeit up to 2.6 million shares of Trebia Class B common stock in order for us to then issue the shares to Cannae (“Backstop forfeiture shares”), in exchange for Cannae entering into the Backstop Agreement. On January 27, 2022, based upon the final backstop funding provided by Cannae, the sponsors forfeited 2.5 million shares of Trebia Class B shares, after which we then issued 2.5 million shares of Class A common stock to Cannae. Trebia recorded a forward purchase liability of $25.3 million immediately prior to the Merger, representing the fair value of the Backstop shares and the Backstop forfeiture shares. In accordance with the Amended and Restated Sponsor Agreement entered into concurrently with the Business Combination Agreement, we issued 1.5 million Class D shares to the Trebia sponsors in exchange for 1.5 million Trebia Class B shares ("Sponsor RSA"). The difference in the fair value of the two was treated as a capital contribution. The founders of S1 Holdco and Protected were also issued 1.5 million Class D shares ("Seller RSU"). Further, in connection with the Merger, we also effected an incentive plan for the Protected business. Concurrently with the consummation of the Merger, System1 entered into a tax receivable agreement with the minority holders of S1 Holdco, (“Tax Receivable Agreement” or "TRA"), pursuant to which, among other things, the parties to the Tax Receivable Agreement have agreed to the allocation and payment of 85% of the actual savings, if any, in U.S. federal, state and local income tax that System1 may realize as a result of certain tax benefits (if any) related to the transactions contemplated by the Business Combination Agreement and future exchanges of Class B Units in S1 Holdco (together with the corresponding shares of our shares of Class C common stock) in exchange for shares of our Class A common stock. As of the Closing Date, the fair value of obligations under the TRA were determined to be zero as any tax savings were uncertain. The TRA is contingent consideration and subsequent changes in fair value of the contingent liability are recognized in earnings. Refer to TRA discussion in Note 9, Income Taxes . The Merger has been accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date. The purchase consideration, inclusive of the Protected assets and liabilities, was allocated to the following assets and liabilities (in thousands): Tangible assets acquired and liabilities assumed: Cash and marketable securities $ 68,748 Accounts receivable 79,086 Prepaid expenses 7,807 Income tax receivable 4,566 Property, plant & equipment, net 1,551 Other assets 6,950 Accounts payable (9,798) Deferred revenue (60,768) Accrued expenses and other current liabilities (110,004) Income tax payable (2,091) Notes payable (172,038) Deferred tax liabilities (145,032) Other liabilities (8,474) Total tangible assets acquired and liabilities assumed (339,497) Trademarks - 10 years estimated useful life 246,400 Customer relationships - 4 years estimated useful life 119,700 Technology - 4 years estimated useful life 196,000 Goodwill 827,696 Net assets acquired $ 1,050,299 Consideration: Cash $ 440,155 Equity 411,453 Total consideration attributable to System1 851,608 Total consideration attributable to non-controlling interest 198,691 Total consideration $ 1,050,299 Goodwill is not deductible for tax purposes. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Answers Holdings, Inc. On May 4, 2022, we acquired the assets of Answers Holdings, Inc. and its subsidiaries ("Answers") for total cash consideration of $4.6 million . The results of Answers' operations from the date of acquisition have been included in our consolidated financial statements within the Owned and Operated Advertising segment. The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Working capital $ 32 Trademark - 10 years estimated useful life 1,100 Goodwill 3,500 Net assets acquired $ 4,632 The goodwill arising from the acquisition consists largely of the expected synergies from combining operations, and is deductible for tax purposes over 15 years. We incurred $0.1 million in transaction costs related to the acquisition. NextGen Shopping, Inc. On March 4, 2022, we acquired NextGen Shopping, Inc. (“CouponFollow”) for total cash consideration of $75.1 million, of which $16.4 million was deferred, $5.6 million was held-back, and $25.5 million related to the fair value of 2.0 million shares of Class A common stock issued. The fair value of the shares of Class A common stock was determined by utilizing the closing price per share on March 3, 2022, and a discount rate of 7.5%, as the shares were not immediately available for sale upon issuance, and this restriction was deemed to be a function of the security characteristics. The deferred consideration of $16.4 million was paid subsequent to the acquisition. The held-back consideration amount became payable eighteen months subsequent to the acquisition date, subject to our satisfaction of any potential post-closing purchase price adjustments and indemnification claims. The cash payment included the transaction costs of $3.1 million that we paid on behalf of CouponFollow in connection with the closing of the transaction. The results of CouponFollow’s operations from the date of acquisition have been included in our consolidated financial statements within the Owned and Operated Advertising segment. In conjunction with this acquisition, we also committed to pay postcombination compensation of $8.5 million which is payable in cash and subject to continued services from certain individuals of CouponFollow. Separately, in conjunction with the acquisition, we entered into the CouponFollow Incentive Plan. On September 6, 2023, in connection with entering into the Senior Unsecured Promissory Note (the “Promissory Note”) with the seller and current employee of ours ("Lender") (see Note 12, Related-Party Transactions), the parties made certain modifications to the CouponFollow Incentive Plan (see Note 18, Stock-Based Compensation). The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Assets acquired and liabilities assumed: Cash and cash equivalents $ 21,232 Accounts receivable 5,860 Other current assets 446 Accounts payable (116) Accrued expenses and other current liabilities (118) Income tax payable (197) Deferred tax liabilities (10,895) Trademark - 10 years estimated useful life 38,100 Software - 4 years estimated useful life 4,100 Goodwill 42,175 Net assets acquired $ 100,587 The goodwill is not deductible for tax purposes. We incurred $0.8 million in transaction costs related to the acquisition. RoadWarrior, LLC On February 9, 2022, we acquired the assets of RoadWarrior, LLC (“RoadWarrior”) for total cash consideration of $19.6 million. The results of RoadWarrior's operations from the date of acquisition have been included in our consolidated financial statements within the Owned and Operated Advertising segment. The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Assets acquired and liabilities assumed: Working capital $ 155 Trademark - 10 years estimated useful life 2,200 Software - 4 years estimated useful life 1,000 Customer relationships - 3 years estimated useful life 1,300 Goodwill 14,981 Net assets acquired $ 19,636 The goodwill arising from the acquisition consists largely of the expected synergies from combining operations as well as the value of the workforce. The goodwill is deductible for tax purposes over 15 years. We incurred $0.3 million in transaction costs related to the acquisition. Unaudited Pro Forma Information The unaudited pro forma information reflects adjustments for additional amortization resulting from the fair value adjustments to assets acquired and liabilities assumed, adjustments for alignment of accounting policies, adjustments for transaction expenses, adjustments for certain stock-based compensation and equity related expenses incurred as a result of the transaction and the resulting tax effects, as if the Merger and acquisitions of Answers, CouponFollow and RoadWarrior occurred January 1, 2021. The pro forma results do not include any anticipated cost synergies or other effects of the merged companies. Accordingly, pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on the dates indicated, nor is it indicative of the future operating results of the combined company. The following table provides unaudited pro forma information as if the 2022 acquisitions occurred as of January 1, 2021 (in thousands). Year Ended December 31, 2022 (Successor) Pro forma revenue $ 682,161 Pro forma net loss $ (366,278) |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): Successor December 31, 2023 2022 Computer equipment $ 812 $ 559 Furniture and equipment 928 560 Leasehold improvements 2,511 2,468 Total 4,251 3,587 Less accumulated depreciation (1,167) (425) Property and equipment, net $ 3,084 $ 3,162 The aggregate depreciation expense related to property and equipment was $0.8 million and $0.5 million for the year ended December 31, 2023 (Successor) and for the period from January 27, 2022 through December 31, 2022 (Successor) , respectively. The aggregate depreciation expense related to property and equipment was not material for the period from January 1, 2022 through January 26, 2022 (Predecessor). |
Goodwill, Internal-Use Software
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net | Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net Goodwill The changes to goodwill by reportable segments were as follows (in thousands): Owned and Operated Advertising Partner Network Total Goodwill at January 27, 2022 (Successor) $ — $ — $ — Additions 360,194 94,941 455,135 Impairment (360,194) (12,534) (372,728) Goodwill at December 31, 2022 (Successor) and December 31, 2023 (Successor) $ — $ 82,407 $ 82,407 Additions to goodwill during the period from January 27, 2022 through December 31, 2022 (Successor), were from the acquisitions of S1 Holdco, CouponFollow, RoadWarrior and Answers (see Note 4, Acquisitions). There was no goodwill activity for the period from January 1, 2022 through January 26, 2022 (Predecessor). Goodwill Impairment During 2022 we experienced adverse macroeconomic impacts as a result of changes in market conditions and increases in interest rates, which contributed to reduced forecasted revenue and reduced expectations for future cash flows. As a result, we recorded an impairment of goodwill of $346.1 million in the third quarter of 2022. In the fourth quarter of 2022 as part of our annual impairment analysis, we recorded an impairment charges related to a write-down of goodwill by $26.6 million. Upon classifying Protected as held for sale as of September 30, 2023, we performed a goodwill impairment test on the Subscription reporting unit resulting in a goodwill impairment charge. Additionally, we recorded an impairment upon the classification of the disposal group as held for sale, see Note 19, Discontinued Operations. Internal-use software development costs, net and intangible assets, net Internal-use software development costs and intangible assets consisted of the following (in thousands): December 31, 2023 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 13,788 $ (2,363) $ 11,425 Intangible assets: Developed technology $ 196,128 $ (94,354) $ 101,774 Trademarks and trade names 236,053 (45,050) 191,003 Software 5,100 (2,341) 2,759 Customer relationships 2,900 (1,435) 1,465 Total $ 440,181 $ (143,180) $ 297,001 December 31, 2022 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 7,206 $ (258) $ 6,948 Intangible assets: Developed technology $ 196,128 $ (45,322) $ 150,806 Trademarks and trade names 236,053 (21,450) 214,603 Software 5,100 (1,066) 4,034 Customer relationships 2,900 (682) 2,218 Total $ 440,181 $ (68,520) $ 371,661 The internal-use software development costs includes construction in progress which is not being amortized of $3.5 million and $5.0 million as of December 31, 2023 (Successor) and 2022 (Successor), respectively. Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Amortization expense for internal-use software development $ 2,981 $ 467 $ 355 Amortization expense for intangible assets $ 74,660 $ 68,520 $ 629 During the fourth quarter of 2023 due to adverse macroeconomic impacts, we performed an impairment assessment on our Owned and Operated Advertising long-lived asset group. Additionally, during 2022, in conjunction with our testing for impairment of goodwill, we performed an impairment assessment of our long-lived asset groups. For the respective analysis, we compared the undiscounted cash flows of the asset groups with their carrying values. The undiscounted cash flows exceeded the carrying value, and accordingly, we did not record any impairments of long-lived assets in either 2023 or 2022. No impairment of internal-use software development cost or intangible assets was identified for any of the periods presented. As of December 31, 2023 (Successor), the expected amortization expense associated with our intangible assets and internal-use software development costs was as follows (in thousands): 2024 $ 78,968 2025 78,359 2026 30,007 2027 24,488 2028 23,600 Thereafter 73,004 Total amortization expense $ 308,426 As of December 31, 2023 (Successor) , the weighted average amortization period for all intangible assets was 7 years. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases We lease office facilities under noncancelable operating lease agreements. During the periods from January 1, 2022 through January 26, 2022 (Predecessor), from January 27, 2022 through December 31, 2022 (Successor), and the year ended December 31, 2023 (Successor), we had leases for office facilities in Marina del Rey, California; Bellevue, Washington; and Guelph, Canada. The components of lease expense were as follows (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Operating lease expense $ 2,141 $ 1,923 $ 142 Short-term lease expense 122 130 12 Variable lease expense 311 310 — Total lease expense $ 2,574 $ 2,363 $ 154 Variable lease expense is primarily attributable to amounts paid to lessors for common area maintenance and utility charges under our real estate leases. Supplemental information related to leases was as follows: Successor As of December 31, 2023 Weighted average remaining lease terms (in years) 6.4 Weighted average discount rate 5.2% Maturities of lease liabilities by fiscal year for our operating leases are as follows: Successor As of December 31, 2023 2024 $ 2,589 2025 2,244 2026 278 2027 282 2028 282 Thereafter 980 Total lease payments 6,655 Less: Imputed interest (740) Present value of operating lease liabilities $ 5,915 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following items as of the periods presented (in thousands): Successor December 31, 2023 December 31, 2022 Accrued revenue share $ 16,365 $ 16,921 Accrued marketing expenses 19,737 35,311 Accrued payroll and related benefits 13,751 13,653 Accrued professional fees 1,455 2,706 Deferred revenue 1,757 1,553 Accrued tax liability 1,233 1,092 Holdback liabilities — 6,885 Other liabilities 5,016 7,659 Accrued expenses and other current liabilities $ 59,314 $ 85,780 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Domestic and foreign components of our loss before income taxes from continuing operations were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Domestic $ (126,830) $ (489,913) $ (38,068) Foreign (4,799) (3,130) 378 Loss before income tax $ (131,629) $ (493,043) $ (37,690) The components of the income tax provision (benefit) were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Current: — — Federal $ (64) $ 79 $ — State (662) 427 17 Foreign 1,431 1,866 170 Total current provision $ 705 $ 2,372 $ 187 Deferred: Federal $ (17,103) $ (99,328) $ — State (1,829) (9,689) — Foreign (2,144) (2,035) (816) Total deferred benefit (21,076) (111,052) (816) Income tax benefit $ (20,371) $ (108,680) $ (629) A reconciliation of the statutory tax rate to the effective income tax rate for the periods presented was as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Amount % Amount % Amount % Income tax (benefit) provision at statutory tax rate $ (27,642) 21.0 % $ (103,539) 21.0 % $ (7,915) 21.0 % State tax, net of federal (1,718) 1.3 % (5,470) 1.1 % 15 — Non-Controlling interests 5,865 (4.5) % 19,626 (4.0) % — — Effect of flow-through entity — — — — 7,994 (21.2) % Changes in unrecognized tax benefits 2,320 (1.8) % (1,749) 0.4 % — — Foreign income taxes at different statutory rate (93) 0.1 % (49) — 18 — Investment in partnership basis adjustments (17,627) 13.4 % (22,677) 4.6 % — — Stock-based compensation 3,408 (2.6) % 2,858 (0.6) % — — Change in valuation allowance 19,521 (14.8) % 917 (0.2) % — — Other (4,405) 3.4 % 1,403 (0.3) % (741) 1.9 % Effective income tax rate $ (20,371) 15.5 % $ (108,680) 22.0 % $ (629) 1.7 % The aggregate amount of gross unrecognized tax benefits related to uncertain tax positions were as follows (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Balance at the beginning of the period $ 593 $ — $ — Increases (decreases) based on tax positions related to prior periods (46) 221 — Increases based on tax positions related to current periods 1,303 372 — Balance at the end of the period $ 1,850 $ 593 $ — Interest and penalties related to our unrecognized tax benefits are recorded as components of the provision for income taxes. Interest or penalties accrued for the years ended December 31, 2023 (Successor) and 2022 (Successor) were not material. Due to our full valuation allowance, the total amount of unrecognized benefits that, if recognized, would favorably affect the effective tax by $0.2 million (net of Federal benefit) at December 31, 2023 (Successor) . We are not currently under examination in any jurisdiction. It is reasonably possible that, within the next twelve months, statutes of limitation will expire which could have the effect of reducing the balance of unrecognized tax benefits by an immaterial amount. The earliest tax years that remain subject to examination in the major tax jurisdictions in which we operate were as follows: Tax year United States 2020 California 2019 Netherlands 2017 The components of the deferred income taxes were as follows (in thousands): Successor December 31, 2023 December 31, 2022 Deferred tax assets: Net Operating Loss and Capital Loss Carryforwards $ 6,362 $ 2,184 Tax credits 4,289 1,110 Interest expense 3,234 1,196 Investment in partnerships 8,950 — Other 231 303 Total deferred tax assets 23,066 4,793 Valuation allowance (22,658) (1,087) Total net deferred tax assets $ 408 $ 3,706 Deferred tax liabilities: Investment in partnerships $ — $ (22,471) Intangibles (8,243) (10,450) Other (472) (171) Total deferred tax liabilities $ (8,715) $ (33,092) Net deferred tax liabilities $ (8,307) $ (29,386) As of December 31, 2023 (Successor), we had a full valuation allowance on our U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets would not be realized. As of December 31, 2023 (Successor) , we had U.S. federal net operating loss carryovers (“NOLs”) of $22.7 million that may be used indefinitely and various state NOLs that will expire at different times. Uncertainties that may affect the utilization of our tax attributes include future operating results, tax law changes, rulings by taxing authorities regarding whether certain transactions are taxable or deductible and expiration of carryforward periods. We had an ownership change and as a result certain federal and state NOLs were limited pursuant to Section 382 of the Internal Revenue Code (the “Code”). This limitation has been accounted for in calculating our available NOL carryforwards. The change in the valuation allowance was comprised of the following (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Balance at the beginning of the period $ 1,087 $ 170 $ 170 Increases in valuation allowance recorded through earnings 19,521 917 — Increases in valuation allowance not recorded through earnings 2,050 — — Balance at the end of the period $ 22,658 $ 1,087 $ 170 Tax Receivable Agreement Pursuant to our election under Section 754 of the Code, we expect to obtain an increase in our share of the tax basis in the net assets of S1 Holdco when LLC Interests are redeemed or exchanged by the other members of S1 Holdco. We intend to treat any redemptions and exchanges of LLC Interests as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that would otherwise be paid in the future to various tax authorities. On January 27, 2022, we entered into a Tax Receivable Agreement with certain of the then-existing members of S1 Holdco that provides for the payment by us of 85% of the amount of any tax benefits that are actually realized, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of S1 Holdco resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (“TRA Payments”). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. We acquired an aggregate of 0.2 million and 0.3 million LLC Interests in connection with the redemption of LLC Interests in the year ended December 31, 2023 (Successor) and the period ended December 31, 2022 (Successor), respectively, which resulted in an increase in the tax basis of our investment in S1 Holdco subject to the provisions of the Tax Receivable Agreement. We have recognized a total liability in the amount of $0.8 million for the TRA Payments due to the redeeming members, representing 85% of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemption of LLC Interests, after concluding it was probable that such TRA Payments would be paid based on estimates of future taxable income. During the year ended December 31, 2023 (Successor) , inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement. The total amount of TRA Payments due under the Tax Receivable Agreement, was $0.8 million and $1.0 million as of December 31, 2023 (Successor) and December 31, 2022 (Successor), respectively. The TRA Liability is classified within other long term liabilities on the consolidated balance sheet. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million in each annual period between July 2023 and June 2026. As of December 31, 2023 (Successor), we remain contractually obligated to spend $11.1 million towards this commitment. As of December 31, 2023 (Successor) , we had various non-cancelable operating lease commitments for office space which have been recorded as Operating lease liabilities. Refer to Note 7, Leases for additional information regarding lease commitments. Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. We believe the ultimate liability, if any, with respect to these actions will not materially affect the consolidated financial position, results of operations, or cash flows reflected in the consolidated financial statements. There can be no assurance, however, that the ultimate resolution of such actions will not materially or adversely affect our consolidated financial position, results of operations, or cash flows. We accrued for losses when the loss is deemed probable and the liability can reasonably be estimated. In July 2021, System1 OpCo, LLC (“System1 OpCo”, f/k/a System1, LLC) received correspondence from counsel for a United Kingdom-based marketing research company and its United States subsidiary (“System1 Group”) alleging trademark infringement based on its use of the “SYSTEM1” trade name and mark in the United States and the United Kingdom. In September 2021, System1 Group filed a lawsuit in the United States District Court for the Southern District of New York (the “Infringement Suit”), alleging (i) trademark infringement, (ii) false designation of origin, (iii) unfair competition and (iv) certain violations of New York business laws. While we believe that System1 Group’s infringement and other allegations and claims set forth in the Infringement Suit would have been subject to a laches defense, among other defenses, the parties entered into a Co-Existence and Settlement Agreement in June 2023 (the “Settlement Agreement”) in which the parties have agreed to co-exist with their current usage of the “System1” mark in their respective business operations with certain requirements and other conditions. The Settlement Agreement contemplates the payment of a fixed amount to System1 Group over the course of seventeen (17) months, and the Infringement Suit was dismissed with prejudice. The amount accrued as of December 31, 2023 for the loss is consistent with the terms of the Settlement Agreement and is considered immaterial. In March 2023, we received a demand letter from counsel for Alta Partners, LLC (“Alta”), which purports to be a holder of certain Public Warrants of the Company (“Demand Letter”). The Demand Letter alleged, among other claims, that we breached the terms of the Warrant Agreement, and that Alta was entitled to approximately $5.7 million in damages, plus prejudgment interest, as a result, and subsequently sent us a draft complaint (the “Complaint”) alleging substantially the same claims as those set forth in Alta’s Demand Letter. While we denied liability with respect to the claims set forth in the Demand Letter and the Complaint, the parties entered into a Confidential Settlement Agreement ("Settlement Agreement") in October 2023, which contemplated an immaterial settlement payment that was subsequently paid prior to December 31, 2023 consistent with the terms of the Settlement Agreement . In October 2023, a putative California class action complaint (the “Complaint”) was filed against us and our Protected business regarding alleged violations of California’s Auto Renewal Law requirements related to the marketing and sale of its subscription service offerings for anti-virus and ad-blocking software (the “Protected Software”) to consumers. The Complaint alleges claims under California’s false advertising and unfair competition laws and primarily alleges that the marketing and sales checkout flows for the Protected Software did not clearly and conspicuously disclose that the named plaintiffs set forth in the Complaint were purchasing the Protected Software for a promotional period which would auto-renew after the applicable promotional period. We dispute the claims alleged, and intends to defend itself vigorously in this matter. Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments we could be required to make under these indemnification provisions may not be subject to claims related to these indemnifications. As a result, we believe the estimated fair value of these agreements was immaterial . Accordingly, we have no liabilities recorded for these agreements as of December 31, 2023 or December 31, 2022 (Successor), respectively. |
Debt, Net
Debt, Net | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt, Net | Debt, Net In connection with the Merger, we entered into a new loan (“Term Loan”) and revolving facility (“2022 Revolving Facility”) with Bank of America, N.A., on January 27, 2022, providing for a 5.5 year term loan with a principal balance of $400.0 million and with the net proceeds of $376.0 million , of which a portion of the proceeds were used by us, to settle the outstanding debt of $172.0 million with Cerberus Business Finance, LLC. The 2022 Revolving Facility provided for borrowing availability of up to $50.0 million . As of December 31, 2023 (Successor), there was no balance outstanding on the 2022 Revolving Facility and principal of $365.0 million was outstanding on the Term Loan. Through December 31, 2025, $5.0 million of the Term Loan is payable quarterly. From March 31, 2026, $7.5 million of the Term Loan is payable quarterly. The Term Loan matures in 2027. For every interest period, the interest rate on the Term Loan is the adjusted Secured Overnight Financing Rate (“SOFR”) plus 4.75%. The Term Loan is amortized in quarterly installments on each scheduled payment date. The Term Loan comes with a leverage covenant, which goes into effect only if the utilization on the 2022 Revolving Facility exceeds 35% of the $50.0 million 2022 Revolving Facility at each quarter-end starting from the first full quarter after the effective date of the Merger, such that the first lien leverage ratio (as defined in the credit agreement) should not exceed 5.40. The facility has certain financial and nonfinancial covenants, including a leverage ratio. The facility also requires that we deliver our audited consolidated financial statements to our lender within 120 days of our fiscal year end, December 31. Should we fail to distribute the financial statements to our lender within 120 days, we are allowed an additional 30 days to cure. We were in compliance with the financial covenants under the Term Loan as of December 31, 2023 . The interest rate on the 2022 Revolving Facility is the adjusted SOFR plus 2.5% with an adjusted SOFR floor of 0%. In March 2022, we borrowed $49.0 million under our 2022 Revolving Facility, to fund a portion of the purchase price related to the CouponFollow acquisition. In October 2022, we borrowed the remaining $1.0 million available. During 2023 the borrowed amount was repaid in full. As of December 31, 2023 (Successor) we had $50.0 million available on the 2022 Revolving Facility. The carrying values of our debt, net of discounts, deferred financing and debt issuance costs were as follows (in thousands): Successor December 31, 2023 December 31, 2022 Term Loan 1,2 $ 349,503 $ 364,525 2022 Revolving Facility — 50,000 Total Debt, net $ 349,503 $ 414,525 _______________ 1 Includes unamortized discount of $14.7 million and $19.4 million, and unamortized loan fees of $0.8 million and $1.1 million, as of December 31, 2023 (Successor), and December 31, 2022 (Successor), respectively, recorded as a reduction of the carrying amount of the debt and amortized to interest expense using the effective interest method. 2 Estimated fair value of the Term Loan was $222.7 million as of December 31, 2023. As of December 31, 2023 (Successor), future minimum principal payments on long-term debt were as follows (in thousands) : 2024 $ 20,000 2025 20,000 2026 30,000 2027 295,000 Total future minimum principal payment 365,000 Less: current portion (20,000) Long-term portion $ 345,000 As of December 31, 2023 (Successor) loan fees amounting to $0.8 million and unamortized discount of $14.7 million for the Term Loan have been recorded as a reduction of the carrying amount of the debt and are amortized to interest expense using the effective interest method. On January 17, 2024, we completed the repurchase of $63.7 million in principal amount of our Term Loan for an aggregate purchase price of $40.9 million (at discount of 64.2% of its par value) pursuant to a Dutch auction tender offer. Following the repurchase, the outstanding principal amount of the Term Loan was $301.3 million. We used available cash on hand to fund the repurchase. Our gain on the repurchase was approximately $19.7 million before fees and expenses incurred. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions 2023 Revolving Note On April 10, 2023, we entered into a $20.0 million Revolving Note (“2023 Revolving Note”) with trusts established for the benefit of our co-founders ("Lenders"). Each of the Lenders provided a $10.0 million commitment for an aggregate principal of $20.0 million under the 2023 Revolving Note. Any borrowed loan amounts outstanding under the 2023 Revolving Note accrue interest at the rate per annum equal to the SOFR plus 3.15%. The Maturity Date under the 2023 Revolving Note is July 10, 2024 ("Maturity Date") with automatic three-month extensions, unless we or any Lenders provide written notice, or unless there is an event of default . The Lenders are also entitled to (i) an unused commitment fee equal to 1.0% per annum of the actual daily amount of total unfunded commitments under the 2023 Revolving Note during the period from the closing date to the maturity date, payable quarterly in arrears and (ii) a loan fee equal to 12.0% of each Lenders' commitment under the 2023 Revolving Note, or $2.4 million in total, was originally payable within 180 days of April 10, 2023, and subsequently extended to November 30, 2023. Upon completion of the Protected disposal, the 2023 Revolving Note and the related loan fee were settled. The previously unamortized portion of the loan fee of $1.2 million was included in loss on extinguishment of related-party debt on our consolidated statements of operations. The 2023 Revolving Note was subsequently terminated in December 2023. Promissory Note On September 6, 2023, we entered into a $5.2 million Promissory Note with the Lender, in order to convert the amount owed to him as a result of the acquisition of CouponFollow (see Note 4, Acquisitions) into a loan to us (the “Loan”). The amount of the Loan was equal to the amount of the Holdback liability of $5.2 million owed to the Lender. The Promissory Note accrues interest at SOFR plus 3.15%. Under the terms of the agreement, the Promissory Note became due and payable immediately upon sale of Protected. Per the terms of the note we (i) must prepay the Loan under certain circumstances, which include consummation of a strategic transaction, the refinancing of the existing credit agreement, the incurrence by us of any indebtedness exceeding $2.5 million, or the sale of any of our assets in excess of $2.5 million; (ii) may prepay the Loan at any time without penalty or interest; and (iii) must make four substantially equal amortization payments on April 1, 2024, May 1, 2024, June 1, 2024, and July 1, 2024, unless there is an event of default, including a continuing event of default on the Credit Agreement, at which point the holder may declare all amounts due immediately. The Lender under the Promissory Note is also entitled to a closing fee equal to 12% of the initial principal amount outstanding under the Promissory Note with 50% paid on October 15, 2023 and the remaining 50% due on December 15, 2023. We recorded expense of approximately $0.6 million within loss on extinguishment of related-party debt on our consolidated statements of operations, which related to the 12% closing fee payable to the Lender. Upon completion of the Protected disposal, the Promissory Note, accrued interest and the remaining 50% of the closing fee was settled. Term Note On October 6, 2023, we entered into a $2.5 million Term Loan Note (“Term Note”) with Openmail2, LLC (“Term Lender”), which is principally owned and managed by trusts established for the benefit of our co-founders. The amounts outstanding under the Term Note accrue interest at the rate per annum equal to the SOFR plus 5.75%. The maturity date under the Term Note is December 31, 2024, unless there is an event of default, including a continuing event of default on the credit agreement, at which point the holder may declare all amounts due immediately . We must prepay the Loan under certain circumstances, which include (i) the consummation of a strategic transaction or (ii) upon the full refinancing and termination of the existing credit agreement. The Term Lender was also entitled to a closing fee equal to 10.0% of the principal amount of the Term Note, payable within 180 days of October 6, 2023. Upon completion of the Protected disposal, the Term Note, accrued interest and closing fee was settled. The previously unamortized portion of the loan fee of $0.2 million was included in loss on extinguishment of related-party debt on our consolidated statements of operations. Secured Facility On October 6, 2023, Protected, our indirect wholly-owned subsidiary at the time, entered into a Secured Facility Agreement providing for a $10.0 million term loan (“Secured Facility”) with a subsidiary of JDI ("Secured Lender") , one of our significant shareholders, which is principally owned and managed by certain members of the Protected management team . Pursuant to the Secured Facility, the Secured Lender provided a $10.0 million commitment to Protected, which amount was (i) drawn down in full on the closing date and (ii) secured by the assets of Protected pursuant to a deed granted in favor of the Secured Lender pursuant to a Debenture between Protected and the Secured Lender, dated October 6, 2023. The amounts outstanding under the Secured Facility accrue interest at the rate of 8.5% per annum. The amounts outstanding under the Secured Facility are due upon the earlier of (i) October 6, 2024 or (ii) the date on which Protected undergoes a Change of Control. The Secured Lender was also entitled to a closing fee equal to 12.0% the principal amount of the borrowings under the Secured Facility, which was paid in full on the closing date. In addition, Protected agreed to reimburse the Secured Lender for their reasonable and documented costs incurred in connection with the negotiation, documentation and execution of the Secured Facility. Upon completion of the Protected disposal, the Secured Facility, the related loan fee and an early settlement fee were settled by the sale. The previously unamortized portion of the loan fee and the early settlement fee for an aggregate amount of $1.4 million was included in net loss from discontinued operations, net of tax Cannae Services Agreement On June 20, 2023, we engaged with one of our significant shareholders, for management and consulting services . The agreement was terminated in August 2023. During the year ended December 31, 2023 (Successor), we paid all amounts owed and outstanding, tot aling $0.1 million. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Warrants | Warrants In June 2020, we issued Public Warrants and Private Placement Warrants in conjunction with the initial public offering of Trebia. Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants became exercisable on April 18, 2022, when the S-1/A registration statement, which was required to be filed under the terms of the Warrant Agreement and the Business Combination Agreement, was declared effective. The Public Warrants will expire five years from the completion of the Merger, or earlier upon redemption or liquidation. We are not obligated to deliver any shares of Class A common stock pursuant to the exercise of a Public Warrant and have no obligation to settle such Public Warrants exercises unless a registration statement under the Securities Act with respect to the Class A common stock underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to us satisfying our obligations with respect to registration, or a valid exemption from registration is available. Warrants are exercisable and we are obligated to issue a share of Class A common stock upon exercise of each Warrant, as the Warrants have been registered with the SEC. We are obligated to use commercially reasonable efforts to maintain the effectiveness of a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, until the expiration or redemption of the Warrants in accordance with the provisions of the Warrant Agreement. If the effectiveness of a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the Warrants is not maintained, Warrant holders may exercise Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. In addition, if our Class A common stock is, at the time of any exercise of a Warrant, not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of the Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we elect to do so, we will not be required to file or maintain in effect a registration statement, but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of Class A common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the Public Warrants, multiplied the excess of the “fair market value” less the exercise price of the Public Warrants by (y) the fair market value and (B) 0.361. The “fair market value” shall mean the volume weighted average price of the Class A common stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. Redemption of Warrants when the Price per Class A common stock equals or exceeds $18.00 —We may redeem the outstanding Public Warrants: • in whole and not in part; • at a price of $0.01 per Public Warrant; • upon not less than 30 days’ prior written notice of redemption to each warrant holder; and • if, and only if, the last reported sale price of the Class A common stock for any 20 trading days within a 30-trading day period ending three business days before sending the notice of redemption to warrant holders (“Reference Value”) equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like). If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. However, we will not redeem the Warrants unless an effective registration statement under the Securities Act covering the underlying shares of Class A common stock issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. Redemption of Warrants When the Price per Class A common stock equals or exceeds $10.00 —Once the Warrants become exercisable, we may redeem the outstanding Warrants: • in whole and not in part; • at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the exhibit in the report on Form 10-K for the year ended December 31, 2021 filed on March 31, 2022, based on the redemption date and the “fair market value” of the Class A common stock; • if, and only if, the Reference Value (as defined above under “Redemption of Warrants When the Price per Class A common stock Equals or Exceeds $18.00”) equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like); and • if the Reference Value is less than $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) the Private Placement Warrants must also be concurrently -called for redemption on the same terms as the outstanding Public Warrants, as described above. The exercise price and number of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of common stock at a price below our exercise price. Additionally, in no event will we be required to net cash settle the Public Warrants. The Private Placement Warrants were identical to the Public Warrants underlying the units sold in the initial public offering of Trebia, except that (x) the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Merger, subject to certain limited exceptions, and (y) the Private Placement Warrants were exercisable on a cashless basis. The Public and Private Placement Warrants are accounted for as liabilities and marked-to-market at each reporting period, with changes in fair value included as change in fair value of warrant liabilities on the consolidated statements of operations. In April 2022, the Private Placement Warrant holders exercised their Warrants on a cashless basis in exchange for 3.5 million shares of our Class A common stock. There were no outstanding Private Placement Warrants as of December 31, 2022 (Successor). During the year ended December 31, 2023 (Successor), there were no Warrants exercised. During the period ended December 31, 2022 (Successor), Public Warrant holders exercised 0.4 million Warrants for cash resulting in total proceeds paid to us of $5.0 million. The total outstanding Public Warrants as of December 31, 2023 (Successor) and December 31, 2022 (Successor) was 16.8 million. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Financial Liabilities Measured at Fair Value on a Recurring Basis The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis was as follows (in thousands): Successor December 31, 2023 December 31, 2022 Level 1 Level 1 Public Warrants $ 2,688 $ 7,798 The fair value of the Public Warrants has been estimated using the Public Warrants’ quoted market price. The fair value of the Private Placement Warrants was estimated using the Public Warrants’ quoted market price. All Private Placement Warrants were exercised in April 2022. In 2021 we reached an agreement with our former CEO which included payment of cash-settled S1 Holdco's equity profits interest, which was settled in conjunction with the consummation of the Merger. The fair value of the equity profits interest was determined with an option pricing model and utilizing significant unobservable inputs for a discount for lack of marketability and projected financial information. The fair value contingent consideration was determined with an option pricing model and contains significant unobservable inputs for projected financial information. Changes in estimated fair value of Level 1, 2 and 3 financial liabilities were as follows (in thousands): Former CEO Equity Profits Interest Contingent Consideration Level 3 Level 3 Fair value of liabilities at December 31, 2021 (Predecessor) and January 26, 2022 (Predecessor) $ 11,132 $ 1,682 Public Warrant Liability Private Warrant Liability Contingent Consideration Level 1 Level 2 Level 3 Fair value of liabilities at January 27, 2022 (Successor) $ 18,285 $ 8,727 $ 1,682 Additions — — 28 Settlements (1,147) (21,818) (1,715) Change in fair value (9,340) 13,091 5 Fair value of liabilities at December 31, 2022 (Successor) 7,798 — — Change in fair value (5,110) — — Fair value of liabilities at December 31, 2023 (Successor) $ 2,688 $ — $ — The total impact of the changes in fair values related to contingent consideration and the former CEO's equity profits interest in S1 Holdco were included in selling, general and administrative expenses on the consolidated statements of operations. There were no transfers in or out of levels during the period January 1, 2022 through January 26, 2022 (Predecessor), the period January 27, 2022 through December 31, 2022 (Successor), or for the year ended December 31, 2023 (Successor). Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis For further information on the fair value assessment of goodwill and impairment charge recorded refer to Note 6, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net and Note 19, Discontinued Operations. |
Net Loss Per Share or Unit
Net Loss Per Share or Unit | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share or Unit | Net Loss Per Share or Unit For the period from January 1, 2022 through January 26, 2022 (Predecessor), the basic net loss per unit attributable to members was calculated by dividing the net loss attributable to common equity holders by the weighted-average number of membership units. For the period from January 27, 2022 through December 31, 2022 (Successor) and the year ended December 31, 2023 (Successor), the basic net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. Basic and diluted net loss per share was calculated as follows (in thousands, except per share and per unit data) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Basic and diluted net loss per share Net loss from continuing operations attributable to System1, Inc. $ (0.94) $ (3.19) n/a Net loss from discontinued operations, net of tax attributable to System1, Inc. (1.54) (0.51) n/a Basic and Diluted net loss per share $ (2.48) $ (3.70) n/a Numerator: Net loss from continuing operations attributable to System1, Inc. $ (85,727) $ (284,522) n/a Net loss from discontinued operations, net of tax attributable to System1, Inc. (141,494) (45,870) n/a Net loss attributable to System1, Inc. $ (227,221) $ (330,392) n/a Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss per share 91,454 89,310 n/a Basic and diluted net loss per unit n/a n/a $ (1.81) Numerator: Net loss n/a n/a $ (37,061) Denominator: Weighted-average membership units outstanding - basic n/a n/a 20,488 Shares of Class C common stock, RSUs and Public Warrants outstanding for the year December 31, 2023 (Successor), and the period from January 27, 2022 through December 31, 2022 (Successor), are considered potentially dilutive of the shares of Class A common stock and are included in the computation of diluted loss per share, except when the effect would be anti-dilutive. For the periods presented in the table above, a total of 16.8 million Public Warrants were excluded from the computation of net loss per share as the impact was anti-dilutive. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting We have two operating segments and reportable segments: Owned and Operated Advertising and Partner Network. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), in deciding how to allocate resources and assess performance. Our Chief Executive Officer, who is considered to be our CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. The CODM measures and evaluates reportable segments based on segment operating revenue as well as adjusted gross profit. The tables below includes the following operating expenses that are not allocated to the reporting segments presented to our CODM : depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments.The CODM does not consider these expenses for the purposes of making decisions to allocate resources among segments or to assess segment performance, however these costs are included in reported consolidated net loss from continuing operations before income tax and are included in the reconciliation that follows. The following table summarizes revenue by reportable segments (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Owned and Operated Advertising $ 328,934 $ 556,303 $ 49,249 Partner Network 73,037 55,926 3,463 Total revenue $ 401,971 $ 612,229 $ 52,712 The following table summarizes adjusted gross profit by reportable segments (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Owned and Operated Advertising $ 107,696 $ 138,560 $ 8,768 Partner Network 53,420 42,291 3,012 Adjusted gross profit 161,116 180,851 11,780 Other cost of revenue 7,890 7,461 575 Salaries and benefits 106,505 138,045 31,181 Selling, general, and administrative 54,307 50,831 15,665 Depreciation and amortization 78,403 69,469 1,000 Impairment of goodwill — 372,728 — Interest expense, net 48,745 31,609 1,049 Loss on extinguishment of related-party debt 2,004 — — Change in fair value of Warrant liabilities (5,109) 3,751 — Loss before income tax $ (131,629) $ (493,043) $ (37,690) The following table summarizes revenue by geographic region (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 United States $ 385,847 $ 593,527 $ 51,701 Other countries 16,124 18,702 1,011 Total revenue $ 401,971 $ 612,229 $ 52,712 The following table summarizes property and equipment, net and operating leases by applicable reportable segment: (in thousands): Successor December 31, 2023 December 31, 2022 Owned and Operated Advertising $ 7,816 $ 9,646 The following table summarizes property and equipment, net and operating leases by geographic region (in thousands): Successor December 31, 2023 December 31, 2022 United States $ 3,927 $ 5,473 Canada 3,432 3,730 Other countries 457 443 Total $ 7,816 $ 9,646 |
Capitalization
Capitalization | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Capitalization | Capitalization Class A common stock Voting rights. Except as provided in our Charter or as required by applicable law, holders of Class A common stock will be entitled to one vote per share on all matters to be voted on by our Stockholders generally. At annual and extraordinary general meetings of our Stockholders, the holders of Class A common stock and Class C common stock will vote together as a single class on any matters submitted to a vote of our Stockholders, or, holders of Preferred Stock, if any, are entitled to vote together with the holders of Class A common stock or Class C common stock, as a single class with the holders of Preferred Stock. Generally, unless a different voting standard applies under our Organizational Documents or applicable law, all matters to be voted on by shareholders must be approved by a majority of the votes cast (except for the election of directors, which will be decided based on a plurality of the votes cast by stockholders present in person or represented by proxy at the applicable meeting and entitled to vote on the election of such directors). Reservation of Shares. Under our Charter, we will have at all times, authorized and unissued shares of Class A common stock for the purposes of effecting any redemptions or exchanges under the New S1 Holdco Agreement. Class C common stock Voting rights. Except as provided in our Charter or as required by applicable law, holders of Class C common stock will be entitled to one vote per share on all matters to be voted on by our Stockholders generally. At any annual and extraordinary general meeting of our Stockholders, the holders of Class A common stock and Class C common stock will vote together as a single class on any matters submitted to a vote of our Stockholders, or, holders of Preferred Stock, if any, are entitled to vote together with the holders of Class A common stock or Class C common stock, as a single class with the holders of Preferred Stock. Holders of Class C common stock have no economic rights, only voting rights. Generally, unless a different voting standard applies under our Organizational Documents or applicable law, all matters to be voted on by stockholders must be approved by a majority of the votes cast (except for the election of directors, which will be decided based on a plurality of the votes cast by stockholders present in person or represented by proxy at the applicable meeting and entitled to vote on the election of such directors). Future Issuances. Under our Charter, System1 is not permitted to issue additional shares of Class C common stock after the adoption of our Charter, other than in connection with the valid issuance S1 Holdco Common Units under the New S1 Holdco Operating Agreement. Restriction on Transfer. Under our Charter, holders of Class C common stock may only transfer their Class C common stock to certain permitted transferees, while also simultaneously transferring an equal number of such holder’s S1 Holdco Common Units. Class D common stock Voting Rights. Except as provided in our Charter or as required by applicable law, holders of Class D common stock are not entitled to any voting rights. Notwithstanding the preceding sentence, under our Charter, any vote that changes the terms of the Class D common stock requires the separate approval of a majority of the holders of Class D common stock. Restriction on Transfer. Under our Charter, holders of Class D common stock may only transfer their Class D common stock to certain permitted transfers. Conversion. Class D common stock automatically converted into Class A common stock on a one-for-one basis, following the consummation of the Merger, once the volume-weighted average price ("VWAP") of the Post-Closing Company exceeded $12.50 per share (adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any twenty (20) trading days within a period of thirty (30) consecutive trading days before the fifth anniversary of the consummation of the Merger. All shares of Class D common stock converted to Class A common stock in the period ended March 31, 2022. Repurchase Program In August 2022, our Board of Directors authorized up to $25.0 million for the repurchase of our Class A common stock and Public Warrants ( “ 2022 Repurchase Program ” ). During the period ended December 31, 2022 (Successor) we repurchased 190 thousand shares for an aggregate purchase price of $1.1 million under the 2022 Repurchase Program. During the year ended December 31, 2023 (Successor) we did not repurchase any shares. As of December 31, 2023 (Successor) and 2022 (Successor) , all repurchased shares were retired. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We are authorized to issue and/or grant restricted stock, restricted stock units, stock options, stock appreciation rights, and other stock-based and cash-based awards under our 2022 Incentive Award Plan ("2022 Plan"). As of December 31, 2023, 2.9 million grant awards were reserved and authorized for issuance and/or grant under the 2022 Plan. In addition, the number of underlying shares authorized for issuance/grant under the 2022 Plan are subject to increase each year on January 1, equal to the lesser of (a) a number of shares equal to 2.5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the compensation committee of the board of directors. On January 1, 2024, the number of shares authorized and reserved for grant under the 2022 Plan was increased by 2.2 million shares in accordance with the foregoing provision of the 2022 Plan. As described in Note 2, Summary of Significant Accounting Policies, the Replacement Awards continue to vest over the original vesting schedule of the original underlying awards. We recognized a total stock-based compensation expense of $23.7 million upon the consummation of the Merger during the period January 1, 2022 through January 26, 2022 (Predecessor). We recognized stock-based compensation expense for the Replacement Awards of $6.6 million and $23.6 million during the year ended December 31, 2023 (Successor) and the period from January 27, 2022 through December 31, 2022 (Successor), respectively. The unrecognized stock-based compensation expense associated with these unvested Replacement Awards was $2.7 million a s of December 31, 2023 (Successor). When the VWAP of our common stock price exceeded the threshold in March 2022 the Sponsor RSAs and Seller RSUs vested, and we recorded their conversion from Class D common stock to Class A common stock on our consolidated statements of changes in stockholders' equity. We also recorded $12.7 million in stock-based compensation expense associated with the vesting of the Sponsor RSUs during the period January 27, 2022 through March 31, 2022 (Successor). Since these Sponsor RSAs and Sponsor RSUs had a market condition to vest, we estimated the fair values of these market-based RSAs and RSUs using a Monte Carlo simulation. The key assumptions used to determine the fair value of these Sponsor RSUs and Sponsor RSAs were as follows: Risk-free interest rate 1.6 % Expected price volatility 50.0 % Cost of equity 23.6 % Expected term (years) 5 Fair value of Class A Common stock $ 10.00 We recorded $7.7 million in stock-based compensation expense for Sponsor Promote Shares during the period January 27, 2022 through March 31, 2022 (Successor). We recorded the following total stock-based compensation expense (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Stock-based compensation expense $ 21,235 $ 55,512 $ 23,705 The following summarizes RSU activity: Shares Weighted-Average Grant Date Fair Value per Share Unvested as of December 31, 2022 (Successor) 5,463 $ 9.83 Granted 4,480 $ 3.04 Vested (3,106) $ 8.99 Forfeited (2,414) $ 6.40 Unvested as of December 31, 2023 (Successor) 4,423 $ 5.41 At December 31, 2023 (Successor), we had unrecognized stock-based compensation relating to restricted stock of approximately $19.1 million , which is expected to be recognized over a weighted-average period of 0.8 years. CouponFollow Incentive Plan In connection with the acquisition of CouponFollow (see Note 4, Acquisitions), we approved and adopted the CouponFollow Incentive Plan, which includes CouponFollow’s key employees, including CouponFollow’s founder (“Principal Participant” and together collectively “Participants”). The CouponFollow Incentive Plan at the time of acquisition provided for total payments of $35.0 million payable at our option in cash or in fully-vested shares of our Class A common stock, consisting of a fixed amount of $10.0 million and contingent amounts of $25.0 million, which could be earned over a three calendar year period between each January 1 to December 31 of 2022, 2023 and 2024 ( each a “Performance Period” and collectively, “Performance Periods” ). On September 6, 2023, in connection with entering into the Promissory Note (see Note 12, Related-Party Transactions ) , the parties made certain modifications to the CouponFollow Incentive Plan. Such modifications include (i) the lowering of the contingent earnout payout amounts, (ii) the lowering of contingent earnout tier targets to the amounts noted below, (iii) the increase of the contingent earnout performance period by one year, and (iv) adding the requirement for the payment of the third fixed earnout amount to be in cash. The restructured CouponFollow Incentive Plan provides for total payments of $31.3 million payable at our option in cash or in fully-vested shares of our Class A common stock (unless otherwise noted) over the Performance Periods. In order to be eligible for the CouponFollow Incentive Plan, the Participants must maintain continuous employment through the last day of each Performance Period, with the exception of the Principal Participant who is still eligible if terminated without cause or if they terminate their employment for good reason. Payment amounts and at the times set forth below: • Fixed Amount. Over the performance periods, we shall pay to each eligible Participant $10.0 million (“Fixed Amount”) in three substantially equal pro rata installment payments. The first two payments are to be settled at our option in cash or in fully-vested shares of our Class A common stock. The third payment is required to be settled in cash. • Tier 1 Target. If, during any of the Performance Periods, the CouponFollow business achieves the first tier TTM EBITDA (as defined in the CouponFollow Incentive Plan) for the first time (“Tier 1 Target”), we will pay a total of $8.5 million (“Tier 1 Amount”) in substantially equal pro rata amounts at the times in the table set forth below (in thousands). • Tier 2 Target. If, during any of the Performance Periods, the CouponFollow business achieves the second tier TTM EBITDA for the first time (“Tier 2 Target”), we will pay an additional $6.4 million (“Tier 2 Amount”) in substantially equal pro rata amounts at the times in the table set forth below (in thousands). • Tier 3 Target. If, during any of the Performance Periods, the CouponFollow business achieves the third tier TTM EBITDA for the first time (“Tier 3 Target” and together with the Tier 1 Target and Tier 2 Target, collectively “Targets”), we will pay an additional $6.4 million (“Tier 3 Amount” and together with the Tier 1 Amount and the Tier 2 Amount, collectively “Tier Amounts”) in substantially equal pro rata amounts at the times in the table set forth below (in thousands). Performance Period* Fixed Amount Tier 1 Amount* Tier 2 Amount* Tier 3 Amount* Total maximum Payment per Performance Period Dec. 31, 2022** $ 3,333 $ — $ — $ — $ 3,333 Dec. 31, 2023 3,333 2,833 — — 6,166 Dec. 31, 2024 3,334 2,833 3,187 — 9,354 Dec. 31, 2025 — 2,834 3,188 6,375 12,397 $ 10,000 $ 8,500 $ 6,375 $ 6,375 $ 31,250 * If the Tier 1 Amount is not achieved in the first Performance Period but is achieved in the second Performance Period, the Tier 1 Amount for the first Performance Period shall be paid out at the end of the second Performance Period and if achieved in the third Performance period the full amount will be paid at the end of the third Performance Period. If the Tier 2 Amount is not achieved in the second Performance Period but is achieved in the third Performance Period, the Tier 2 Amount will be paid at the end of the third Performance Period. If the Tier 2 Amount or the Tier 3 Amount is achieved in the first Performance Period, such Tier Amounts shall be paid as noted in the table above. Amounts earned are payable within 60 days of the end of each performance period. ** On March 1, 2023, we issued 0.4 million shares of Class A Common stock with an aggregate fair value of $1.7 million , net of shares withheld for taxes, on th e date of settlement, to settle the first Fixed Amount of $3.3 million. If a Participant’s continued employment is terminated prior to applicable payment date(s), with the exception of the Principal Participant as discussed above, we will reverse all prior liabilities for their pro rata share of any Tier Amounts or Fixed Amounts associated with that Participant. If we elect to settle the payment obligations in shares of our Class A common stock, the number of shares payable under the CouponFollow Incentive Plan will be determined based on the VWAP of our Class A common stock. As of December 31, 2023 (Successor), we have determined that it was not probable that the CouponFollow business would achieve any o f the contingent earnout targets during the Performance Periods, and accordingly, we did not record a liability for any of the Tier amounts. During the year ended December 31, 2023 (Successor), we recognized $2.7 million for the Fixed Amount within salaries and benefits expenses on the consolidated statements of operations. The amount for the year ended December 31, 2023 (Successor) is net of a $0.6 million difference between the fair value of the Class A common stock issued to settle the earnout liability for fiscal 2022 and the carrying value of the earnout liability. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Sale of Protected On November 30, 2023, we completed the sale of Protected , our subscription reporting unit. Total consideration comprised of: (a) $240.0 million in cash, subject to certain adjustments, (b) the return and subsequent cancellation of approximately 29.1 million shares of our Class A common stock, par value $0.0001 per share, owned by JDI and other entities and individuals affiliated with the Purchasing Parties and (c) confirmation from JDI, Protected and the Protected CEO that the financial performance benchmarks related to the Protected Incentive Plan, will , as a result of the Protected Disposition, no longer be achievable. We used $51.0 million of the proceeds from the sale of Protected to repay certain of our outstanding indebtedness, including (i) the mandatory repayment of secured and unsecured obligations totaling $18.8 million and intercompany obligations totaling $9.6 million and (ii) the voluntary repayment of unsecured obligations (inclusive of certain fees and accrued but unpaid interest) totaling $22.7 million . We continue to use the remaining cash proceeds from the sale of Protected for general working capital purposes and to reduce certain of our other existing debt obligations. Additionally, the 29.1 million of Class A common stock returned to us pursuant to the Share Purchase Agreement as part of the sale of Protected were subsequently cancelled and are no longer outstanding shares of our capital stock. We have determined that the sale of Protected represents a strategic shift that will have a major effect on our results of operations. The Protected business met the criteria to be reported as assets held for sale and discontinued operations on September 30, 2023, and accordingly, all prior comparable periods have been recast to conform to the current period presentation. Impairment of the Subscription Reporting Unit (the Protected Business) Upon classifying the Protected Business as held for sale, we performed a goodwill impairment test on the Subscription reporting unit resulting in a goodwill impairment charge of $115.5 million. This impairment was the result of decreases in long-term forecasts due to recent adverse customer trends and other macroeconomic outcomes. We recorded a further impairment charge of $3.3 million upon the classification of the disposal group as held for sale, for a total impairment charge of $118.8 million that was recorded in the results of discontinued operations for the year ended December 31, 2023 (Successor). There was no tax benefit of this charge for the year ended December 31, 2023 (Successor). The following table presents the assets and liabilities classified as held for sale from discontinued operations as of December 31, 2022 (in thousands): Successor December 31, 2022 Carrying amount of assets included as part of discontinued operations: Current assets: Cash and cash equivalents $ 15,701 Restricted cash, current 3,357 Other current assets, net 1,234 Current assets held for sale from discontinued operations 20,292 Property and equipment, net 860 Intangible assets, net 121,025 Goodwill 433,184 Total assets held for sale from discontinued operations $ 575,361 Carrying amount of liabilities included as part of discontinued operations: Current liabilities: Protected incentive plan liability, current $ 15,436 Deferred revenue 68,611 Other current liabilities 17,371 Current liabilities held for sale from discontinued operations 101,418 Protected incentive plan liability, non-current 15,824 Deferred tax liability 15,286 Other liabilities 3,366 Total liabilities held for sale from discontinued operations $ 135,894 The financial results of Protected are presented as loss from discontinued operations, net of taxes in the consolidated statements of operations. The following table presents the summarized discontinued operations consolidated statements of operations (in thousands) : Successor Year Ended Period from January 27, 2022 through December 31, 2022 Revenue $ 190,090 $ 161,711 Operating expenses: Cost of revenue (excluding depreciation and amortization) 161,134 99,940 Salaries and benefits 41,972 60,005 Selling, general, and administrative 11,546 12,647 Depreciation and amortization 26,727 49,183 Impairment of assets held for sale 3,276 — Impairment of goodwill 115,483 — Total operating expenses 360,138 221,775 Operating loss (170,048) (60,064) Other expense, net 548 441 Loss on sale of business 4,247 — Loss from discontinued operations before income taxes (174,843) (60,505) Income tax benefit (516) (3,546) Net loss from discontinued operations $ (174,327) $ (56,959) The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the subscription business that are included in the consolidated statements of cash flows (in thousands): Successor Year Ended Period from January 27, 2022 through December 31, 2022 Impairment of assets held for sale $ 3,276 $ — Impairment of goodwill $ 115,483 $ — Loss on sale of business $ 4,247 $ — Depreciation and amortization $ 26,727 $ 49,183 Stock-based compensation $ 31,850 $ 53,715 Capital expenditures $ 1,739 $ 432 Transition Service Agreement In connection with a transition service agreement, we agreed to provide certain services for which full reimbursement of cost will be provided. Discontinued Operations Related-Party Transactions Payment Processing Agreement Protected utilizes multiple credit card payment processors, including Paysafe Financial Services Limited (“Paysafe”). In March 2021, Paysafe completed a merger with Foley Trasimene Acquisition Corp. II (“Foley Trasimene”), a special purpose acquisition company sponsored by entities affiliated with a sponsor of Trebia who was also a member of our Board of Directors. Protected's payment processing agreement with Paysafe was negotiated before the announcements of both (i) the Merger as well as (ii) the business combination between Paysafe and Foley Trasimene. We incurred credit card processing fees related to Paysafe for the year ended December 31, 2023 (Successor), and the period from January 27, 2022 through December 31, 2022 (Successor) of $14.9 million and $2.8 million, respectively. The amount receivable from Paysafe was $2.4 million as of December 31, 2022 (Successor). Office Facilities We have an agreement with JDI Property Holdings Limited (“JDIP”), an entity controlled by one of our directors, which allows us to use space at their property in exchange for GBP 0.1 million per year. The agreement with JDIP expires on October 31, 2026. Protected Incentive Plan Installment Payments In connection with the Merger, we effected an incentive plan for eligible recipients as defined in the Business Combination Agreement, providing up to $100 million payable in fully-vested shares of our Class A common stock based contingent upon the achievement of the future performance of Protected’s business. The incentive plan originally was to be paid out in two tranches based on performance of the business for 2023 and 2024. The first award (2023), consisting of $50.0 million of Class A common stock payable in January 2024, was modified to a cash award resulting in $20 million of payments in 2022 and 2023 with an additional final $10.0 million, payable upon the achievement of certain performance thresholds around marketing spend and operating contribution of Protected are achieved on or before December 31, 2024 (Successor). On November 30, 2023, none of the performance thresholds have been met, and therefore, none of the additional cash bonus payments have been paid. At the closing of the Protected Disposition, JDI, Protected and the Protected CEO confirmed that the financial performance benchmarks related to certain contingent earnout payments based on the future performance of Protected’s Business will no longer be achievable. As such, we reversed $40.8 million of expense during the year ended December 31, 2023 (Successor) for the Protected Incentive Plan within loss on sale of business segment of discontinued operations on the consolidated statements of operations . |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Pay vs Performance Disclosure | |||
Net loss | $ (37,061) | $ (330,392) | $ (227,221) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 12 Months Ended |
Dec. 31, 2023 shares | Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Michael Blend [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | In the quarter ended December 31, 2023, trusts established for the benefit of our co-founders' families, which include Michael Blend (also our Chief Executive Officer) and Charles Ursini, each entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The trading plan entered into by the trust established for the benefit of Mr. Blend provides for the purchase of an aggregate of $2.0 million worth of shares of our Class A common stock during the duration of the plan, which will terminate on July 15, 2024, subject to early termination for certain specified events set forth in the plan. The trading plan entered into by the trust established for the benefit of Mr. Ursini provides for the purchase of an aggregate of $3.0 million worth of shares of our Class A common stock during the duration of the plan, which will terminate on July 15, 2024, subject to early termination for certain specified events set forth in the plan. | |
Name | Michael Blend | |
Title | Chief Executive Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Arrangement Duration | 197 days | |
Aggregate Available | 2,000,000 | 2,000,000 |
Charles Ursini [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | In the quarter ended December 31, 2023, trusts established for the benefit of our co-founders' families, which include Michael Blend (also our Chief Executive Officer) and Charles Ursini, each entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The trading plan entered into by the trust established for the benefit of Mr. Blend provides for the purchase of an aggregate of $2.0 million worth of shares of our Class A common stock during the duration of the plan, which will terminate on July 15, 2024, subject to early termination for certain specified events set forth in the plan. The trading plan entered into by the trust established for the benefit of Mr. Ursini provides for the purchase of an aggregate of $3.0 million worth of shares of our Class A common stock during the duration of the plan, which will terminate on July 15, 2024, subject to early termination for certain specified events set forth in the plan. | |
Name | Charles Ursini | |
Rule 10b5-1 Arrangement Adopted | true | |
Arrangement Duration | 197 days | |
Aggregate Available | 3,000,000 | 3,000,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of System1, Inc. and its subsidiaries for the Successor periods, and S1 Holdco for the Predecessor period. All intercompany accounts and transactions have been eliminated in the consolidation of the financial statements. |
Principles of Consolidation | The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of System1, Inc. and its subsidiaries for the Successor periods, and S1 Holdco for the Predecessor period. All intercompany accounts and transactions have been eliminated in the consolidation of the financial statements. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management’s estimates are based on historical information available as of the date of the consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, valuation of goodwill, acquired intangible assets, assets held for sale and long-lived assets, valuation and recognition of stock-based compensation awards, income taxes, contingent consideration and determination of the fair value of the warrant liabilities. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of amounts held as bank deposits. Cash is deposited with high-credit-quality financial institutions and, at times, such balances with any one financial institution may exceed the insurance limits of the prevailing regulatory body. Historically, we have not experienced any losses related to these cash balances and we believe that there is minimal risk of expected future losses. However, there can be no assurance that there will not be losses on these deposits. |
Accounts Receivable, Net | Accounts Receivable, Net |
Foreign Currency | Foreign Currency The functional currency of our wholly-owned subsidiaries is the currency of the primary economic environment in which they operate. Assets and liabilities are translated into U.S. dollars using exchange rates prevailing at the balance sheet date, while revenue and expenses are translated at average exchange rates during the year. Gains and losses resulting from the translation of our consolidated balance sheets are recorded as a component of accumulated other comprehensive (loss) income. Foreign currency transaction gains and losses are recorded in other income (expense), net on our consolidated statement of operations. |
Warrant Liability | Warrant Liability We account for the Public Warrants and Private Placement Warrants (collectively “Warrants”), as liabilities measured at fair value each balance sheet date, with changes in fair value recorded in Change in fair value of warrant liabilities in the consolidated statements of operations. Refer to Note 13, Warrants and Note 14, Fair Value Measurement. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure fair value based on a three-level hierarchy of inputs, maximizing the use of observable inputs, where available, and minimizing the use of unobservable inputs when measuring fair value. A financial instrument’s level within the three-level hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three-level hierarchy of inputs is as follows: Level 1 : Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 : Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions about current market conditions and require significant management judgment or estimation. Financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, and warrant liabilities. Cash equivalents and restricted cash are stated at fair value on a recurring basis. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. As of December 31, 2023 and 2022 (Successor), our outstanding debt included a Term Loan, for which fair value was estimated using an observable market quotation (Level 2). Our liabilities measured at fair value relate to the Public Warrant liabilities (Level 1), Private Placement Warrant liabilities (Level 2), the former CEO of S1 Holdco's equity profits interest liability (Level 3) and contingent consideration (Level 3). |
Restricted Cash | Restricted Cash Our restricted cash as of December 31, 2023 (Successor) and December 31, 2022 (Successor) primarily related to; (i) cash collateralized letter of credit we maintain in connection with our corporate office lease, (ii) escrow account related to unvested equity awards as of the closing of the Merger that will be cash settled, (iii) escrow account related to the indemnification of obligations related to the RoadWarrior acquisition and (iv) escrow account related to the postcombination compensation arrangement related to the CouponFollow acquisition. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Repairs and maintenance are charged to expense as incurred, while improvements are capitalized. Upon the sale or retirement of property and equipment, the accounts are relieved of the cost and the related accumulated depreciation, and any resulting gain or loss is included in selling, general, and administrative expense on the consolidated statements of operations. |
Internal-Use Software Development Costs, Net | Internal-Use Software Development Costs, Net Internal-use software development costs are stated at cost, less accumulated amortization. We capitalize certain internal-use software development costs associated with creating and enhancing internally developed software related to our technology infrastructure, including continuing to develop and deploy our RAMP platform. Deployment activities focus on enhancement of our customer acquisition capabilities, including website enhancements and tools for marketing support, and upgrades of dashboards and reporting tools. These costs are comprised of personnel costs, which include salaries, bonuses, stock-based compensation and employee benefits’ expenses for employees who are directly associated with, and who devote significant time to, software projects, as well as external direct costs of materials and services consumed in developing or obtaining the software. Internal-use software development costs that do not meet the qualification for capitalization are expensed as incurred, and are recorded in salaries and benefits expense on the consolidated statement of operations. Internal-use software development activities generally consist of three stages: (i) the planning stage, (ii) the application and infrastructure development stage, and (iii) the post-implementation stage. Costs incurred in the planning and post-implementation stages of software development, including costs associated with the post configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. Costs incurred in the application and infrastructure development stage, including significant enhancements and upgrades, are capitalized once the preliminary project stage is completed, management has authorized further funding for the completion of the project, and it is probable that the project will be completed and the software will perform as intended. Capitalization ends once a project is substantially complete, and the software and technologies are ready for their intended purpose(s). Internal-use software development costs are amortized using a straight-line method over an estimated useful life of three years, commencing when the software is ready for our intended use, which approximates the period over which the expected benefits will be derived. We do not transfer ownership of or software or lease our software to third parties. Intangible Assets Intangible assets primarily consist of acquired technology, customer relationships and trade names/trademarks. We determine the appropriate useful life based on management’s estimate of the applicable intangible asset’s remaining economic useful life at the time of acquisition. Intangible assets are generally amortized over their estimated economic useful lives using a straight-line method, which approximates the pattern in which the economic benefits are consumed . The fair value of the intangible assets acquired in a business combination are determined as follows; (i) trademarks using the relief from royalty method under the income-based approach. Key assumptions include forecasted revenue, an estimated royalty rate applicable to the trademarks, and a discount rate; (ii) customer relationships using an excess-earnings method utilizing distributor inputs. Key assumptions include customer attrition rate, revenue growth rate, existing customer revenue, deferred revenue, and a discount rate; and (iii) technology using the excess-earnings method. Key assumptions include forecasted revenue, technology migration rate and a discount rate. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We assess the recoverability of our long-lived assets when events or changes in circumstances indicate that their carrying value may not be recoverable. Such events or changes in circumstances may include a significant adverse change in the extent or manner in which a long-lived asset is being used; significant adverse changes in legal factors or in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset; current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. We assess recoverability of our long-lived assets by determining whether the carrying value of the asset group can be recovered through projected undiscounted cash flows over their remaining useful lives inclusive of an estimated residual value. If the carrying value of the asset group exceeds the forecasted undiscounted cash flows, an impairment loss is recognized and measured as the amount by which the carrying amount exceeds the estimated fair value. An impairment loss is charged to operations in the period in which management determines such impairment has occurr ed. Refer to Note 6, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net. |
Assets and Liabilities Held for Sale | Assets and Liabilities Held for Sale We report a business as held for sale when management has received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the ensuing year and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less costs to sell, which is required to be remeasured each reporting period. If the carrying amount of the business exceeds its estimated fair value, which is based on the estimated sales price of the transaction, less costs to sell, a loss is recognized. Depreciation and amortization is not recorded on assets of a business classified as held for sale. Refer to Note 19, Discontinued Operations. |
Discontinued Operations | Discontinued Operations We present discontinued operations when there is a disposal of a component or a group of components that represents a strategic shift that will have a major effect on operations and financial results. The results of discontinued operations are reported in net income from discontinued operations in the consolidated statements of operations for all periods presented, commencing in the period in which the business is either disposed of or is classified as held for sale, including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less costs to sell. Assets and liabilities related to a business classified as held for sale which also meets the criteria for discontinued operations are segregated in the consolidated balance sheets for the current and prior periods presented. Refer to Note 19, Discontinued Operations. |
Business Combinations | Business Combinations We allocate the consideration transferred to the fair value of assets acquired and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, including estimating average industry multiples, customer and service attrition rate, forecasted revenue and revenue growth rates, existing customer revenue, deferred revenue, discount rates, technology migration rates, royalty rates and estimating future cash flows. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Transaction costs associated with business combinations are expensed as incurred and are included in selling, general and administrative expenses on our consolidated statements of operations. When the purchase consideration includes contingent consideration, we record the fair value of the contingent consideration as of the date of acquisition, and subsequently remeasure the contingent consideration at fair value as of each reporting date through our consolidated statements of operations. |
Goodwill | Goodwill We perform annual impairment testing on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below our carrying value. We have the option (i) to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than our carrying amount or (ii) to perform the quantitative impairment test. The quantitative impairment test involves comparing the estimated fair value of a reporting unit with our respective carrying amount, including goodwill. If the estimated fair value exceeds carrying amount, goodwill is considered not to be impaired. If, however, the fair value of the reporting unit is less than carrying amount, an impairment loss is recognized in an amount equal to the excess, not to exceed the carrying amount of goodwill. The fair values of our reporting units are computed by weighting a discounted cash flow model and a reference transaction model which included inputs developed using both internal and market-based data, or in a disposal transaction based on the best indicator of fair value which might include the proceeds to be received upon sale. Our key assumptions in the discounted cash flow model included, but were not limited to, the weighted average cost of capital, revenue growth rates (including long-term growth rates), and operating margins. The weighted average cost of capital reflected the increases in market interest rates. Our reference transaction model derives indications of value based on mergers and acquisition transactions in the digital advertising industry. Key assumptions in this model include, but were not limited to, the selection of comparable transactions, and the revenue and EBITDA multiples and EBITDA margins from those transactions. Unanticipated events or circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results. We completed a qualitative assessment of our Partner Network reporting unit, the only reporting unit with goodwill, and determined it is not more likely than not that the fair value of the reporting unit is less than the carrying amount for fiscal 2023 . Refer to Note 6, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net, regarding impairment of goodwill in fiscal 2022 and Note 19, Discontinued Operations regarding discontinued operation impairments in fiscal 2023. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets. |
Revenue Recognition | Revenue Recognition We recognize revenue when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps; (i) Identification of a contract with a customer, (ii) Identification of the performance obligations in the contract, (iii) Determination of the transaction price, (iv) Allocation of the transaction price to the performance obligations in the contract, and (v) Recognition of revenue when or as the performance obligations are satisfied. Advertising We earn revenue by directly acquiring traffic to our owned and operated websites and utilizing our RAMP platform and additional services to generate 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. For this revenue, we have determined that we are the principal since we have a risk of loss on the user-traffic that we are acquiring for monetization with our Advertising Partners, and, in the case of our owned and operated websites, 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. Revenue is also earned from revenue-sharing arrangements with our Network Partners related to the use of our RAMP platform and additional services provided to them in order to direct advertising by our Advertising Partners to their digital online inventory. We have determined that we are the agent in these transactions and therefore report revenue on a net basis, because (a) we do not control the underlying digital online inventory, (b) we do not acquire the corresponding user-traffic and do not have risk of loss in connection therewith, and (c) the pricing is in the form of a substantively fixed-percentage revenue-sharing arrangement. We report the revenue generated under our revenue-sharing arrangements on a net basis, based on the difference between amounts received by us from our Advertising Partners, less amounts remitted to the Network Partners based on the underlying revenue-sharing agreements. We recognize revenue upon delivering user-traffic to our Advertising Partners based on a cost-per-click or cost-per-thousand impression basis. Cost of Revenue Cost of revenue primarily consists of traffic acquisition costs, which are the costs to place advertisements to acquire customers to our websites, as well as domain name registration costs and licensing costs to provide mapping services to Mapquest.com. We do not pre-pay any traffic acquisition costs, and therefore, we expense such costs as incurred. |
Salaries and Benefits | Salaries and Benefits Salaries and benefits expenses include salaries, bonuses, stock-based compensation and employee benefits costs. |
Stock-Based Compensation | Stock-Based Compensation Compensation cost related to stock-based payments is measured based on the fair value of the units issued and recognized in salaries and benefits expenses on our consolidated statement of operations. We have elected to treat stock-based payment awards with time-based service condition(s) only as a single award, with the related compensation expense recognized on a straight-line basis. Predecessor Period The assumptions used in the Black-Scholes model to value equity in the Predecessor period are based upon the following; (i) the fair value of S1 Holdco’s equity was determined by S1 Holdco’s Board of Directors, with input from management and contemporaneous valuation reports prepared by a third-party valuation specialist, as the equity was not publicly traded, (ii) the expected term of the award was estimated by considering the contractual term and vesting period of the award, the employees’ expected exercise behavior and the post-vesting employee turnover rate. For non-employees, the expected life equals the contractual term of the award, (iii) the risk-free interest rate was based on published U.S. Treasury Department interest rates for the expected term of the underlying award and (iv) the volatility was based on the expected unit price volatility of the underlying units over the expected term of the award which was based upon historical share price data of an index of comparable publicly traded companies. Replacement Awards Pursuant to the Merger, we were required to replace certain profits interests awards, the value creation units ("VCU") and Class F Units ("F Units"), with a combination of a restricted stock unit (“RSU”) in our shares and a cash award (collectively, "Replacement Awards”). The fair value of the Replacement Awards was derived utilizing the transaction closing price of $10.00. The Merger triggered a liquidating event, therefore, the portion of the Replacement Awards issued in connection with the Merger that was associated with services rendered through the date of the Merger are included in the total consideration transferred, with the exception of the unvested awards subject to service vesting conditions where the service condition has not been completed. With regards to the remaining unvested portion of the Replacement Awards, we continue to recognize compensation expense on a straight-line basis over the original requisite service period and recognize forfeitures as they occur. For Replacement Awards forfeited prior to vesting, we recognize accelerated compensation expense for the remaining unvested shares, as a share of our common stock becomes issuable to the previous investors immediately upon forfeiture. For the cash portion of the Replacement Awards forfeited prior to vesting, we recognize accelerated compensation expense for the unpaid amount, as that cash amount becomes payable to the previous investors immediately upon forfeiture. Post-Combination Awards For awards granted subsequent to the Merger, our fair value of the related restricted stock units was derived from the market price of our Class A common stock, which is traded on the NYSE. As these awards are subject only to time-based service conditions, we recognize compensation expense for these awards on a straight-line basis over the requisite service period for each award, generally three years, and recognize forfeitures as they occur. Liability Awards In connection with the Merger and acquisition of Protected (see Note 3, Merger), we effected an incentive plan for eligible recipients, the Protected Incentive Plan, which is payable in a fixed value of fully-vested shares of our Class A common stock upon the satisfaction of certain performance and service conditions. The Protected Incentive Plan targets were deemed to no longer be achievable due to the sale of Protected (see Note 19, Discontinued Operations). In connection with the acquisition of CouponFollow (see Note 4, Acquisitions) we effected an incentive plan for eligible recipients. Refer to Note 18, Stock-Based Compensation. We recognize compensation cost for these liability awards with performance and service conditions if and when it is deemed probable that the performance condition will be achieved. The probability of vesting is evaluated at each reporting period taking into consideration actual results to-date and forecasts and compensation cost adjusted to reflect the completed portion of the service period with a graded vesting attribution . |
Repurchased Shares | Repurchased Shares Repurchased shares of our common stock are retired, and the cost of the retired shares in excess of par value, including any direct and incremental costs associated with the repurchase, is recorded as a decrease in retained earnings. |
Selling, General, and Administrative Expenses | Selling, General, and Administrative Expenses Selling, general, and administrative expenses consist of fees for professional services, occupancy costs, travel and entertainment. These costs are expensed as incurred. |
Depreciation and Amortization | Depreciation and Amortization Depreciation and amortization expenses are primarily attributable to our capital investments and consist of property and equipment depreciation and amortization of intangible assets with finite lives. |
Income Taxes | Income Taxes We are the sole managing member of S1 Holdco and, as a result, consolidate the financial results of S1 Holdco. S1 Holdco is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, S1 Holdco is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by S1 Holdco is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of S1 Holdco, as well as any stand-alone income or loss generated by us . We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities (“DTAs” and “DTLs”, as applicable) for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of operations. If we determine that we would not be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA valuation allowance, which would increase the provision for income taxes. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of our technical merits and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize both accrued interest and penalties, when appropriate, in the provision for income taxes on the consolidated statements of operations. |
Non-Controlling Interest | Non-Controlling Interest We report a non-controlling interest representing the economic interest in S1 Holdco held by certain individuals and entities other than us. The non-controlling interest is comprised of certain selling equity holders of S1 Holdco that retained an economic interest through their ownership of Class B units in S1 Holdco as of the closing of the Merger, along with the same number of corresponding shares of Class C common stock in us. The non-controlling interest holders may, from time to time, require us to convert all or a portion of their economic interest via a redemption of their Class B units in S1 Holdco together with surrendering their corresponding shares of Class C common stock in us in exchange for shares of Class A common stock on a one-for-one basis. Upon the redemption of Class B Units, our Board of Directors may also elect to settle the non-controlling interest holder's Class B units in cash. We are required to maintain a one-to-one ratio of Class A common stock outstanding to our Class A units in S1 Holdco and Class C common stock to the non-controlling interest’s Class B units. As redemptions occur or other transactions result in the issuance or retirement of a share of Class A common stock, S1 Holdco is required to issue or retire a Class A unit in S1 Holdco to maintain in parity with the corresponding number of outstanding shares of Class A common stock. These transactions may result in a change in the total number of units outstanding in S1 Holdco and/or a change in the percentage that we own of S1 Holdco. As a result, any change in ownership that does not result in a change of control is accounted for as an equity transaction and we adjust for the re-allocation of equity between us and our non-controlling interest. |
Recent Accounting Pronouncements and Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements On January 1, 2023, we adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Loss on Financial Instruments". Accordingly, upon adoption of this new standard, we recorded an allowance for credit losses of $0.3 million, with a corresponding cumulative adjustment to the beginning balance of accumulated deficit in the first quarter of fiscal 2023. Accounting Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Revision of Previously Issued Consolidated Financial Statements | The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued consolidated balance sheet as of December 31, 2022: Successor December 31, 2022 As Previously Reported Revision Adjustments As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Accrued expenses and other current liabilities 95,447 790 (b) 96,237 (10,457) 85,780 Total current liabilities 210,285 790 211,075 — 211,075 Deferred tax liability 43,355 1,327 (a) (e) 44,682 (15,286) 29,396 Total liabilities 687,668 2,117 689,785 — 689,785 Additional paid-in capital 829,687 1,879 (b) (c) 831,566 — 831,566 Accumulated deficit (445,301) 6,005 (b) (c) (439,296) (439,296) Accumulated other comprehensive loss (417) 157 (e) (260) — (260) Total stockholders' equity attributable to System1, Inc. 383,980 8,041 392,021 — 392,021 Non-controlling interest 88,808 (10,158) (c) 78,650 — 78,650 Total stockholders' equity 472,788 (2,117) 470,671 — 470,671 Total liabilities and stockholders' equity $ 1,160,456 $ — $ 1,160,456 $ — $ 1,160,456 The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued consolidated statement of operations, for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Salaries and benefits 194,976 3,074 (b) 198,050 (60,005) 138,045 Impairment of goodwill 366,309 6,419 (a) 372,728 — 372,728 Total operating expenses 1,282,194 9,493 1,291,687 (221,775) 1,069,912 Operating loss (508,254) (9,493) (517,747) 60,064 (457,683) Total other expense 35,801 — 35,801 (441) 35,360 Loss before income tax (544,055) (9,493) (553,548) 60,505 (493,043) Income tax benefit (101,976) (10,250) (a) (e) (112,226) 3,546 (108,680) Net loss from continuing operations (442,079) 757 (441,322) 56,959 (384,363) Net loss from discontinued operations, net of tax — — — (56,959) (56,959) Net loss (442,079) 757 (441,322) — (441,322) Less: Net loss from continuing operations attributable to non-controlling interest (105,682) (5,248) (c) (110,930) 11,089 (99,841) Less: Net loss from discontinued operations attributable to non-controlling interest — — — (11,089) (11,089) Net loss attributable to System1, Inc. $ (336,397) $ 6,005 $ (330,392) $ — $ (330,392) Amounts attributable to System1, Inc.: Net loss from continuing operations $ (336,397) $ 6,005 (c) $ (330,392) $ 45,870 $ (284,522) Net loss from discontinued operations — — (45,870) (45,870) Net loss attributable to System1, Inc. $ (336,397) $ 6,005 $ (330,392) $ — $ (330,392) Basic and diluted net loss per share: Continuing operations $ (3.77) $ 0.07 (c) $ (3.70) $ (0.51) $ (3.19) Discontinued operations — — — (0.51) (0.51) Basic and diluted net loss per share $ (3.77) $ 0.07 $ (3.70) $ — $ (3.70) Weighted average number of shares outstanding - basic and diluted 89,251 59 (c) 89,310 89,310 The following table reflects the revisions related to the sale of Protected to the previously issued consolidated statement of comprehensive loss for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Revised and Currently Reported Net loss $ (442,079) $ 757 (a) (b) (e) $ (441,322) Other comprehensive income (loss) Foreign currency translation income (loss) (394) — (394) Comprehensive loss (442,473) 757 (441,716) Comprehensive loss attributable to non-controlling interest (105,682) (5,248) (c) (110,930) Comprehensive loss attributable to System1, Inc. $ (336,791) $ 6,005 $ (330,786) The following tables reflects the revisions to the previously issued consolidated statement of changes in stockholders' equity for the period from January 27, 2022 through December 31, 2022. Although the impact is pervasive throughout the consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant impact is an additional net loss of $0.8 million, a reduction of non-controlling interest of $10.2 million, an increase in accumulated deficit of $6.0 million and an increase in additional paid-in-capital of $1.9 million Successor Class A Common Stock Class C Common Stock Class D Common Stock Shares Amount Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Deficit Accumulated Other Comprehensive Income Non-Controlling Interest Total Stockholders’ As Previously Reported Balance at January 27, 2022 80,767 $ 8 22,077 $ 2 1,450 $ — $ 722,362 $ (107,797) $ — $ 198,691 $ 813,266 Net loss — — — — — — — (336,397) — (105,682) (442,079) Exercise of warrants 3,969 — — — — — 27,989 — — — 27,989 Issuance of restricted stock, net of forfeitures and shares withheld for taxes 968 — — — — — (2,089) — — — (2,089) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions 930 — — — — — 661 — — — 661 Issuance of common stock in connection with the acquisition of business 2,000 — — — — — 25,500 — — — 25,500 Issuance of market-based restricted stock units — — — — 1,450 — — — — — — Conversion of Class D shares to Class A shares 2,900 1 — — (2,900) — — — — — 1 Conversion of Class C shares to Class A shares 330 — (330) — — — 2,714 — — (2,714) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — — — (41) — — — (41) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (2,596) — — — (2,596) Other comprehensive income — — — — — — — — (417) 24 (393) Stock-based compensation — — — — — — 55,187 — — — 55,187 Distribution to members — — — — — — — — — (1,511) (1,511) Class A common stock repurchases (190) — — — — — — (1,107) — — (1,107) Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 — $ — $ 829,687 $ (445,301) $ (417) $ 88,808 $ 472,788 Revision Adjustments Net loss — — — — — — — 6,005 — (5,248) 757 (a) (b) (c) (e) Exercise of warrants — — — — — — 6,359 — — (6,359) — (c) Issuance of restricted stock, net of forfeitures and shares withheld for taxes — — — — — — (598) — — 598 — (b) (c) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions — — — — — — 1,736 — — (1,736) — (c) Issuance of common stock in connection with the acquisition of business — — — — — — 3,734 — — (3,734) — (c) Conversion of Class D shares to Class A shares — — — — — — 5,414 — — (5,414) — (c) Conversion of Class C shares to Class A shares — — — — — — 20 — — (20) — (c) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (5,314) — 157 — (5,157) (e) Other comprehensive income — — — — — — — — (1) (1) (e) Stock-based compensation — — — — — — (9,736) — — 12,020 2,284 (b) (c) Class A common stock repurchases — — — — — — 264 — — (264) — (c) Balance at December 31, 2022 — $ — — $ — — $ — $ 1,879 $ 6,005 $ 157 $ (10,158) $ (2,117) As Revised Net loss — — — — — — — (330,392) — (110,930) (441,322) Exercise of warrants 3,969 — — — — — 34,348 — — (6,359) 27,989 Issuance of restricted stock, net of forfeitures and shares withheld for taxes 968 — — — — — (2,687) — — 598 (2,089) Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions 930 — — — — — 2,397 — — (1,736) 661 Issuance of common stock in connection with the acquisition of business 2,000 — — — — — 29,234 — — (3,734) 25,500 Issuance of market-based restricted stock units — — — — 1,450 — — — — — — Conversion of Class D shares to Class A shares 2,900 1 — — (2,900) — 5,414 — — (5,414) 1 Conversion of Class C shares to Class A shares 330 — (330) — — — 2,734 — — (2,734) — Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — — — (41) — — — (41) Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC — — — — — — (7,910) — 157 — (7,753) Other comprehensive income — — — — — — — — (417) 23 (394) Stock-based compensation — — — — — — 45,451 — — 12,020 57,471 Distribution to members — — — — — — — — — (1,511) (1,511) Class A common stock repurchases (190) — — — — — 264 (1,107) — (264) (1,107) Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 — $ — $ 831,566 $ (439,296) $ (260) $ 78,650 $ 470,671 The following table reflects the revisions to the previously issued consolidated statement of cash flows for the period from January 27, 2022 through December 31, 2022: Successor Period from January 27, 2022 through December 31, 2022 As Previously Reported Revision Adjustments As Currently Reported Cash Flows from Operating Activities Net loss $ (442,079) $ 757 (a) (b) (e) $ (441,322) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock-based compensation 106,943 1,380 (b) (d) 108,323 Impairment of goodwill 366,309 6,419 (a) 372,728 Deferred tax benefits (107,798) (10,250) (a) (e) (118,048) Changes in operating assets and liabilities Accrued expenses and other liabilities (13,478) (8,556) (b) (d) (22,034) Other long-term liabilities (28,395) 10,250 (a) (e) (18,145) Net cash provided by (used in) operating activities $ 3,317 $ — $ 3,317 |
Schedule of Table Illustrates the Level of Concentration as a Percentage of Total Revenues | The following table illustrates the concentration as a percentage of total revenue for our key Advertising Partners: Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Google 85 % 86 % 88 % |
Schedule of Estimated Useful Lives of Property and Equipment | The estimated useful lives of our property and equipment for purposes of computing depreciation are as follows (in years): Computer equipment 3 Office equipment 3 Furniture, fixtures and equipment 3 - 7 Leasehold improvements Shorter of the remaining lease term or estimated useful life for leasehold improvements. Property and equipment, net consisted of the following (in thousands): Successor December 31, 2023 2022 Computer equipment $ 812 $ 559 Furniture and equipment 928 560 Leasehold improvements 2,511 2,468 Total 4,251 3,587 Less accumulated depreciation (1,167) (425) Property and equipment, net $ 3,084 $ 3,162 |
Schedule of Finite-Lived Intangible Assets | The estimated useful lives of our intangible assets are as follows (in years): Useful Life Developed technology 4 Customer relationships 3 - 5 Trademarks and trade names 10 Other intangibles 4 Internal-use software development costs and intangible assets consisted of the following (in thousands): December 31, 2023 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 13,788 $ (2,363) $ 11,425 Intangible assets: Developed technology $ 196,128 $ (94,354) $ 101,774 Trademarks and trade names 236,053 (45,050) 191,003 Software 5,100 (2,341) 2,759 Customer relationships 2,900 (1,435) 1,465 Total $ 440,181 $ (143,180) $ 297,001 December 31, 2022 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 7,206 $ (258) $ 6,948 Intangible assets: Developed technology $ 196,128 $ (45,322) $ 150,806 Trademarks and trade names 236,053 (21,450) 214,603 Software 5,100 (1,066) 4,034 Customer relationships 2,900 (682) 2,218 Total $ 440,181 $ (68,520) $ 371,661 Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Amortization expense for internal-use software development $ 2,981 $ 467 $ 355 Amortization expense for intangible assets $ 74,660 $ 68,520 $ 629 |
Schedule of Ownership Interest by Other Entities | The following table summarizes the ownership interest in S1 Holdco as of December 31, 2023 (Successor), based on shares issued and outstanding. Units (in thousands) Ownership % Class A units of S1 Holdco 65,855 75 % Class B units of S1 Holdco 21,513 25 % |
Merger (Tables)
Merger (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The purchase consideration, inclusive of the Protected assets and liabilities, was allocated to the following assets and liabilities (in thousands): Tangible assets acquired and liabilities assumed: Cash and marketable securities $ 68,748 Accounts receivable 79,086 Prepaid expenses 7,807 Income tax receivable 4,566 Property, plant & equipment, net 1,551 Other assets 6,950 Accounts payable (9,798) Deferred revenue (60,768) Accrued expenses and other current liabilities (110,004) Income tax payable (2,091) Notes payable (172,038) Deferred tax liabilities (145,032) Other liabilities (8,474) Total tangible assets acquired and liabilities assumed (339,497) Trademarks - 10 years estimated useful life 246,400 Customer relationships - 4 years estimated useful life 119,700 Technology - 4 years estimated useful life 196,000 Goodwill 827,696 Net assets acquired $ 1,050,299 Consideration: Cash $ 440,155 Equity 411,453 Total consideration attributable to System1 851,608 Total consideration attributable to non-controlling interest 198,691 Total consideration $ 1,050,299 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The purchase consideration, inclusive of the Protected assets and liabilities, was allocated to the following assets and liabilities (in thousands): Tangible assets acquired and liabilities assumed: Cash and marketable securities $ 68,748 Accounts receivable 79,086 Prepaid expenses 7,807 Income tax receivable 4,566 Property, plant & equipment, net 1,551 Other assets 6,950 Accounts payable (9,798) Deferred revenue (60,768) Accrued expenses and other current liabilities (110,004) Income tax payable (2,091) Notes payable (172,038) Deferred tax liabilities (145,032) Other liabilities (8,474) Total tangible assets acquired and liabilities assumed (339,497) Trademarks - 10 years estimated useful life 246,400 Customer relationships - 4 years estimated useful life 119,700 Technology - 4 years estimated useful life 196,000 Goodwill 827,696 Net assets acquired $ 1,050,299 Consideration: Cash $ 440,155 Equity 411,453 Total consideration attributable to System1 851,608 Total consideration attributable to non-controlling interest 198,691 Total consideration $ 1,050,299 |
Schedule of Pro Forma Information | The unaudited pro forma information reflects adjustments for additional amortization resulting from the fair value adjustments to assets acquired and liabilities assumed, adjustments for alignment of accounting policies, adjustments for transaction expenses, adjustments for certain stock-based compensation and equity related expenses incurred as a result of the transaction and the resulting tax effects, as if the Merger and acquisitions of Answers, CouponFollow and RoadWarrior occurred January 1, 2021. The pro forma results do not include any anticipated cost synergies or other effects of the merged companies. Accordingly, pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on the dates indicated, nor is it indicative of the future operating results of the combined company. The following table provides unaudited pro forma information as if the 2022 acquisitions occurred as of January 1, 2021 (in thousands). Year Ended December 31, 2022 (Successor) Pro forma revenue $ 682,161 Pro forma net loss $ (366,278) |
Answers Holdings, Inc. | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Working capital $ 32 Trademark - 10 years estimated useful life 1,100 Goodwill 3,500 Net assets acquired $ 4,632 |
NextGen Shopping, Inc | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Assets acquired and liabilities assumed: Cash and cash equivalents $ 21,232 Accounts receivable 5,860 Other current assets 446 Accounts payable (116) Accrued expenses and other current liabilities (118) Income tax payable (197) Deferred tax liabilities (10,895) Trademark - 10 years estimated useful life 38,100 Software - 4 years estimated useful life 4,100 Goodwill 42,175 Net assets acquired $ 100,587 |
RoadWarrior, LLC | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The allocation of the total purchase consideration for this acquisition was as follows (in thousands): Assets acquired and liabilities assumed: Working capital $ 155 Trademark - 10 years estimated useful life 2,200 Software - 4 years estimated useful life 1,000 Customer relationships - 3 years estimated useful life 1,300 Goodwill 14,981 Net assets acquired $ 19,636 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, Net | The estimated useful lives of our property and equipment for purposes of computing depreciation are as follows (in years): Computer equipment 3 Office equipment 3 Furniture, fixtures and equipment 3 - 7 Leasehold improvements Shorter of the remaining lease term or estimated useful life for leasehold improvements. Property and equipment, net consisted of the following (in thousands): Successor December 31, 2023 2022 Computer equipment $ 812 $ 559 Furniture and equipment 928 560 Leasehold improvements 2,511 2,468 Total 4,251 3,587 Less accumulated depreciation (1,167) (425) Property and equipment, net $ 3,084 $ 3,162 |
Goodwill, Internal-Use Softwa_2
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes to goodwill by reportable segments were as follows (in thousands): Owned and Operated Advertising Partner Network Total Goodwill at January 27, 2022 (Successor) $ — $ — $ — Additions 360,194 94,941 455,135 Impairment (360,194) (12,534) (372,728) Goodwill at December 31, 2022 (Successor) and December 31, 2023 (Successor) $ — $ 82,407 $ 82,407 |
Schedule of Finite-Lived Intangible Assets | The estimated useful lives of our intangible assets are as follows (in years): Useful Life Developed technology 4 Customer relationships 3 - 5 Trademarks and trade names 10 Other intangibles 4 Internal-use software development costs and intangible assets consisted of the following (in thousands): December 31, 2023 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 13,788 $ (2,363) $ 11,425 Intangible assets: Developed technology $ 196,128 $ (94,354) $ 101,774 Trademarks and trade names 236,053 (45,050) 191,003 Software 5,100 (2,341) 2,759 Customer relationships 2,900 (1,435) 1,465 Total $ 440,181 $ (143,180) $ 297,001 December 31, 2022 (Successor) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 7,206 $ (258) $ 6,948 Intangible assets: Developed technology $ 196,128 $ (45,322) $ 150,806 Trademarks and trade names 236,053 (21,450) 214,603 Software 5,100 (1,066) 4,034 Customer relationships 2,900 (682) 2,218 Total $ 440,181 $ (68,520) $ 371,661 Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Amortization expense for internal-use software development $ 2,981 $ 467 $ 355 Amortization expense for intangible assets $ 74,660 $ 68,520 $ 629 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of December 31, 2023 (Successor), the expected amortization expense associated with our intangible assets and internal-use software development costs was as follows (in thousands): 2024 $ 78,968 2025 78,359 2026 30,007 2027 24,488 2028 23,600 Thereafter 73,004 Total amortization expense $ 308,426 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | The components of lease expense were as follows (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Operating lease expense $ 2,141 $ 1,923 $ 142 Short-term lease expense 122 130 12 Variable lease expense 311 310 — Total lease expense $ 2,574 $ 2,363 $ 154 |
Schedule of Supplemental Lease Information | Supplemental information related to leases was as follows: Successor As of December 31, 2023 Weighted average remaining lease terms (in years) 6.4 Weighted average discount rate 5.2% |
Schedule of Maturities of Facility Lease Liabilities | Maturities of lease liabilities by fiscal year for our operating leases are as follows: Successor As of December 31, 2023 2024 $ 2,589 2025 2,244 2026 278 2027 282 2028 282 Thereafter 980 Total lease payments 6,655 Less: Imputed interest (740) Present value of operating lease liabilities $ 5,915 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other current liabilities consisted of the following items as of the periods presented (in thousands): Successor December 31, 2023 December 31, 2022 Accrued revenue share $ 16,365 $ 16,921 Accrued marketing expenses 19,737 35,311 Accrued payroll and related benefits 13,751 13,653 Accrued professional fees 1,455 2,706 Deferred revenue 1,757 1,553 Accrued tax liability 1,233 1,092 Holdback liabilities — 6,885 Other liabilities 5,016 7,659 Accrued expenses and other current liabilities $ 59,314 $ 85,780 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Loss Before Income Taxes | Domestic and foreign components of our loss before income taxes from continuing operations were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Domestic $ (126,830) $ (489,913) $ (38,068) Foreign (4,799) (3,130) 378 Loss before income tax $ (131,629) $ (493,043) $ (37,690) |
Schedule of Income Tax Provision (Benefit) | The components of the income tax provision (benefit) were as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Current: — — Federal $ (64) $ 79 $ — State (662) 427 17 Foreign 1,431 1,866 170 Total current provision $ 705 $ 2,372 $ 187 Deferred: Federal $ (17,103) $ (99,328) $ — State (1,829) (9,689) — Foreign (2,144) (2,035) (816) Total deferred benefit (21,076) (111,052) (816) Income tax benefit $ (20,371) $ (108,680) $ (629) |
Schedule of Effective Income Tax Rate | A reconciliation of the statutory tax rate to the effective income tax rate for the periods presented was as follows (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Amount % Amount % Amount % Income tax (benefit) provision at statutory tax rate $ (27,642) 21.0 % $ (103,539) 21.0 % $ (7,915) 21.0 % State tax, net of federal (1,718) 1.3 % (5,470) 1.1 % 15 — Non-Controlling interests 5,865 (4.5) % 19,626 (4.0) % — — Effect of flow-through entity — — — — 7,994 (21.2) % Changes in unrecognized tax benefits 2,320 (1.8) % (1,749) 0.4 % — — Foreign income taxes at different statutory rate (93) 0.1 % (49) — 18 — Investment in partnership basis adjustments (17,627) 13.4 % (22,677) 4.6 % — — Stock-based compensation 3,408 (2.6) % 2,858 (0.6) % — — Change in valuation allowance 19,521 (14.8) % 917 (0.2) % — — Other (4,405) 3.4 % 1,403 (0.3) % (741) 1.9 % Effective income tax rate $ (20,371) 15.5 % $ (108,680) 22.0 % $ (629) 1.7 % |
Schedule of Unrecognized Tax Benefits | The aggregate amount of gross unrecognized tax benefits related to uncertain tax positions were as follows (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Balance at the beginning of the period $ 593 $ — $ — Increases (decreases) based on tax positions related to prior periods (46) 221 — Increases based on tax positions related to current periods 1,303 372 — Balance at the end of the period $ 1,850 $ 593 $ — |
Schedule of Tax Years that Remain Subject to Examination in Major Tax Jurisdictions | The earliest tax years that remain subject to examination in the major tax jurisdictions in which we operate were as follows: Tax year United States 2020 California 2019 Netherlands 2017 |
Schedule of Deferred Income Taxes | The components of the deferred income taxes were as follows (in thousands): Successor December 31, 2023 December 31, 2022 Deferred tax assets: Net Operating Loss and Capital Loss Carryforwards $ 6,362 $ 2,184 Tax credits 4,289 1,110 Interest expense 3,234 1,196 Investment in partnerships 8,950 — Other 231 303 Total deferred tax assets 23,066 4,793 Valuation allowance (22,658) (1,087) Total net deferred tax assets $ 408 $ 3,706 Deferred tax liabilities: Investment in partnerships $ — $ (22,471) Intangibles (8,243) (10,450) Other (472) (171) Total deferred tax liabilities $ (8,715) $ (33,092) Net deferred tax liabilities $ (8,307) $ (29,386) |
Schedule of Valuation Allowance | The change in the valuation allowance was comprised of the following (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Balance at the beginning of the period $ 1,087 $ 170 $ 170 Increases in valuation allowance recorded through earnings 19,521 917 — Increases in valuation allowance not recorded through earnings 2,050 — — Balance at the end of the period $ 22,658 $ 1,087 $ 170 |
Debt, Net (Tables)
Debt, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | The carrying values of our debt, net of discounts, deferred financing and debt issuance costs were as follows (in thousands): Successor December 31, 2023 December 31, 2022 Term Loan 1,2 $ 349,503 $ 364,525 2022 Revolving Facility — 50,000 Total Debt, net $ 349,503 $ 414,525 _______________ 1 Includes unamortized discount of $14.7 million and $19.4 million, and unamortized loan fees of $0.8 million and $1.1 million, as of December 31, 2023 (Successor), and December 31, 2022 (Successor), respectively, recorded as a reduction of the carrying amount of the debt and amortized to interest expense using the effective interest method. 2 Estimated fair value of the Term Loan was $222.7 million as of December 31, 2023. |
Schedule of Future Minimum Principal Payments on Long-Term Debt | As of December 31, 2023 (Successor), future minimum principal payments on long-term debt were as follows (in thousands) : 2024 $ 20,000 2025 20,000 2026 30,000 2027 295,000 Total future minimum principal payment 365,000 Less: current portion (20,000) Long-term portion $ 345,000 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Liabilities Measured at Fair Value on Recurring Basis | The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis was as follows (in thousands): Successor December 31, 2023 December 31, 2022 Level 1 Level 1 Public Warrants $ 2,688 $ 7,798 |
Schedule of Estimated Fair Value of Liabilities | Changes in estimated fair value of Level 1, 2 and 3 financial liabilities were as follows (in thousands): Former CEO Equity Profits Interest Contingent Consideration Level 3 Level 3 Fair value of liabilities at December 31, 2021 (Predecessor) and January 26, 2022 (Predecessor) $ 11,132 $ 1,682 Public Warrant Liability Private Warrant Liability Contingent Consideration Level 1 Level 2 Level 3 Fair value of liabilities at January 27, 2022 (Successor) $ 18,285 $ 8,727 $ 1,682 Additions — — 28 Settlements (1,147) (21,818) (1,715) Change in fair value (9,340) 13,091 5 Fair value of liabilities at December 31, 2022 (Successor) 7,798 — — Change in fair value (5,110) — — Fair value of liabilities at December 31, 2023 (Successor) $ 2,688 $ — $ — |
Net Loss Per Share or Unit (Tab
Net Loss Per Share or Unit (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share | Basic and diluted net loss per share was calculated as follows (in thousands, except per share and per unit data) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Basic and diluted net loss per share Net loss from continuing operations attributable to System1, Inc. $ (0.94) $ (3.19) n/a Net loss from discontinued operations, net of tax attributable to System1, Inc. (1.54) (0.51) n/a Basic and Diluted net loss per share $ (2.48) $ (3.70) n/a Numerator: Net loss from continuing operations attributable to System1, Inc. $ (85,727) $ (284,522) n/a Net loss from discontinued operations, net of tax attributable to System1, Inc. (141,494) (45,870) n/a Net loss attributable to System1, Inc. $ (227,221) $ (330,392) n/a Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss per share 91,454 89,310 n/a Basic and diluted net loss per unit n/a n/a $ (1.81) Numerator: Net loss n/a n/a $ (37,061) Denominator: Weighted-average membership units outstanding - basic n/a n/a 20,488 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The following table summarizes revenue by reportable segments (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Owned and Operated Advertising $ 328,934 $ 556,303 $ 49,249 Partner Network 73,037 55,926 3,463 Total revenue $ 401,971 $ 612,229 $ 52,712 The following table summarizes adjusted gross profit by reportable segments (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Owned and Operated Advertising $ 107,696 $ 138,560 $ 8,768 Partner Network 53,420 42,291 3,012 Adjusted gross profit 161,116 180,851 11,780 Other cost of revenue 7,890 7,461 575 Salaries and benefits 106,505 138,045 31,181 Selling, general, and administrative 54,307 50,831 15,665 Depreciation and amortization 78,403 69,469 1,000 Impairment of goodwill — 372,728 — Interest expense, net 48,745 31,609 1,049 Loss on extinguishment of related-party debt 2,004 — — Change in fair value of Warrant liabilities (5,109) 3,751 — Loss before income tax $ (131,629) $ (493,043) $ (37,690) |
Schedule of Revenues Disaggregated by Geographic Region | The following table summarizes revenue by geographic region (in thousands): Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 United States $ 385,847 $ 593,527 $ 51,701 Other countries 16,124 18,702 1,011 Total revenue $ 401,971 $ 612,229 $ 52,712 |
Schedule of Property and Equipment, Net and Operating Lease Right-of-use Assets by Geographic Region | The following table summarizes property and equipment, net and operating leases by applicable reportable segment: (in thousands): Successor December 31, 2023 December 31, 2022 Owned and Operated Advertising $ 7,816 $ 9,646 The following table summarizes property and equipment, net and operating leases by geographic region (in thousands): Successor December 31, 2023 December 31, 2022 United States $ 3,927 $ 5,473 Canada 3,432 3,730 Other countries 457 443 Total $ 7,816 $ 9,646 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Assumptions Used To Determine Fair Value of Market-Based RSUs and RSAs | The key assumptions used to determine the fair value of these Sponsor RSUs and Sponsor RSAs were as follows: Risk-free interest rate 1.6 % Expected price volatility 50.0 % Cost of equity 23.6 % Expected term (years) 5 Fair value of Class A Common stock $ 10.00 |
Schedule of Total Stock-Based Compensation Expense | We recorded the following total stock-based compensation expense (in thousands) : Successor Predecessor Year Ended Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 Stock-based compensation expense $ 21,235 $ 55,512 $ 23,705 Performance Period* Fixed Amount Tier 1 Amount* Tier 2 Amount* Tier 3 Amount* Total maximum Payment per Performance Period Dec. 31, 2022** $ 3,333 $ — $ — $ — $ 3,333 Dec. 31, 2023 3,333 2,833 — — 6,166 Dec. 31, 2024 3,334 2,833 3,187 — 9,354 Dec. 31, 2025 — 2,834 3,188 6,375 12,397 $ 10,000 $ 8,500 $ 6,375 $ 6,375 $ 31,250 * If the Tier 1 Amount is not achieved in the first Performance Period but is achieved in the second Performance Period, the Tier 1 Amount for the first Performance Period shall be paid out at the end of the second Performance Period and if achieved in the third Performance period the full amount will be paid at the end of the third Performance Period. If the Tier 2 Amount is not achieved in the second Performance Period but is achieved in the third Performance Period, the Tier 2 Amount will be paid at the end of the third Performance Period. If the Tier 2 Amount or the Tier 3 Amount is achieved in the first Performance Period, such Tier Amounts shall be paid as noted in the table above. Amounts earned are payable within 60 days of the end of each performance period. ** On March 1, 2023, we issued 0.4 million shares of Class A Common stock with an aggregate fair value of $1.7 million , net of shares withheld for taxes, on th e date of settlement, to settle the first Fixed Amount of $3.3 million. |
Schedule of RSU Activity | The following summarizes RSU activity: Shares Weighted-Average Grant Date Fair Value per Share Unvested as of December 31, 2022 (Successor) 5,463 $ 9.83 Granted 4,480 $ 3.04 Vested (3,106) $ 8.99 Forfeited (2,414) $ 6.40 Unvested as of December 31, 2023 (Successor) 4,423 $ 5.41 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following table presents the assets and liabilities classified as held for sale from discontinued operations as of December 31, 2022 (in thousands): Successor December 31, 2022 Carrying amount of assets included as part of discontinued operations: Current assets: Cash and cash equivalents $ 15,701 Restricted cash, current 3,357 Other current assets, net 1,234 Current assets held for sale from discontinued operations 20,292 Property and equipment, net 860 Intangible assets, net 121,025 Goodwill 433,184 Total assets held for sale from discontinued operations $ 575,361 Carrying amount of liabilities included as part of discontinued operations: Current liabilities: Protected incentive plan liability, current $ 15,436 Deferred revenue 68,611 Other current liabilities 17,371 Current liabilities held for sale from discontinued operations 101,418 Protected incentive plan liability, non-current 15,824 Deferred tax liability 15,286 Other liabilities 3,366 Total liabilities held for sale from discontinued operations $ 135,894 (in thousands) : Successor Year Ended Period from January 27, 2022 through December 31, 2022 Revenue $ 190,090 $ 161,711 Operating expenses: Cost of revenue (excluding depreciation and amortization) 161,134 99,940 Salaries and benefits 41,972 60,005 Selling, general, and administrative 11,546 12,647 Depreciation and amortization 26,727 49,183 Impairment of assets held for sale 3,276 — Impairment of goodwill 115,483 — Total operating expenses 360,138 221,775 Operating loss (170,048) (60,064) Other expense, net 548 441 Loss on sale of business 4,247 — Loss from discontinued operations before income taxes (174,843) (60,505) Income tax benefit (516) (3,546) Net loss from discontinued operations $ (174,327) $ (56,959) The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the subscription business that are included in the consolidated statements of cash flows (in thousands): Successor Year Ended Period from January 27, 2022 through December 31, 2022 Impairment of assets held for sale $ 3,276 $ — Impairment of goodwill $ 115,483 $ — Loss on sale of business $ 4,247 $ — Depreciation and amortization $ 26,727 $ 49,183 Stock-based compensation $ 31,850 $ 53,715 Capital expenditures $ 1,739 $ 432 |
Organization and Description _2
Organization and Description of Business (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||||||
Jan. 17, 2024 USD ($) | Nov. 30, 2023 USD ($) $ / shares shares | Jan. 26, 2022 USD ($) | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) segment $ / shares shares | Sep. 06, 2023 USD ($) | Jun. 30, 2023 USD ($) | Jun. 05, 2023 USD ($) | Oct. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | ||||||||||
Number of reportable segments | segment | 2 | |||||||||
Long-term debt | $ 365,000 | $ 365,000 | ||||||||
Accumulated deficit | (707,662) | $ (439,296) | (707,662) | |||||||
Net loss | $ (37,061) | (441,322) | (285,585) | |||||||
Net cash provided by (used in) operating activities | (10,603) | 3,317 | (24,742) | |||||||
Proceeds from sale of business, net of cash sold | $ 180,300 | 0 | 0 | 211,139 | ||||||
Cash and cash equivalents | $ 36,833 | 135,343 | $ 8,905 | 135,343 | ||||||
Term Loan and Revolving Facility | May Be Called | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Long-term debt | $ 430,000 | |||||||||
Term Loan | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Long-term debt | 365,000 | 365,000 | ||||||||
Revolving Credit Facility | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Remaining borrowing capacity | $ 1,000 | |||||||||
Revolving Credit Facility | Term Loan | Subsequent event | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Principle amount | $ 63,700 | |||||||||
Debt instrument, repurchase amount | 40,900 | |||||||||
Debt outstanding amount | $ 301,300 | |||||||||
Revolving Credit Facility | 2023 Revolving Note | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Periodic payment | 5,000 | 6,600 | ||||||||
Revolving Credit Facility | 2022 Revolving Facility | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Remaining borrowing capacity | $ 50,000 | $ 50,000 | ||||||||
Promissory Note | Subsidiaries | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Principle amount | $ 5,200 | |||||||||
Annualized savings | $ 14,500 | |||||||||
Class A common stock | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Common stock outstanding (in shares) | shares | 65,855,000 | 91,674,000 | 65,855,000 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Discontinued Operations, Held-for-sale | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Proceeds from sale | 51,000 | |||||||||
Discontinued Operations, Held-for-sale | JDIL | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Proceeds from sale | $ 240,000 | |||||||||
Common stock outstanding (in shares) | shares | 29,100,000 | |||||||||
Proceeds from divestiture of businesses | $ 60,000 | |||||||||
Discontinued Operations, Held-for-sale | JDIL | Class A common stock | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |||||
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2023 | Mar. 31, 2022 | Jan. 27, 2022 | Dec. 31, 2021 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Goodwill | $ 0 | $ (82,407) | $ (82,407) | $ (82,407) | ||||
Deferred tax liability | (29,396) | (8,307) | (29,396) | |||||
Accrued expenses and other current liabilities | (85,780) | (59,314) | (85,780) | |||||
Additional paid-in capital | (831,566) | (843,112) | (831,566) | |||||
Cash and cash equivalents and restricted cash | 37,576 | 39,075 | 143,450 | 39,075 | $ 517,553 | $ 48,639 | ||
Net loss | $ 37,061 | 330,392 | $ 227,221 | |||||
Revision of Prior Period, Error Correction, Adjustment | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Goodwill | $ 6,400 | |||||||
Deferred tax liability | $ 6,400 | |||||||
Accrued expenses and other current liabilities | 800 | 800 | ||||||
Additional paid-in capital | 2,300 | 2,300 | $ (6,800) | |||||
Salaries and benefits expense | $ 3,100 | |||||||
Cash and cash equivalents and restricted cash | $ 6,800 | |||||||
Net loss | 800 | |||||||
Reduction of noncontrolling interest | 10,200 | |||||||
Increase in accumulated deficit | 6,000 | |||||||
Increase in additional paid-in-capital | $ 1,900 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Jan. 26, 2022 | Jan. 25, 2022 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accrued expenses and other current liabilities | $ 59,314 | $ 85,780 | ||
Total current liabilities | 86,417 | 211,075 | ||
Deferred tax liability | 8,307 | 29,396 | ||
Total liabilities | 436,155 | 689,785 | ||
Additional paid-in capital | 843,112 | 831,566 | ||
Accumulated deficit | (707,662) | (439,296) | ||
Accumulated other comprehensive loss | (181) | (260) | ||
Total stockholders' equity attributable to System1, Inc. | 135,278 | 392,021 | ||
Non-controlling interest | 34,037 | 78,650 | ||
Total stockholders' equity | 169,315 | 470,671 | $ 813,266 | $ 466,211 |
Total liabilities and stockholders' equity | $ 605,470 | 1,160,456 | ||
As Previously Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accrued expenses and other current liabilities | 95,447 | |||
Total current liabilities | 210,285 | |||
Deferred tax liability | 43,355 | |||
Total liabilities | 687,668 | |||
Additional paid-in capital | 829,687 | |||
Accumulated deficit | (445,301) | |||
Accumulated other comprehensive loss | (417) | |||
Total stockholders' equity attributable to System1, Inc. | 383,980 | |||
Non-controlling interest | 88,808 | |||
Total stockholders' equity | 472,788 | $ 813,266 | ||
Total liabilities and stockholders' equity | 1,160,456 | |||
Revision Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accrued expenses and other current liabilities | 790 | |||
Total current liabilities | 790 | |||
Deferred tax liability | 1,327 | |||
Total liabilities | 2,117 | |||
Additional paid-in capital | 1,879 | |||
Accumulated deficit | 6,005 | |||
Accumulated other comprehensive loss | 157 | |||
Total stockholders' equity attributable to System1, Inc. | 8,041 | |||
Non-controlling interest | (10,158) | |||
Total stockholders' equity | (2,117) | |||
Total liabilities and stockholders' equity | 0 | |||
As Revised | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accrued expenses and other current liabilities | 96,237 | |||
Total current liabilities | 211,075 | |||
Deferred tax liability | 44,682 | |||
Total liabilities | 689,785 | |||
Additional paid-in capital | 831,566 | |||
Accumulated deficit | (439,296) | |||
Accumulated other comprehensive loss | (260) | |||
Total stockholders' equity attributable to System1, Inc. | 392,021 | |||
Non-controlling interest | 78,650 | |||
Total stockholders' equity | 470,671 | |||
Total liabilities and stockholders' equity | 1,160,456 | |||
Impact of Reclassification of Discontinued Operations | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accrued expenses and other current liabilities | (10,457) | |||
Total current liabilities | 0 | |||
Deferred tax liability | (15,286) | |||
Total liabilities | 0 | |||
Additional paid-in capital | 0 | |||
Accumulated deficit | ||||
Accumulated other comprehensive loss | 0 | |||
Total stockholders' equity attributable to System1, Inc. | 0 | |||
Non-controlling interest | 0 | |||
Total stockholders' equity | 0 | |||
Total liabilities and stockholders' equity | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Salaries and benefits | $ 31,181 | $ 138,045 | $ 106,505 | ||
Impairment of goodwill | 0 | $ 26,600 | $ 346,100 | 372,728 | 0 |
Total operating expenses | 89,353 | 1,069,912 | 487,960 | ||
Operating loss | (36,641) | (457,683) | (85,989) | ||
Total other expense | 1,049 | 35,360 | 45,640 | ||
Loss before income tax | (37,690) | (493,043) | (131,629) | ||
Income tax benefit | (629) | (108,680) | (20,371) | ||
Net loss from continuing operations | (37,061) | (384,363) | (111,258) | ||
Net loss from discontinued operations, net of tax | 0 | (56,959) | (174,327) | ||
Net loss | (37,061) | (441,322) | (285,585) | ||
Less: Net loss from continuing operations attributable to non-controlling interest | 0 | (99,841) | (25,531) | ||
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | (11,089) | (32,833) | ||
Net loss attributable to System1, Inc. | (37,061) | (330,392) | (227,221) | ||
Net loss from continuing operations | (37,061) | (284,522) | (85,727) | ||
Net loss from discontinued operations | $ 0 | $ (45,870) | $ (141,494) | ||
Basic net loss per share, continuing operations (in dollars per share) | $ (3.19) | $ (0.94) | |||
Diluted net loss per share, continuing operations (in dollars per share) | (3.19) | (0.94) | |||
Basic net loss per share, discontinuing operations (in dollars per share) | (0.51) | (1.54) | |||
Diluted net loss per share, discontinuing operations (in dollars per share) | (0.51) | (1.54) | |||
Basic net loss per share (in dollars per share) | (3.70) | (2.48) | |||
Diluted net loss per share (in dollars per share) | $ (3.70) | $ (2.48) | |||
Weighted average number of shares outstanding - basic (in shares) | 89,310 | 91,454 | |||
Weighted average number of shares outstanding - diluted (in shares) | 89,310 | 91,454 | |||
As Previously Reported | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Salaries and benefits | $ 194,976 | ||||
Impairment of goodwill | 366,309 | ||||
Total operating expenses | 1,282,194 | ||||
Operating loss | (508,254) | ||||
Total other expense | 35,801 | ||||
Loss before income tax | (544,055) | ||||
Income tax benefit | (101,976) | ||||
Net loss from continuing operations | (442,079) | ||||
Net loss from discontinued operations, net of tax | 0 | ||||
Net loss | (442,079) | ||||
Less: Net loss from continuing operations attributable to non-controlling interest | (105,682) | ||||
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | ||||
Net loss attributable to System1, Inc. | (336,397) | ||||
Net loss from continuing operations | (336,397) | ||||
Net loss from discontinued operations | $ 0 | ||||
Basic net loss per share, continuing operations (in dollars per share) | $ (3.77) | ||||
Diluted net loss per share, continuing operations (in dollars per share) | (3.77) | ||||
Basic net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Diluted net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Basic net loss per share (in dollars per share) | (3.77) | ||||
Diluted net loss per share (in dollars per share) | $ (3.77) | ||||
Weighted average number of shares outstanding - basic (in shares) | 89,251 | ||||
Weighted average number of shares outstanding - diluted (in shares) | 89,251 | ||||
Revision Adjustments | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Salaries and benefits | $ 3,074 | ||||
Impairment of goodwill | 6,419 | ||||
Total operating expenses | 9,493 | ||||
Operating loss | (9,493) | ||||
Total other expense | 0 | ||||
Loss before income tax | (9,493) | ||||
Income tax benefit | (10,250) | ||||
Net loss from continuing operations | 757 | ||||
Net loss from discontinued operations, net of tax | 0 | ||||
Net loss | 757 | ||||
Less: Net loss from continuing operations attributable to non-controlling interest | (5,248) | ||||
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | ||||
Net loss attributable to System1, Inc. | 6,005 | ||||
Net loss from continuing operations | 6,005 | ||||
Net loss from discontinued operations | |||||
Basic net loss per share, continuing operations (in dollars per share) | $ 0.07 | ||||
Diluted net loss per share, continuing operations (in dollars per share) | 0.07 | ||||
Basic net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Diluted net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Basic net loss per share (in dollars per share) | 0.07 | ||||
Diluted net loss per share (in dollars per share) | $ 0.07 | ||||
Weighted average number of shares outstanding - basic (in shares) | 59 | ||||
Weighted average number of shares outstanding - diluted (in shares) | 59 | ||||
As Revised | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Salaries and benefits | $ 198,050 | ||||
Impairment of goodwill | 372,728 | ||||
Total operating expenses | 1,291,687 | ||||
Operating loss | (517,747) | ||||
Total other expense | 35,801 | ||||
Loss before income tax | (553,548) | ||||
Income tax benefit | (112,226) | ||||
Net loss from continuing operations | (441,322) | ||||
Net loss from discontinued operations, net of tax | 0 | ||||
Net loss | (441,322) | ||||
Less: Net loss from continuing operations attributable to non-controlling interest | (110,930) | ||||
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | ||||
Net loss attributable to System1, Inc. | (330,392) | ||||
Net loss from continuing operations | (330,392) | ||||
Net loss from discontinued operations | $ 0 | ||||
Basic net loss per share, continuing operations (in dollars per share) | $ (3.70) | ||||
Diluted net loss per share, continuing operations (in dollars per share) | (3.70) | ||||
Basic net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Diluted net loss per share, discontinuing operations (in dollars per share) | 0 | ||||
Basic net loss per share (in dollars per share) | (3.70) | ||||
Diluted net loss per share (in dollars per share) | $ (3.70) | ||||
Weighted average number of shares outstanding - basic (in shares) | 89,310 | ||||
Weighted average number of shares outstanding - diluted (in shares) | 89,310 | ||||
Impact of Reclassification of Discontinued Operations | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Salaries and benefits | $ (60,005) | ||||
Impairment of goodwill | 0 | ||||
Total operating expenses | (221,775) | ||||
Operating loss | 60,064 | ||||
Total other expense | (441) | ||||
Loss before income tax | 60,505 | ||||
Income tax benefit | 3,546 | ||||
Net loss from continuing operations | 56,959 | ||||
Net loss from discontinued operations, net of tax | (56,959) | ||||
Net loss | 0 | ||||
Less: Net loss from continuing operations attributable to non-controlling interest | 11,089 | ||||
Less: Net loss from discontinued operations attributable to non-controlling interest | (11,089) | ||||
Net loss attributable to System1, Inc. | 0 | ||||
Net loss from continuing operations | 45,870 | ||||
Net loss from discontinued operations | $ (45,870) | ||||
Basic net loss per share, continuing operations (in dollars per share) | $ (0.51) | ||||
Diluted net loss per share, continuing operations (in dollars per share) | (0.51) | ||||
Basic net loss per share, discontinuing operations (in dollars per share) | (0.51) | ||||
Diluted net loss per share, discontinuing operations (in dollars per share) | (0.51) | ||||
Basic net loss per share (in dollars per share) | 0 | ||||
Diluted net loss per share (in dollars per share) | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net loss | $ (37,061) | $ (441,322) | $ (285,585) |
Foreign currency translation income (loss) | 87 | (394) | 35 |
Comprehensive loss | (36,974) | (441,716) | (285,550) |
Comprehensive loss attributable to non-controlling interest | 0 | (110,930) | (58,364) |
Comprehensive loss attributable to System1, Inc. | $ (36,974) | (330,786) | $ (227,186) |
As Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net loss | (442,079) | ||
Foreign currency translation income (loss) | (394) | ||
Comprehensive loss | (442,473) | ||
Comprehensive loss attributable to non-controlling interest | (105,682) | ||
Comprehensive loss attributable to System1, Inc. | (336,791) | ||
Revision Adjustments | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net loss | 757 | ||
Foreign currency translation income (loss) | 0 | ||
Comprehensive loss | 757 | ||
Comprehensive loss attributable to non-controlling interest | (5,248) | ||
Comprehensive loss attributable to System1, Inc. | 6,005 | ||
As Revised | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net loss | (441,322) | ||
Foreign currency translation income (loss) | (394) | ||
Comprehensive loss | (441,716) | ||
Comprehensive loss attributable to non-controlling interest | (110,930) | ||
Comprehensive loss attributable to System1, Inc. | (330,786) | ||
Impact of Reclassification of Discontinued Operations | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net loss | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Changes in Stockholders' Equity (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 | Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 466,211 | $ 813,266 | $ 470,671 | |
Net loss | $ (37,061) | (441,322) | (285,585) | |
Exercise of warrants | 27,989 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,089) | (2,118) | ||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 661 | |||
Issuance of common stock in connection with the acquisition of business | 25,500 | 1,658 | ||
Conversion of Class D shares to Class A shares | 1 | |||
Conversion of Class C shares to Class A shares | 0 | 0 | ||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | (41) | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (7,753) | |||
Other comprehensive income | (394) | |||
Stock-based compensation | 23,705 | 57,471 | 25,612 | |
Distribution to members | (1,511) | (97) | ||
Ending balance | 813,266 | 813,266 | 470,671 | 169,315 |
Additional Paid-In-Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 574,003 | 722,362 | 831,566 | |
Exercise of warrants | 34,348 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,687) | (1,108) | ||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 2,397 | |||
Issuance of common stock in connection with the acquisition of business | 29,234 | 1,818 | ||
Conversion of Class D shares to Class A shares | 5,414 | |||
Conversion of Class C shares to Class A shares | 2,734 | 1,048 | ||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | (41) | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (7,910) | |||
Stock-based compensation | 45,451 | 23,072 | ||
Ending balance | 722,362 | 722,362 | 831,566 | 843,112 |
Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (107,797) | (107,797) | (439,296) | |
Net loss | (330,392) | (227,221) | ||
Ending balance | (107,797) | (107,797) | (439,296) | (707,662) |
Accumulated Other Comprehensive Income | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 0 | (260) | |
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | 157 | |||
Other comprehensive income | (417) | |||
Ending balance | 0 | 0 | (260) | (181) |
Non-Controlling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 198,691 | 78,650 | |
Net loss | (110,930) | (58,364) | ||
Exercise of warrants | (6,359) | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 598 | (1,011) | ||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | (1,736) | |||
Issuance of common stock in connection with the acquisition of business | (3,734) | (160) | ||
Conversion of Class D shares to Class A shares | (5,414) | |||
Conversion of Class C shares to Class A shares | (2,734) | (1,048) | ||
Other comprehensive income | 23 | |||
Stock-based compensation | 12,020 | 2,540 | ||
Distribution to members | (1,511) | (97) | ||
Ending balance | $ 198,691 | $ 198,691 | 78,650 | $ 34,037 |
Class A common stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ (1,107) | |||
Class A common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 51,750 | 80,767 | 91,674 | |
Beginning balance | $ 5 | $ 8 | $ 9 | |
Exercise of warrants (in shares) | 3,969 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 968 | 2,615 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | $ 1 | |||
Issuance of common stock in connection with Merger, net of offering costs, underwriting discounts and commissions (in shares) | 930 | |||
Issuance of common stock in connection with the acquisition of business (in shares) | 2,000 | 407 | ||
Conversion of Class D shares to Class A shares (in shares) | 2,900 | |||
Conversion of Class D shares to Class A shares | $ 1 | |||
Conversion of Class C shares to Class A shares (in shares) | 330 | 234 | ||
Class A common stock repurchases (in shares) | (190) | |||
Ending balance (in shares) | 80,767 | 80,767 | 91,674 | 65,855 |
Ending balance | $ 8 | $ 8 | $ 9 | $ 7 |
Class A common stock | Additional Paid-In-Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | 264 | |||
Class A common stock | Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | (1,107) | |||
Class A common stock | Non-Controlling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ (264) | |||
Class C common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 0 | 22,077 | 21,747 | |
Beginning balance | $ 0 | $ 2 | $ 2 | |
Conversion of Class C shares to Class A shares (in shares) | (330) | (234) | ||
Ending balance (in shares) | 22,077 | 22,077 | 21,747 | 21,513 |
Ending balance | $ 2 | $ 2 | $ 2 | $ 2 |
Class D common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 0 | 1,450 | 0 | |
Beginning balance | $ 0 | $ 0 | $ 0 | |
Issuance of market-based restricted stock units (in shares) | 1,450 | |||
Conversion of Class D shares to Class A shares (in shares) | (2,900) | |||
Ending balance (in shares) | 1,450 | 1,450 | 0 | 0 |
Ending balance | $ 0 | $ 0 | $ 0 | $ 0 |
As Previously Reported | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 813,266 | 472,788 | ||
Net loss | (442,079) | |||
Exercise of warrants | 27,989 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,089) | |||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 661 | |||
Issuance of common stock in connection with the acquisition of business | 25,500 | |||
Conversion of Class D shares to Class A shares | 1 | |||
Conversion of Class C shares to Class A shares | 0 | |||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | (41) | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (2,596) | |||
Other comprehensive income | (393) | |||
Stock-based compensation | 55,187 | |||
Distribution to members | (1,511) | |||
Ending balance | 813,266 | 813,266 | 472,788 | |
As Previously Reported | Additional Paid-In-Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 722,362 | 829,687 | ||
Exercise of warrants | 27,989 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (2,089) | |||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 661 | |||
Issuance of common stock in connection with the acquisition of business | 25,500 | |||
Conversion of Class C shares to Class A shares | 2,714 | |||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | (41) | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (2,596) | |||
Stock-based compensation | 55,187 | |||
Ending balance | 722,362 | 722,362 | 829,687 | |
As Previously Reported | Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (107,797) | (445,301) | ||
Net loss | (336,397) | |||
Ending balance | (107,797) | (107,797) | (445,301) | |
As Previously Reported | Accumulated Other Comprehensive Income | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | (417) | ||
Other comprehensive income | (417) | |||
Ending balance | 0 | 0 | (417) | |
As Previously Reported | Non-Controlling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 198,691 | $ 88,808 | ||
Net loss | (105,682) | |||
Conversion of Class C shares to Class A shares | (2,714) | |||
Other comprehensive income | 24 | |||
Distribution to members | (1,511) | |||
Ending balance | $ 198,691 | $ 198,691 | 88,808 | |
As Previously Reported | Class A common stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ (1,107) | |||
As Previously Reported | Class A common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 80,767 | 91,674 | ||
Beginning balance | $ 8 | $ 9 | ||
Exercise of warrants (in shares) | 3,969 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 968 | |||
Issuance of common stock in connection with Merger, net of offering costs, underwriting discounts and commissions (in shares) | 930 | |||
Issuance of common stock in connection with the acquisition of business (in shares) | 2,000 | |||
Conversion of Class D shares to Class A shares (in shares) | 2,900 | |||
Conversion of Class D shares to Class A shares | $ 1 | |||
Conversion of Class C shares to Class A shares (in shares) | 330 | |||
Class A common stock repurchases (in shares) | (190) | |||
Ending balance (in shares) | 80,767 | 80,767 | 91,674 | |
Ending balance | $ 8 | $ 8 | $ 9 | |
As Previously Reported | Class A common stock | Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ (1,107) | |||
As Previously Reported | Class C common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 22,077 | 21,747 | ||
Beginning balance | $ 2 | $ 2 | ||
Conversion of Class C shares to Class A shares (in shares) | (330) | |||
Ending balance (in shares) | 22,077 | 22,077 | 21,747 | |
Ending balance | $ 2 | $ 2 | $ 2 | |
As Previously Reported | Class D common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 1,450 | 0 | ||
Beginning balance | $ 0 | $ 0 | ||
Issuance of market-based restricted stock units (in shares) | 1,450 | |||
Conversion of Class D shares to Class A shares (in shares) | (2,900) | |||
Ending balance (in shares) | 1,450 | 1,450 | 0 | |
Ending balance | $ 0 | $ 0 | $ 0 | |
Revision Adjustments | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (2,117) | |||
Net loss | 757 | |||
Exercise of warrants | 0 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 0 | |||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 0 | |||
Issuance of common stock in connection with the acquisition of business | 0 | |||
Conversion of Class D shares to Class A shares | 0 | |||
Conversion of Class C shares to Class A shares | 0 | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (5,157) | |||
Other comprehensive income | (1) | |||
Stock-based compensation | 2,284 | |||
Ending balance | (2,117) | |||
Revision Adjustments | Additional Paid-In-Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 1,879 | |||
Exercise of warrants | 6,359 | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (598) | |||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | 1,736 | |||
Issuance of common stock in connection with the acquisition of business | 3,734 | |||
Conversion of Class D shares to Class A shares | 5,414 | |||
Conversion of Class C shares to Class A shares | 20 | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | (5,314) | |||
Stock-based compensation | (9,736) | |||
Ending balance | 1,879 | |||
Revision Adjustments | Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 6,005 | |||
Net loss | 6,005 | |||
Ending balance | 6,005 | |||
Revision Adjustments | Accumulated Other Comprehensive Income | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 157 | |||
Net deferred tax liability resulting from changes in outside basis difference on investment in S1 Holdco, LLC | 157 | |||
Ending balance | 157 | |||
Revision Adjustments | Non-Controlling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ (10,158) | |||
Net loss | (5,248) | |||
Exercise of warrants | (6,359) | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 598 | |||
Issuance of common stock in connection with the Merger, net of offering costs, underwriting discounts and commissions | (1,736) | |||
Issuance of common stock in connection with the acquisition of business | (3,734) | |||
Conversion of Class D shares to Class A shares | (5,414) | |||
Conversion of Class C shares to Class A shares | (20) | |||
Stock-based compensation | 12,020 | |||
Ending balance | (10,158) | |||
Revision Adjustments | Class A common stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ 0 | |||
Revision Adjustments | Class A common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 0 | |||
Beginning balance | $ 0 | |||
Ending balance (in shares) | 0 | |||
Ending balance | $ 0 | |||
Revision Adjustments | Class A common stock | Additional Paid-In-Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | 264 | |||
Revision Adjustments | Class A common stock | Non-Controlling Interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Class A common stock repurchases | $ (264) | |||
Revision Adjustments | Class C common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 0 | |||
Beginning balance | $ 0 | |||
Ending balance (in shares) | 0 | |||
Ending balance | $ 0 | |||
Revision Adjustments | Class D common stock | Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 0 | |||
Beginning balance | $ 0 | |||
Ending balance (in shares) | 0 | |||
Ending balance | $ 0 | |||
As Revised | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 470,671 | |||
Net loss | (441,322) | |||
Ending balance | $ 470,671 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Cash Flows from Operating Activities | |||
Net loss | $ (37,061) | $ (441,322) | $ (285,585) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Stock-based compensation | 23,705 | 108,323 | 53,085 |
Impairment of goodwill | 0 | 372,728 | 115,483 |
Deferred tax benefits | (816) | (118,048) | (22,330) |
Accrued expenses and other liabilities | 57,488 | (22,034) | (19,438) |
Other long-term liabilities | 77 | (18,145) | (264) |
Net cash provided by (used in) operating activities | $ (10,603) | 3,317 | $ (24,742) |
As Previously Reported | |||
Cash Flows from Operating Activities | |||
Net loss | (442,079) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Stock-based compensation | 106,943 | ||
Impairment of goodwill | 366,309 | ||
Deferred tax benefits | (107,798) | ||
Accrued expenses and other liabilities | (13,478) | ||
Other long-term liabilities | (28,395) | ||
Net cash provided by (used in) operating activities | 3,317 | ||
Revision Adjustments | |||
Cash Flows from Operating Activities | |||
Net loss | 757 | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Stock-based compensation | 1,380 | ||
Impairment of goodwill | 6,419 | ||
Deferred tax benefits | (10,250) | ||
Accrued expenses and other liabilities | (8,556) | ||
Other long-term liabilities | 10,250 | ||
Net cash provided by (used in) operating activities | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Concentration as a Percentage of Total Revenues (Details) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Revenue Benchmark | Advertising Partner Risk | Google | |||
Product Information [Line Items] | |||
Concentration risk, percentage | 88% | 86% | 85% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Capital Resources and Liquidity (Details) | 12 Months Ended | |
Dec. 31, 2023 contract | Dec. 31, 2022 customer | |
Product Information [Line Items] | ||
Number of customers | customer | 2 | |
Product Information [Line Items] | ||
Number of contract | 2 | |
Google | Accounts Receivable | Advertising Partner Risk | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 69% | 68% |
Microsoft | ||
Product Information [Line Items] | ||
Number of contract | 1 | |
Yahoo | Accounts Receivable | Advertising Partner Risk | ||
Product Information [Line Items] | ||
Concentration risk, percentage | 6% | 11% |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Account Receivable (Details) | Dec. 31, 2023 |
Accounting Policies [Abstract] | |
Accounts receivable, payment term | 30 days |
Summary of Significant Accou_13
Summary of Significant Accounting Policies -Estimated Useful Lives of Property and Equipment (Details) | Dec. 31, 2023 |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Office equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture, fixtures and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture, fixtures and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Estimated Useful Life of Intangible assets (Details) | Dec. 31, 2023 |
Developed technology | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 4 years |
Customer relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Customer relationships | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Trademarks and trade names | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Other intangibles | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 4 years |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Share-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2023 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Service period | 3 years |
Restricted Stock Units (RSUs) | Business Combination Agreement | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Business acquisition, share price (in dollars per share) | $ 10 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Non-Controlling Interest (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Stock conversion ratio | 1 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Schedule Ownership Interests (Details) - S1 Holdco, LLC shares in Thousands | Dec. 31, 2023 shares |
Entity A | Class A units of S1 Holdco | |
Noncontrolling Interest [Line Items] | |
Units (in shares) | 65,855 |
Ownership percentage | 75% |
Entity B | Class B units of S1 Holdco | |
Noncontrolling Interest [Line Items] | |
Units (in shares) | 21,513 |
Ownership percentage | 25% |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) $ in Millions | Jan. 01, 2023 USD ($) |
Accounting Standards Update 2016-13 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Accounts receivable, credit allowance | $ 0.3 |
Merger - Narrative (Details)
Merger - Narrative (Details) | 1 Months Ended | 2 Months Ended | 11 Months Ended | 12 Months Ended | |||
Jan. 27, 2022 shares | Jan. 26, 2022 USD ($) $ / shares shares | Jan. 10, 2022 USD ($) shares | Jan. 26, 2022 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) $ / shares shares | |
Business Acquisition [Line Items] | |||||||
Stock-based compensation expense | $ 23,705,000 | $ 7,700,000 | $ 55,512,000 | $ 21,235,000 | |||
Selling, general, and administrative | 15,665,000 | 50,831,000 | $ 54,307,000 | ||||
Allocation and payment from the actual savings | 85% | ||||||
Determined fair value of obligations under agreement | $ 0 | ||||||
Restricted Stock Units (RSUs) | |||||||
Business Acquisition [Line Items] | |||||||
Forfeited (in shares) | shares | 2,414,000 | ||||||
Stock-based compensation expense | 23,700,000 | 12,700,000 | $ 23,600,000 | $ 6,600,000 | |||
Business Combination Agreement | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 440,155,000 | ||||||
Equity | 411,453,000 | ||||||
Total consideration attributable to non-controlling interest | $ 198,691,000 | $ 198,691,000 | |||||
Stock-based compensation expense | 7,700,000 | ||||||
Selling, general, and administrative | $ 700,000 | ||||||
Business Combination Agreement | Restricted Stock Units (RSUs) | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, share price (in dollars per share) | $ / shares | $ 10 | ||||||
Business Combination Agreement | Cannae | Financial Standby Letter of Credit | |||||||
Business Acquisition [Line Items] | |||||||
Subscription for number of shares to be redeemed (in shares) | shares | 25,000,000 | 25,000,000 | |||||
Subscription redemption amount | $ 250,000,000 | $ 250,000,000 | |||||
Aggregate commitment redemption value | $ 246,500,000 | $ 246,500,000 | |||||
Backstop shares received (in shares) | shares | 24,600,000 | ||||||
Business Combination Agreement | Trebia Acquisition Corporation | |||||||
Business Acquisition [Line Items] | |||||||
Forward purchase liability amount immediate prior to merger | $ 25,300,000 | ||||||
Business Combination Agreement | Class A common stock | |||||||
Business Acquisition [Line Items] | |||||||
Equity | $ 610,100,000 | ||||||
Business acquisition, share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||
Lock-up period, discount rate (in percent) | 10% | 10% | |||||
Common stock exchange ratio | 1 | 1 | 1 | ||||
Business Combination Agreement | Class A common stock | Cannae | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued (in shares) | shares | 2,500,000 | ||||||
Business Combination Agreement | Class C common stock | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||
Lock-up period, discount rate (in percent) | 10% | 10% | |||||
Business Combination Agreement | Class B Common Stock | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||
Lock-up period, discount rate (in percent) | 10% | 10% | |||||
Issuance of common stock in connection with the acquisition of business (in shares) | shares | 22,100,000 | ||||||
Business Combination Agreement | Class B Common Stock | Trebia Acquisition Corporation | |||||||
Business Acquisition [Line Items] | |||||||
Forfeited (in shares) | shares | 900,000 | ||||||
Business Combination Agreement | Class B Common Stock | Trebia Acquisition Corporation | Restricted Stock | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued (in shares) | shares | 1,500,000 | ||||||
Business Combination Agreement | Class B Common Stock | Trebia Acquisition Corporation | Amended And Restated Backstop Facility Agreement | |||||||
Business Acquisition [Line Items] | |||||||
Forfeited (in shares) | shares | 2,500,000 | 2,600,000 | |||||
Business Combination Agreement | Class D common stock | Restricted Stock | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued (in shares) | shares | 1,500,000 | ||||||
Business Combination Agreement | Class D common stock | Restricted Stock Units (RSUs) | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued (in shares) | shares | 1,500,000 |
Merger - Fair Value of the Asse
Merger - Fair Value of the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 26, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Tangible assets acquired and liabilities assumed: | |||
Goodwill | $ 0 | $ 82,407 | $ 82,407 |
Business Combination Agreement | |||
Tangible assets acquired and liabilities assumed: | |||
Cash and marketable securities | 68,748 | ||
Accounts receivable | 79,086 | ||
Prepaid expenses | 7,807 | ||
Income tax receivable | 4,566 | ||
Property, plant & equipment, net | 1,551 | ||
Other assets | 6,950 | ||
Accounts payable | (9,798) | ||
Deferred revenue | (60,768) | ||
Accrued expenses and other current liabilities | (110,004) | ||
Income tax payable | 2,091 | ||
Notes payable | (172,038) | ||
Deferred tax liabilities | (145,032) | ||
Other liabilities | (8,474) | ||
Total tangible assets acquired and liabilities assumed | (339,497) | ||
Goodwill | 827,696 | ||
Net assets acquired | 1,050,299 | ||
Consideration: | |||
Cash | 440,155 | ||
Equity | 411,453 | ||
Total consideration attributable to System1 | 851,608 | ||
Total consideration attributable to non-controlling interest | 198,691 | ||
Business Combination Agreement | Trademarks | |||
Tangible assets acquired and liabilities assumed: | |||
Intangible assets | 246,400 | ||
Consideration: | |||
Weighted average useful life (in years) | 10 years | ||
Business Combination Agreement | Customer relationships | |||
Tangible assets acquired and liabilities assumed: | |||
Intangible assets | 119,700 | ||
Consideration: | |||
Weighted average useful life (in years) | 4 years | ||
Business Combination Agreement | Technology | |||
Tangible assets acquired and liabilities assumed: | |||
Intangible assets | $ 196,000 | ||
Consideration: | |||
Weighted average useful life (in years) | 4 years |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 11 Months Ended | 22 Months Ended | |||
May 04, 2022 | Mar. 04, 2022 | Feb. 09, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Answers Holdings, Inc. | |||||
Business Acquisition [Line Items] | |||||
Consideration transferred | $ 4.6 | ||||
Weighted-average useful lives in years | 15 years | ||||
Acquisition related costs | $ 0.1 | ||||
NextGen Shopping, Inc | |||||
Business Acquisition [Line Items] | |||||
Acquisition related costs | 0.8 | ||||
Cash consideration | $ 75.1 | ||||
Business acquisition, deferred | 16.4 | ||||
Holdback liability | $ 5.6 | ||||
Discount rate | 7.50% | ||||
Held-back consideration payable term | 18 months | ||||
Transaction costs | $ 3.1 | ||||
Committed to pay post combination compensation amount | 8.5 | ||||
NextGen Shopping, Inc | Class A common stock | |||||
Business Acquisition [Line Items] | |||||
Fair value | $ 25.5 | ||||
Number of shares issued (in shares) | 2 | ||||
RoadWarrior, LLC | |||||
Business Acquisition [Line Items] | |||||
Weighted-average useful lives in years | 15 years | ||||
Acquisition related costs | $ 0.3 | ||||
Cash consideration | $ 19.6 |
Acquisitions- Fair Value of the
Acquisitions- Fair Value of the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | May 04, 2022 | Mar. 04, 2022 | Feb. 09, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jan. 26, 2022 |
Assets acquired and liabilities assumed: | ||||||
Goodwill | $ 82,407 | $ 82,407 | $ 0 | |||
Answers Holdings, Inc. | ||||||
Assets acquired and liabilities assumed: | ||||||
Working capital | $ 32 | |||||
Goodwill | 3,500 | |||||
Net assets acquired | $ 4,632 | |||||
Weighted average useful life (in years) | 15 years | |||||
Answers Holdings, Inc. | Trademarks | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 1,100 | |||||
Weighted average useful life (in years) | 10 years | |||||
NextGen Shopping, Inc | ||||||
Assets acquired and liabilities assumed: | ||||||
Goodwill | $ 42,175 | |||||
Cash and cash equivalents | 21,232 | |||||
Accounts receivable | 5,860 | |||||
Other current assets | 446 | |||||
Accounts payable | (116) | |||||
Accrued expenses and other current liabilities | (118) | |||||
Income tax payable | (197) | |||||
Deferred tax liabilities | (10,895) | |||||
Net assets acquired | 100,587 | |||||
NextGen Shopping, Inc | Trademarks | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 38,100 | |||||
Weighted average useful life (in years) | 10 years | |||||
NextGen Shopping, Inc | Software | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 4,100 | |||||
Weighted average useful life (in years) | 4 years | |||||
RoadWarrior, LLC | ||||||
Assets acquired and liabilities assumed: | ||||||
Working capital | $ 155 | |||||
Goodwill | 14,981 | |||||
Net assets acquired | $ 19,636 | |||||
Weighted average useful life (in years) | 15 years | |||||
RoadWarrior, LLC | Trademarks | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 2,200 | |||||
Weighted average useful life (in years) | 10 years | |||||
RoadWarrior, LLC | Software | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 1,000 | |||||
Weighted average useful life (in years) | 4 years | |||||
RoadWarrior, LLC | Customer relationships | ||||||
Assets acquired and liabilities assumed: | ||||||
Intangible assets | $ 1,300 | |||||
Weighted average useful life (in years) | 3 years |
Acquisitions- Pro Forma Net Rev
Acquisitions- Pro Forma Net Revenue and Net Income (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Business Combination and Asset Acquisition [Abstract] | |
Pro forma revenue | $ 682,161 |
Pro forma net loss | $ (366,278) |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule Of Property And Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 4,251 | $ 3,587 |
Less accumulated depreciation | (1,167) | (425) |
Property and equipment, net | 3,084 | 3,162 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 812 | 559 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 928 | 560 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 2,511 | $ 2,468 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions | 11 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 0.5 | $ 0.8 |
Goodwill, Internal-Use Softwa_3
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Schedule of goodwill (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Goodwill [Roll Forward] | |||||
Beginning balance | $ 0 | $ 82,407,000 | |||
Additions | $ 0 | 455,135,000 | |||
Impairment | 0 | $ (26,600,000) | $ (346,100,000) | (372,728,000) | 0 |
Ending balance | 0 | 82,407,000 | 82,407,000 | 82,407,000 | |
Owned and Operated Advertising | |||||
Goodwill [Roll Forward] | |||||
Beginning balance | 0 | 0 | |||
Additions | 360,194,000 | ||||
Impairment | (360,194,000) | ||||
Ending balance | 0 | 0 | 0 | 0 | |
Partner Network | |||||
Goodwill [Roll Forward] | |||||
Beginning balance | 0 | 82,407,000 | |||
Additions | 94,941,000 | ||||
Impairment | (12,534,000) | ||||
Ending balance | $ 0 | $ 82,407,000 | $ 82,407,000 | $ 82,407,000 |
Goodwill, Internal-Use Softwa_4
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Additions | $ 0 | $ 455,135,000 | |||
Impairment of goodwill | $ 0 | $ 26,600,000 | $ 346,100,000 | 372,728,000 | $ 0 |
Internal-use software development costs | $ 5,000,000 | 5,000,000 | 3,500,000 | ||
Impairment of intangible assets | 0 | 0 | |||
Computer software impairments | $ 0 | $ 0 | |||
Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted average amortization period | 7 years |
Goodwill, Internal-Use Softwa_5
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 13,788 | $ 7,206 |
Accumulated Amortization | (2,363) | (258) |
Net Carrying Amount | 11,425 | 6,948 |
Gross Carrying Amount | 440,181 | 440,181 |
Accumulated Amortization | (143,180) | (68,520) |
Net Carrying Amount | 297,001 | 371,661 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 196,128 | 196,128 |
Accumulated Amortization | (94,354) | (45,322) |
Net Carrying Amount | 101,774 | 150,806 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 236,053 | 236,053 |
Accumulated Amortization | (45,050) | (21,450) |
Net Carrying Amount | 191,003 | 214,603 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,100 | 5,100 |
Accumulated Amortization | (2,341) | (1,066) |
Net Carrying Amount | 2,759 | 4,034 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,900 | 2,900 |
Accumulated Amortization | (1,435) | (682) |
Net Carrying Amount | $ 1,465 | $ 2,218 |
Goodwill, Internal-Use Softwa_6
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Amortization Expense for Internal-Use Software Development Costs and Intangible Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense for internal-use software development | $ 355 | $ 467 | $ 2,981 |
Amortization expense for intangible assets | $ 629 | $ 68,520 | $ 74,660 |
Goodwill, Internal-Use Softwa_7
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Schedule of Future Amortization Expense (Details) - Intangible Assets and Internal Use Software Development Costs $ in Thousands | Dec. 31, 2023 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2024 | $ 78,968 |
2025 | 78,359 |
2026 | 30,007 |
2027 | 24,488 |
2028 | 23,600 |
Thereafter | 73,004 |
Total amortization expense | $ 308,426 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Leases [Abstract] | |||
Operating lease expense | $ 142 | $ 1,923 | $ 2,141 |
Short-term lease expense | 12 | 130 | 122 |
Variable lease expense | 0 | 310 | 311 |
Total lease expense | $ 154 | $ 2,363 | $ 2,574 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) | Dec. 31, 2023 |
Leases [Abstract] | |
Weighted average remaining lease terms (in years) | 6 years 4 months 24 days |
Weighted average discount rate | 5.20% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Facility Lease Liabilities (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Leases [Abstract] | |
2024 | $ 2,589 |
2025 | 2,244 |
2026 | 278 |
2027 | 282 |
2028 | 282 |
Thereafter | 980 |
Total lease payments | 6,655 |
Less: Imputed interest | (740) |
Present value of operating lease liabilities | $ 5,915 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued revenue share | $ 16,365 | $ 16,921 |
Accrued marketing expenses | 19,737 | 35,311 |
Accrued payroll and related benefits | 13,751 | 13,653 |
Accrued professional fees | 1,455 | 2,706 |
Deferred revenue | 1,757 | 1,553 |
Accrued tax liability | 1,233 | 1,092 |
Holdback liabilities | 0 | 6,885 |
Other liabilities | 5,016 | 7,659 |
Accrued expenses and other current liabilities | $ 59,314 | $ 85,780 |
Income Taxes - Loss Before Inco
Income Taxes - Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (38,068) | $ (489,913) | $ (126,830) |
Foreign | 378 | (3,130) | (4,799) |
Loss before income tax | $ (37,690) | $ (493,043) | $ (131,629) |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Current: | |||
Federal | $ 0 | $ 79 | $ (64) |
State | 17 | 427 | (662) |
Foreign | 170 | 1,866 | 1,431 |
Total current provision | 187 | 2,372 | 705 |
Deferred: | |||
Federal | 0 | (99,328) | (17,103) |
State | 0 | (9,689) | (1,829) |
Foreign | (816) | (2,035) | (2,144) |
Total deferred benefit | (816) | (111,052) | (21,076) |
Income tax benefit | $ (629) | $ (108,680) | $ (20,371) |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Income Tax Expense (Benefit), Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Income tax (benefit) provision at statutory tax rate | $ (7,915) | $ (103,539) | $ (27,642) |
State tax, net of federal | 15 | (5,470) | (1,718) |
Non-Controlling interests | 0 | 19,626 | 5,865 |
Effect of flow-through entity | 7,994 | 0 | 0 |
Changes in unrecognized tax benefits | 0 | (1,749) | 2,320 |
Foreign income taxes at different statutory rate | 18 | (49) | (93) |
Investment in partnership basis adjustments | 0 | (22,677) | (17,627) |
Stock-based compensation | 0 | 2,858 | 3,408 |
Change in valuation allowance | 0 | 917 | 19,521 |
Other | (741) | 1,403 | (4,405) |
Income tax benefit | $ (629) | $ (108,680) | $ (20,371) |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Income tax (benefit) provision at statutory tax rate | 21% | 21% | 21% |
State tax, net of federal | 0% | 1.10% | 1.30% |
Non-Controlling interests | 0% | (4.00%) | (4.50%) |
Effect of flow-through entity | (21.20%) | 0% | 0% |
Changes in unrecognized tax benefits | 0% | 0.40% | (1.80%) |
Foreign income taxes at different statutory rate | 0% | 0% | 0.10% |
Investment in partnership basis adjustments | 0% | 4.60% | 13.40% |
Stock-based compensation | 0% | (0.60%) | (2.60%) |
Change in valuation allowance | 0% | (0.20%) | (14.80%) |
Other | 1.90% | (0.30%) | 3.40% |
Effective income tax rate | 1.70% | 22% | 15.50% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at the beginning of the period | $ 0 | $ 0 | $ 593 |
Increases (decreases) based on tax positions related to prior periods | (46) | ||
Increases (decreases) based on tax positions related to prior periods | 0 | 221 | |
Increases based on tax positions related to current periods | 0 | 372 | 1,303 |
Balance at the end of the period | $ 0 | $ 593 | $ 1,850 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Jan. 27, 2022 | |
Income Tax Examination [Line Items] | |||
Unrecognized tax benefits, would affect effective tax rate | $ 200 | ||
U.S. federal net operating loss carryovers | $ 22,700 | ||
S1 Holdco, LLC | |||
Income Tax Examination [Line Items] | |||
Percentage of aggregate tax benefit expected to realized | 85% | 85% | |
Percent of expected tax benefit | 15% | ||
Number of shares issued (in shares) | 0.2 | 0.3 | |
Additional liability amount | $ 1,000 | ||
TRA payment including interest amount | $ 0 | ||
TRA payments due | $ 800 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Jan. 26, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||||
Net Operating Loss and Capital Loss Carryforwards | $ 6,362 | $ 2,184 | ||
Tax credits | 4,289 | 1,110 | ||
Interest expense | 3,234 | 1,196 | ||
Investment in partnerships | 8,950 | 0 | ||
Other | 231 | 303 | ||
Total deferred tax assets | 23,066 | 4,793 | ||
Valuation allowance | (22,658) | (1,087) | $ (170) | $ (170) |
Total net deferred tax assets | 408 | 3,706 | ||
Deferred tax liabilities: | ||||
Investment in partnerships | 0 | (22,471) | ||
Intangibles | (8,243) | (10,450) | ||
Other | (472) | (171) | ||
Total deferred tax liabilities | (8,715) | (33,092) | ||
Net deferred tax liabilities | $ (8,307) | $ (29,386) |
Income Taxes - Valuation Allowa
Income Taxes - Valuation Allowance (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Valuation Allowance [Roll Forward] | |||
Beginning balance | $ 170 | $ 170 | $ 1,087 |
Increases in valuation allowance recorded through earnings | 0 | 917 | 19,521 |
Increases in valuation allowance not recorded through earnings | 0 | 0 | 2,050 |
Ending balance | $ 170 | $ 1,087 | $ 22,658 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2023 | Jun. 30, 2023 | |
Loss Contingencies [Line Items] | |||
Obligated to pay, year one | $ 5 | ||
Obligated to pay, year two | $ 5 | ||
Remaining contractual obligated to be pay | $ 11.1 | ||
Pending litigation | |||
Loss Contingencies [Line Items] | |||
Settlement agreement period | 17 months | ||
Damages sought by plaintiff | $ 5.7 |
Debt, Net - Narrative (Details)
Debt, Net - Narrative (Details) - USD ($) | 9 Months Ended | 12 Months Ended | 42 Months Ended | |||||
Jan. 17, 2024 | Jan. 27, 2022 | Dec. 31, 2026 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2025 | Oct. 31, 2022 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 365,000,000 | |||||||
Period of financial report distribution to lender | 120 days | |||||||
Additional remediate period | 30 days | |||||||
Loan fees | $ 800,000 | $ 1,100,000 | ||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | $ 50,000,000 | 0 | ||||||
Debt Instrument covenant percentage | 35% | |||||||
Credit agreement, leverage ratio | 5.40 | |||||||
Revolving line of credit facility | $ 49,000,000 | |||||||
Remaining borrowing capacity | $ 1,000,000 | |||||||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate | 2.50% | |||||||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate Floor | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate | 0% | |||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | 365,000,000 | |||||||
Term Loan | Subsequent event | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument,discount percentage | 64.20% | |||||||
Term Loan | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Unamortized portion of the loan | $ 14,700,000 | |||||||
Term Loan | Revolving Credit Facility | Subsequent event | ||||||||
Debt Instrument [Line Items] | ||||||||
Principle amount | $ 63,700,000 | |||||||
Debt instrument, repurchase amount | 40,900,000 | |||||||
Debt outstanding amount | 301,300,000 | |||||||
Estimated gain on the repurchase | $ 19,700,000 | |||||||
Term Loan | Revolving Credit Facility | Forecast | ||||||||
Debt Instrument [Line Items] | ||||||||
Amortization quarterly payment | $ 7,500,000 | $ 5,000,000 | ||||||
Term Loan | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Term of loan | 5 years 6 months | |||||||
Principle amount | $ 400,000,000 | |||||||
Proceeds from term loan | 376,000,000 | |||||||
Long-term debt | $ 172,000,000 | |||||||
Term Loan and Revolving Facility | Secured Overnight Financing Rate (SOFR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate | 4.75% |
Debt, Net - Schedule of Long-Te
Debt, Net - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total Debt, net | $ 349,503 | $ 414,525 |
Unamortized discount | 14,700 | 19,400 |
Loan fees | 800 | 1,100 |
Level 2 | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 222,700 | |
Term Loan | Secured Debt | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total Debt, net | 349,503 | 364,525 |
2022 Revolving Facility | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total Debt, net | $ 0 | $ 50,000 |
Debt, Net - Future Minimum Prin
Debt, Net - Future Minimum Principal Payments on Long-Term Debt (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 20,000 |
2025 | 20,000 |
2026 | 30,000 |
2027 | 295,000 |
Total future minimum principal payment | 365,000 |
Less: current portion | (20,000) |
Long-term portion | $ 345,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |||||
Oct. 06, 2023 USD ($) | Sep. 26, 2023 payment | Sep. 06, 2023 USD ($) | Jun. 20, 2023 USD ($) | Apr. 10, 2023 USD ($) | Jan. 26, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) | |
Related Party Transaction [Line Items] | ||||||||
Proceeds from related-party loan | $ 0 | $ 0 | $ 11,278 | |||||
Loan fees | 1,100 | 800 | ||||||
Loss on extinguishment of related-party debt | 0 | 0 | $ (2,004) | |||||
Discontinued Operation, Gain (Loss) on Disposal, Statement of Income or Comprehensive Income [Extensible Enumeration] | Net loss from discontinued operations, net of tax | |||||||
Repayments of related party debt | $ 0 | $ 0 | $ 2,699 | |||||
2023 Revolving Note | ||||||||
Related Party Transaction [Line Items] | ||||||||
Proceeds from related-party loan | $ 20,000 | |||||||
Related party debt commitment | $ 10,000 | |||||||
Extension term | 3 months | |||||||
Related party transaction, unused commitment fee | 1% | |||||||
Related party transaction, closing fee | 12% | |||||||
Loan fees | $ 2,400 | |||||||
Related party debt payable period | 180 days | |||||||
Loss on extinguishment of related-party debt | $ (1,200) | |||||||
2023 Revolving Note | Secured Overnight Financing Rate (SOFR) | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, rate | 3.15% | |||||||
Promissory Note | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, closing fee | 12% | |||||||
Promissory Note | Secured Overnight Financing Rate (SOFR) | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, rate | 3.15% | |||||||
Term Note | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, closing fee | 10% | |||||||
Related party debt payable period | 180 days | |||||||
Unamortized portion of the loan | $ 200 | |||||||
Term Note | Secured Overnight Financing Rate (SOFR) | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, rate | 5.75% | |||||||
Secured Facility | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party debt commitment | $ 10,000 | |||||||
Related party transaction, closing fee | 12% | |||||||
Net loss from discontinued operations | $ 1,400 | |||||||
Cannae Services Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Repayments of related party debt | $ 100 | |||||||
Subsidiaries | Promissory Note | ||||||||
Related Party Transaction [Line Items] | ||||||||
Loss on extinguishment of related-party debt | $ (600) | |||||||
Aggregate amount | 5,200 | |||||||
Company's indebtedness | $ 2,500 | |||||||
Number of equal amortization payments | payment | 4 | |||||||
Closing fee, percentage | 12% | |||||||
Interest rate | 50% | |||||||
Subsidiaries | Term Note | ||||||||
Related Party Transaction [Line Items] | ||||||||
Aggregate amount | $ 2,500 | |||||||
Subsidiaries | Secured Facility | ||||||||
Related Party Transaction [Line Items] | ||||||||
Aggregate amount | $ 10,000 | |||||||
Interest rate | 8.50% |
Warrants (Details)
Warrants (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 USD ($) | Dec. 31, 2022 USD ($) shares | Dec. 31, 2023 USD ($) d business_day $ / shares shares | Apr. 30, 2022 shares | |
Derivative [Line Items] | ||||
Warrants and rights outstanding, term | 5 years | |||
Multiplier used in calculating warrant exercise price | 0.361 | |||
Number of trading days on which fair market value of shares is reported | business_day | 10 | |||
Threshold period for not to transfer, assign or sell any of their shares or warrants after the completion of the initial merger | 30 days | |||
Proceeds from Warrant exercises | $ | $ 0 | $ 5,027 | $ 0 | |
Warrant outstanding (in shares) | shares | 16,800,000 | 16,800,000 | ||
Private Warrants | Class A common stock | ||||
Derivative [Line Items] | ||||
Warrants exercised (in shares) | shares | 3,500 | |||
Public Warrants | ||||
Derivative [Line Items] | ||||
Warrants exercised (in shares) | shares | 400,000 | |||
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 | ||||
Derivative [Line Items] | ||||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 18 | |||
Redemption price per public warrant (in dollars per share) | $ 0.01 | |||
Minimum threshold written notice period for redemption of public warrants | 30 days | |||
Threshold trading days for redemption of public warrants | business_day | 20 | |||
Threshold consecutive trading days for redemption of public warrants | d | 30 | |||
Redemption period | 30 days | |||
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00 | ||||
Derivative [Line Items] | ||||
Stock price trigger for redemption of public warrants (in dollars per share) | $ 10 | |||
Redemption price per public warrant (in dollars per share) | $ 0.10 | |||
Minimum threshold written notice period for redemption of public warrants | 30 days |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Public Warrants | Level 1 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Public Warrants | $ 2,688 | $ 7,798 |
Fair Value Measurement - Sche_2
Fair Value Measurement - Schedule of Estimated Fair Value of Liabilities (Details) - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Dec. 31, 2023 | |
Former CEO Equity Profits Interest | Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 11,132 | |
Contingent Consideration | Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 1,682 | $ 0 |
Additions | 28 | |
Settlements | (1,715) | |
Change in fair value | 5 | 0 |
Ending balance | 0 | 0 |
Public Warrant Liability | Level 1 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 18,285 | 7,798 |
Additions | 0 | |
Settlements | (1,147) | |
Change in fair value | (9,340) | (5,110) |
Ending balance | 7,798 | 2,688 |
Private Warrant Liability | Level 2 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 8,727 | 0 |
Additions | 0 | |
Settlements | (21,818) | |
Change in fair value | 13,091 | 0 |
Ending balance | $ 0 | $ 0 |
Net Loss Per Share or Unit - Ba
Net Loss Per Share or Unit - Basic And Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |||
Net loss from continuing operations attributable to System1, Inc., Basic (in dollars per share) | $ (3.19) | $ (0.94) | |
Net loss from continuing operations attributable to System1, Inc., Diluted (in dollars per share) | (3.19) | (0.94) | |
Net loss from discontinued operations, net of tax attributable to System1, Inc., Basic (in dollars per share) | (0.51) | (1.54) | |
Net loss from discontinued operations, net of tax attributable to System1, Inc., Diluted (in dollars per share) | (0.51) | (1.54) | |
Basic net loss per share (in dollars per share) | (3.70) | (2.48) | |
Diluted net loss per share (in dollars per share) | $ (3.70) | $ (2.48) | |
Numerator: | |||
Net loss from continuing operations attributable to System1, Inc. | $ (37,061) | $ (284,522) | $ (85,727) |
Net loss from discontinued operations, net of tax attributable to System1, Inc. | 0 | (45,870) | (141,494) |
Net loss attributable to System1, Inc. | $ (37,061) | $ (330,392) | $ (227,221) |
Denominator: | |||
Weighted-average common shares outstanding used in computing basic net loss per share (in shares) | 89,310 | 91,454 | |
Weighted-average common shares outstanding used in computing diluted net loss per share (in shares) | 89,310 | 91,454 | |
Basic net loss per unit (in dollars per share) | $ (1.81) | ||
Diluted net loss per unit (in dollars per share) | $ (1.81) | ||
Weighted-average membership units outstanding - basic (in shares) | 20,488 | ||
Weighted-average membership units outstanding - diluted (in shares) | 20,488 |
Net Loss Per Share or Unit - Na
Net Loss Per Share or Unit - Narrative (Details) - shares shares in Millions | 11 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Dec. 31, 2023 | |
Public Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 16.8 | 16.8 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 26, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Segment Reporting Information [Line Items] | |||||
Total revenue | $ 52,712 | $ 612,229 | $ 401,971 | ||
Adjusted gross profit | 11,780 | 180,851 | 161,116 | ||
Other cost of revenue | 575 | 7,461 | 7,890 | ||
Salaries and benefits | 31,181 | 138,045 | 106,505 | ||
Selling, general, and administrative | 15,665 | 50,831 | 54,307 | ||
Depreciation and amortization | 1,000 | 69,469 | 78,403 | ||
Impairment of goodwill | 0 | $ 26,600 | $ 346,100 | 372,728 | 0 |
Interest expense, net | 1,049 | 31,609 | 48,745 | ||
Loss on extinguishment of related-party debt | 0 | 0 | 2,004 | ||
Change in fair value of Warrant liabilities | 0 | 3,751 | (5,109) | ||
Loss before income tax | (37,690) | (493,043) | (131,629) | ||
Owned and Operated Advertising | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 49,249 | 556,303 | 328,934 | ||
Adjusted gross profit | 8,768 | 138,560 | 107,696 | ||
Impairment of goodwill | 360,194 | ||||
Partner Network | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 3,463 | 55,926 | 73,037 | ||
Adjusted gross profit | $ 3,012 | 42,291 | $ 53,420 | ||
Impairment of goodwill | $ 12,534 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Revenues Disaggregated by Geographic Region (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 52,712 | $ 612,229 | $ 401,971 |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | 51,701 | 593,527 | 385,847 |
Other countries | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 1,011 | $ 18,702 | $ 16,124 |
Segment Reporting - Schedule _3
Segment Reporting - Schedule of Property and Equipment, Net and Operating Lease Right-of-use Assets by Geographic Region (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net and operating lease right-of-use assets | $ 7,816 | $ 9,646 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net and operating lease right-of-use assets | 3,927 | 5,473 |
Canada | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net and operating lease right-of-use assets | 3,432 | 3,730 |
Other countries | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net and operating lease right-of-use assets | 457 | 443 |
Owned and Operated Advertising | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net and operating lease right-of-use assets | $ 7,816 | $ 9,646 |
Capitalization (Details)
Capitalization (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2022 USD ($) shares | Dec. 31, 2023 $ / shares | Aug. 31, 2022 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock conversion ratio | 1 | ||
Class A common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair market value of stock (in dollars per share) | $ / shares | $ 12.50 | ||
Number of trading days | 20 days | ||
Number of consecutive trading days | 30 days | ||
Stock repurchased | $ 1,107 | ||
2022 Share Repurchase Program | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchased (in shares) | shares | 190 | ||
Stock repurchased | $ 1,100 | ||
2022 Share Repurchase Program | Class A common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchase, authorized amount | $ 25,000 | ||
2022 Share Repurchase Program | Public Warrants | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock repurchase, authorized amount | $ 25,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 11 Months Ended | 12 Months Ended | ||||
Sep. 06, 2023 | Mar. 01, 2023 | Mar. 04, 2022 | Jan. 26, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | Jan. 01, 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock based expense | $ 23,705 | $ 7,700 | $ 55,512 | $ 21,235 | ||||
Issuance of market-based restricted stock units | 0 | |||||||
2022 Incentive Award Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Grant awards were reserved and authorized for issuance (in shares) | 2,900,000 | |||||||
Aggregate percentage of common stock outstanding | 2.50% | |||||||
2022 Incentive Award Plan | Subsequent event | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares authorized (in shares) | 2,200,000 | |||||||
CouponFollow Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Issuance of market-based restricted stock units | $ 31,250 | |||||||
Cash EBITDA | $ 3,300 | 10,000 | ||||||
Recognized fixed amount | $ 2,700 | |||||||
CouponFollow Incentive Plan | Tier 1 Target | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Cash EBITDA | 8,500 | |||||||
CouponFollow Incentive Plan | Tier 2 Target | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Cash EBITDA | 6,375 | |||||||
CouponFollow Incentive Plan | Tier 3 Target | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Cash EBITDA | 6,375 | |||||||
Class A common stock | CouponFollow Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Issuance of market-based restricted stock units | $ 31,300 | $ 1,700 | 35,000 | |||||
Cash EBITDA | 10,000 | |||||||
Change in fair value of contingent consideration | $ 25,000 | |||||||
Difference between fair value of common stock issued to settle the earnout liability and the carrying value of the earnout liability | 600 | |||||||
Restricted Stock Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock based expense | $ 23,700 | $ 12,700 | $ 23,600 | 6,600 | ||||
Unrecognized stock-based compensation expense | 2,700 | |||||||
Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Amount of cost not yet recognized | $ 19,100 | |||||||
Weighted average period | 9 months 18 days |
Stock-Based Compensation - Mark
Stock-Based Compensation - Market-Based RSUs and RSAs (Details) - Market-Based RSUs and RSAs | 12 Months Ended |
Dec. 31, 2023 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 1.60% |
Expected price volatility | 50% |
Cost of equity | 23.60% |
Expected term (years) | 5 years |
Fair value of Class A Common stock (in dollars per share) | $ 10 |
Stock-Based Compensation - Tota
Stock-Based Compensation - Total Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 23,705 | $ 7,700 | $ 55,512 | $ 21,235 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Shares (in thousands) | |
Unvested, beginning balance (in shares) | shares | 5,463 |
Granted (in shares) | shares | 4,480 |
Vested (in shares) | shares | (3,106) |
Forfeited (in shares) | shares | (2,414) |
Unvested, ending balance (in shares) | shares | 4,423 |
Weighted-Average Grant Date Fair Value per Share | |
Unvested, beginning balance (in dollars per share) | $ / shares | $ 9.83 |
Granted (in dollars per share) | $ / shares | 3.04 |
Vested (in dollars per share) | $ / shares | 8.99 |
Forfeited (in dollars per share) | $ / shares | 6.40 |
Unvested, ending balance (in dollars per share) | $ / shares | $ 5.41 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Period (Details) - USD ($) $ in Thousands, shares in Millions | 11 Months Ended | |||
Sep. 06, 2023 | Mar. 01, 2023 | Mar. 04, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total maximum Payment per Performance Period | $ 0 | |||
Issuance of market-based restricted stock units | $ 0 | |||
CouponFollow Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | $ 3,300 | $ 10,000 | ||
Total maximum Payment per Performance Period | $ 31,250 | |||
Amounts earned payable period | 60 days | |||
Issuance of market-based restricted stock units | $ 31,250 | |||
CouponFollow Incentive Plan | Class A common stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 10,000 | |||
Total maximum Payment per Performance Period | $ 31,300 | $ 1,700 | 35,000 | |
Issuance of common stock in connection with the acquisition of business (in shares) | 0.4 | |||
Issuance of market-based restricted stock units | $ 31,300 | $ 1,700 | 35,000 | |
CouponFollow Incentive Plan | Tier 1 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 8,500 | |||
CouponFollow Incentive Plan | Tier 2 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 6,375 | |||
CouponFollow Incentive Plan | Tier 3 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 6,375 | |||
CouponFollow Incentive Plan | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 3,333 | |||
Total maximum Payment per Performance Period | 3,333 | |||
Issuance of market-based restricted stock units | 3,333 | |||
CouponFollow Incentive Plan | Tranche One | Tier 1 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche One | Tier 2 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche One | Tier 3 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 3,333 | |||
Total maximum Payment per Performance Period | 6,166 | |||
Issuance of market-based restricted stock units | 6,166 | |||
CouponFollow Incentive Plan | Tranche Two | Tier 1 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 2,833 | |||
CouponFollow Incentive Plan | Tranche Two | Tier 2 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche Two | Tier 3 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 3,334 | |||
Total maximum Payment per Performance Period | 9,354 | |||
Issuance of market-based restricted stock units | 9,354 | |||
CouponFollow Incentive Plan | Tranche Three | Tier 1 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 2,833 | |||
CouponFollow Incentive Plan | Tranche Three | Tier 2 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 3,187 | |||
CouponFollow Incentive Plan | Tranche Three | Tier 3 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
CouponFollow Incentive Plan | Tranche Four | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 0 | |||
Total maximum Payment per Performance Period | 12,397 | |||
Issuance of market-based restricted stock units | 12,397 | |||
CouponFollow Incentive Plan | Tranche Four | Tier 1 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 2,834 | |||
CouponFollow Incentive Plan | Tranche Four | Tier 2 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | 3,188 | |||
CouponFollow Incentive Plan | Tranche Four | Tier 3 Target | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash EBITDA | $ 6,375 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) $ / shares in Units, $ in Thousands, £ in Millions | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||||
Nov. 30, 2023 USD ($) $ / shares shares | Aug. 30, 2022 USD ($) shares | Jan. 26, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2023 GBP (£) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Impairment of goodwill | $ 0 | $ 26,600 | $ 346,100 | $ 372,728 | $ 0 | |||
Impairment of assets held for sale | $ 0 | 0 | $ 3,276 | |||||
Incentive plan for eligible recipients total | $ 0 | |||||||
Class A common stock | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Common stock outstanding (in shares) | shares | 91,674,000 | 91,674,000 | 65,855,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Paysafe | Related Party | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Credit card processing fees | $ 2,800 | $ 14,900 | ||||||
Receivable from related parties | $ 2,400 | $ 2,400 | ||||||
Just Develop It Limited | Related Party | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Monthly payment for desk occupancy | £ | £ 0.1 | |||||||
Just Develop It Limited | Related Party | Waiver | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Quarterly payments | $ 10,000 | |||||||
Just Develop It Limited | Related Party | Waiver | Class A common stock | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Number of shares in waiver agreement (in shares) | shares | 50,000,000 | |||||||
2023 Award Modification | Protected Incentive Plan | Class A common stock | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Incentive plan for eligible recipients total | $ 100,000 | 40,800 | ||||||
Cash rewards | $ 20,000 | |||||||
Discontinued Operations, Held-for-sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sale | $ 51,000 | |||||||
Repayments of secured and unsecured obligation | 18,800 | |||||||
Repayment of intercompany obligation | 9,600 | |||||||
Repayments of unsecured obligation | 22,700 | |||||||
JDIL | Discontinued Operations, Held-for-sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sale | $ 240,000 | |||||||
Common stock outstanding (in shares) | shares | 29,100,000 | |||||||
Impairment of goodwill | 115,500 | |||||||
Impairment of assets held for sale | 3,300 | |||||||
Total impairment charges | $ 118,800 | |||||||
JDIL | Discontinued Operations, Held-for-sale | Class A common stock | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Current assets held for sale from discontinued operations | $ 0 | $ 20,292 |
Current liabilities: | ||
Current liabilities held for sale from discontinued operations | $ 0 | 101,418 |
JDIL | Discontinued Operations, Held-for-sale | ||
Current assets: | ||
Cash and cash equivalents | 15,701 | |
Restricted cash, current | 3,357 | |
Other current assets, net | 1,234 | |
Current assets held for sale from discontinued operations | 20,292 | |
Property and equipment, net | 860 | |
Intangible assets, net | 121,025 | |
Goodwill | 433,184 | |
Total assets held for sale from discontinued operations | 575,361 | |
Current liabilities: | ||
Protected incentive plan liability, current | 15,436 | |
Deferred revenue | 68,611 | |
Other current liabilities | 17,371 | |
Current liabilities held for sale from discontinued operations | 101,418 | |
Protected incentive plan liability, non-current | 15,824 | |
Deferred tax liability | 15,286 | |
Other liabilities | 3,366 | |
Total liabilities held for sale from discontinued operations | $ 135,894 |
Discontinued Operations - State
Discontinued Operations - Statements of Operations (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total operating expenses | $ 221,775 | $ 360,138 | |
Loss from discontinued operations before income taxes | (60,505) | (174,843) | |
Net loss from discontinued operations | $ 0 | (45,870) | (141,494) |
JDIL | Discontinued Operations, Held-for-sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Revenue | 161,711 | 190,090 | |
Cost of revenue (excluding depreciation and amortization) | 99,940 | 161,134 | |
Salaries and benefits | 60,005 | 41,972 | |
Selling, general, and administrative | 12,647 | 11,546 | |
Depreciation and amortization | 49,183 | 26,727 | |
Impairment of assets held for sale | 0 | 3,276 | |
Impairment of goodwill | 0 | 115,483 | |
Operating loss | (60,064) | (170,048) | |
Other expense, net | 441 | 548 | |
Loss on sale of business | 0 | 4,247 | |
Income tax benefit | (3,546) | (516) | |
Net loss from discontinued operations | $ (56,959) | $ (174,327) |
Discontinued Operations - Depre
Discontinued Operations - Depreciation, Amortization, Capital Expenditures (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2023 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Income Loss Ongoing Equity Method Investment In Discontinued Operation After Disposal Extensible Enumeration Not Disclosed Flag | Stock-based compensation | ||
Loss on sale of business | $ 0 | $ 0 | $ 4,247 |
JDIL | Discontinued Operations, Held-for-sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of assets held for sale | 0 | 3,276 | |
Impairment of goodwill | 0 | 115,483 | |
Loss on sale of business | 0 | 4,247 | |
Depreciation and amortization | 49,183 | 26,727 | |
Stock-based compensation | 31,850 | ||
Capital expenditures | $ 432 | $ 1,739 |
Uncategorized Items - sst-20231
Label | Element | Value |
Fair Value, Inputs, Level 3 [Member] | Contingent Consideration [Member] | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value | us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue | $ 1,682,000 |
Fair Value, Inputs, Level 3 [Member] | Former CEO Equity Profits Interest [Member] | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value | us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue | $ 11,132,000 |