Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | May 07, 2024 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 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 | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001805833 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
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 | 68,901,898 | |
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 $11.50 per share | |
Trading Symbol | SST.WS | |
Security Exchange Name | NYSE | |
Class C Common Stock | ||
Cover | ||
Entity Common Stock, Shares Outstanding | 21,203,676 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 69,920 | $ 135,343 |
Restricted cash, current | 7,231 | 3,813 |
Accounts receivable, net | 52,735 | 56,093 |
Prepaid expenses and other current assets | 9,791 | 6,754 |
Total current assets | 139,677 | 202,003 |
Restricted cash, non-current | 533 | 4,294 |
Property and equipment, net | 2,836 | 3,084 |
Internal-use software development costs, net | 12,545 | 11,425 |
Intangible assets, net | 278,336 | 297,001 |
Goodwill | 82,407 | 82,407 |
Operating lease right-of-use assets | 4,241 | 4,732 |
Other non-current assets | 484 | 524 |
Total assets | 521,059 | 605,470 |
Current liabilities: | ||
Accounts payable | 7,055 | 9,499 |
Accrued expenses and other current liabilities | 52,351 | 59,314 |
Operating lease liabilities, current | 2,375 | 2,333 |
Debt, net | 16,190 | 15,271 |
Total current liabilities | 77,971 | 86,417 |
Operating lease liabilities, non-current | 2,938 | 3,582 |
Long-term debt, net | 268,597 | 334,232 |
Warrant liability | 2,438 | 2,688 |
Deferred tax liability | 7,649 | 8,307 |
Other liabilities | 1,061 | 929 |
Total liabilities | 360,654 | 436,155 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Additional paid-in capital | 850,202 | 843,112 |
Accumulated deficit | (718,199) | (707,662) |
Accumulated other comprehensive loss | (271) | (181) |
Total stockholders' equity attributable to System1, Inc. | 131,741 | 135,278 |
Non-controlling interest | 28,664 | 34,037 |
Total stockholders' equity | 160,405 | 169,315 |
Total liabilities and stockholders' equity | 521,059 | 605,470 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock value | 7 | 7 |
Class C Common Stock | ||
Stockholders' equity: | ||
Common stock value | $ 2 | $ 2 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 25,000 | |
Common stock outstanding (in shares) | 21,204 | 21,513 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock issued (in shares) | 68,632 | 65,855 |
Common stock outstanding (in shares) | 68,632 | 65,855 |
Class C Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 25,000 | |
Common stock issued (in shares) | 21,204 | 21,513 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Revenue | $ 84,917 | $ 121,118 |
Operating expenses: | ||
Cost of revenue (excluding depreciation and amortization) | 53,698 | 82,953 |
Salaries and benefits | 24,483 | 28,147 |
Selling, general, and administrative | 12,728 | 14,855 |
Depreciation and amortization | 19,804 | 19,392 |
Total operating expenses | 110,713 | 145,347 |
Operating loss | (25,796) | (24,229) |
Other expense (income): | ||
Interest expense, net | 7,970 | 11,402 |
Gain from debt extinguishment | (19,676) | 0 |
Change in fair value of warrant liabilities | (251) | (1,409) |
Total other (income) expense, net | (11,957) | 9,993 |
Loss before income tax | (13,839) | (34,222) |
Income tax benefit | (48) | (3,829) |
Net loss from continuing operations | (13,791) | (30,393) |
Net loss from discontinued operations, net of tax | 0 | (12,533) |
Net loss | (13,791) | (42,926) |
Less: Net loss from continuing operations attributable to non-controlling interest | (3,254) | (6,757) |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | (2,367) |
Net loss attributable to System1, Inc. | (10,537) | (33,802) |
Net loss from continuing operations | (10,537) | (23,636) |
Net loss from discontinued operations | $ 0 | $ (10,166) |
Basic net loss per share, continuing operations (in dollars per share) | $ (0.16) | $ (0.25) |
Diluted net loss per share, continuing operations (in dollars per share) | (0.16) | (0.25) |
Basic net loss per share, discontinued operations (in dollars per share) | 0 | (0.11) |
Diluted net loss per share, discontinued operations (in dollars per share) | 0 | (0.11) |
Basic net loss per share (in dollars per share) | (0.16) | (0.36) |
Diluted net loss per share (in dollars per share) | $ (0.16) | $ (0.36) |
Weighted average number of shares outstanding - basic (in shares) | 67,781 | 92,771 |
Weighted average number of shares outstanding - diluted (in shares) | 67,781 | 92,771 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (13,791) | $ (42,926) |
Other comprehensive income (loss) | ||
Foreign currency translation income (loss) | (135) | (109) |
Comprehensive loss | (13,926) | (43,035) |
Comprehensive loss attributable to non-controlling interest | (3,299) | (9,170) |
Comprehensive loss attributable to System1, Inc. | $ (10,627) | $ (33,865) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Class A Common Stock | Common Stock Class C Common Stock | Additional Paid-In-Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Non-Controlling Interest |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | $ (42,926) | ||||||
Ending balance (in shares) at Mar. 31, 2023 | 93,147 | 21,513 | |||||
Ending balance at Mar. 31, 2023 | 433,959 | $ 9 | $ 2 | $ 838,745 | $ (473,424) | $ (322) | $ 68,949 |
Beginning balance (in shares) at Dec. 31, 2023 | 65,855 | 21,513 | |||||
Beginning balance at Dec. 31, 2023 | 169,315 | $ 7 | $ 2 | 843,112 | (707,662) | (181) | 34,037 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (13,791) | (10,537) | (3,254) | ||||
Issuance of common stock in connection with settlement of incentive plan (in shares) | 970 | ||||||
Issuance of common stock in connection with settlement of incentive plan | 1,707 | 2,464 | (757) | ||||
Conversion of Class C shares to Class A shares (in shares) | 309 | (309) | |||||
Conversion of Class C shares to Class A shares | 0 | 241 | (241) | ||||
Tax receivable agreement liability and deferred taxes arising from LLC interest ownership exchanges and the issuance of common stock from equity incentive plans | (110) | (110) | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 1,498 | ||||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (991) | 178 | (1,169) | ||||
Other comprehensive income (loss) | (135) | (90) | (45) | ||||
Stock-based compensation | 4,405 | 4,317 | 88 | ||||
Contributions from members, net of distributions | 5 | 5 | |||||
Ending balance (in shares) at Mar. 31, 2024 | 68,632 | 21,204 | |||||
Ending balance at Mar. 31, 2024 | $ 160,405 | $ 7 | $ 2 | $ 850,202 | $ (718,199) | $ (271) | $ 28,664 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flows from Operating Activities | ||
Net loss | $ (13,791) | $ (42,926) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 19,804 | 29,374 |
Stock-based compensation | 3,970 | 14,122 |
Amortization of debt issuance costs | 1,030 | 0 |
Noncash lease expense | 462 | 436 |
Change in fair value of warrant liabilities | (251) | (1,409) |
Deferred tax benefits | (656) | (7,869) |
Gain from debt extinguishment | (19,676) | 0 |
Other | (517) | 686 |
Changes in operating assets and liabilities | ||
Accounts receivable | 3,387 | 11,282 |
Prepaids and other assets | (2,999) | (159) |
Accounts payable | (2,444) | (810) |
Accrued expenses and other liabilities | (3,654) | (5,057) |
Deferred revenue | (65) | 6,182 |
Long-term earnout liabilities | 0 | (10,000) |
Other long-term liabilities | (587) | 347 |
Net cash used in operating activities | (15,987) | (5,801) |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | 0 | (714) |
Capitalized software development costs | (1,622) | (1,678) |
Net cash used in investing activities | (1,622) | (2,392) |
Cash Flows from Financing Activities | ||
Repayment of Term Loan | (46,071) | (5,000) |
Payment of acquisition holdback | 0 | (1,250) |
Taxes paid related to net settlement of stock awards | (2,092) | (2,837) |
Contributions from (distributions to) members | 5 | (45) |
Net cash used in financing activities | (48,158) | (9,132) |
Effect of exchange rate changes in cash, cash equivalent and restricted cash | 1 | (44) |
Net decrease in cash, cash equivalents and restricted cash | (65,766) | (17,369) |
Cash and cash equivalents and restricted cash, beginning of the period | 143,450 | 39,075 |
Cash and cash equivalents and restricted cash, end of the period | 77,684 | 21,706 |
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: | ||
Cash and cash equivalents | 69,920 | 8,267 |
Restricted cash | 7,764 | 13,439 |
Total cash, cash equivalents and restricted cash | 77,684 | 21,706 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 634 | 0 |
Cash paid for interest | 8,230 | 0 |
Capitalized assets financed by accounts payable | 0 | 702 |
Stock-based compensation included in capitalized software development costs | 432 | 561 |
Settlement of incentive plan through issuance of common stock | $ 1,707 | $ 1,658 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2024 | |
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 high-intent end-users, RAMP allows us to monetize these acquired end users through our relationships with third party advertisers and advertising networks (“Advertising Partners”). RAMP operates across our network of owned and operated websites, allowing us to monetize end-user traffic that we source from various acquisition marketing channels, including Google, Facebook, Zemanta, Taboola, and TikTok. RAMP also allows third party advertising platforms and publishers (“Network Partners”) to send end-user traffic to, and monetize end user traffic on, our owned and operated websites or through our monetization agreements. We have two reportable segments: Owned and Operated Advertising and Partner Network ( see Note 10, Segment Reporting) . |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) in March 2024. In our opinion, the unaudited interim condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2024 or future operating periods. There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that have had a material impact on our condensed consolidated financial statements and related notes. We completed the sale of Total Security Limited, formerly known as Protected.net Group Limited (“Protected”) on November 30, 2023. The results of operations of our Protected business prior to its sale are presented as net loss from discontinued operations in our condensed consolidated statements of operations in the periods applicable (see Note 12, Discontinued Operations). Revision of Previously Issued Consolidated Financial Statements During the fourth quarter of 2023, we identified certain errors related to our previously issued financial statements as of and for the three months ended March 31, 2023 as follows: a. Accrued expenses and other current liabilities were understated by $0.9 million, additional paid-in capital was understated by $1.7 million and salaries and benefits expense was understated by $0.3 million as a result of our not accelerating expenses upon forfeiture of certain cash and equity Replacement Awards (as defined in Note 9, Net Loss Per Share ) previously granted in 2022 that impacted the condensed consolidated balance sheet, condensed consolidated statements of operations, condensed consolidated statements of changes in stockholders' equity, and condensed consolidated statement of cash flows. b. 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 2022 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 condensed consolidated balance sheets, condensed consolidated statement of operations, condensed consolidated statements of changes in stockholders' equity, and condensed consolidated statement of cash flows. c. We made additional corrections for other immaterial errors. d. We adjusted for the tax impacts of the corrections related to such errors described above. We concluded that the errors were not material, either individually or in the aggregate, to our previously issued condensed consolidated financial statements for the impacted period. To correct the immaterial errors, we have revised our previously issued condensed consolidated financial statements as of and for the period ended March 31, 2023. We have revised the condensed consolidated balance sheet, condensed consolidated statement of operations, condensed consolidated statement of comprehensive income (loss), condensed consolidated statement of changes in stockholders' equity, and condensed consolidated statement of cash flows for the period ended March 31, 2023, as well as the associated Notes to the condensed consolidated financial statements to reflect the correction of these immaterial errors in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 . The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued condensed consolidated balance sheet as of March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Liabilities and Stockholders' Equity Current liabilities: Accrued expenses and other current liabilities 85,727 890 86,617 (a) (14,620) 71,997 Total current liabilities 199,354 890 200,244 — 200,244 Deferred tax liability 35,995 830 36,825 (d) (13,318) 23,507 Total liabilities 669,119 1,720 670,839 — 670,839 Stockholders’ Equity / Members’ Deficit Additional paid-in capital 837,093 1,652 838,745 (a) (b) — 838,745 Accumulated deficit (479,579) 6,155 (473,424) (a) (b) (d) — (473,424) Accumulated other comprehensive loss (479) 156 (323) (d) — (323) Total stockholders' equity attributable to System1, Inc. 357,046 7,963 365,009 — 365,009 Non-controlling interest 78,632 (9,683) 68,949 (b) — 68,949 Total stockholders' equity 435,678 (1,720) 433,958 — 433,958 Total liabilities and stockholders' equity $ 1,104,797 $ — $ 1,104,797 $ — $ 1,104,797 The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued condensed consolidated statement of operations, for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Salaries and benefits 38,398 296 (a) 38,694 (10,547) 28,147 Total operating expenses 205,346 296 205,642 (60,295) 145,347 Operating loss (37,492) (296) (37,788) 13,559 (24,229) Other expense (income): Interest expense, net 11,451 — 11,451 (49) 11,402 Total other (income) expense, net 10,042 — 10,042 (49) 9,993 Loss before income tax (47,534) (296) (47,830) 13,608 (34,222) Income tax benefit (4,408) (496) (d) (4,904) 1,075 (3,829) Net loss from continuing operations (43,126) 200 (42,926) 12,533 (30,393) Net loss from discontinued operations, net of tax — — — (12,533) (12,533) Net loss (43,126) 200 (42,926) — (42,926) Less: Net loss from continuing operations attributable to non-controlling interest (9,174) 50 (b) (9,124) 2,367 (6,757) Less: Net loss from discontinued operations attributable to non-controlling interest — — — (2,367) (2,367) Net loss attributable to System1, Inc. $ (33,952) $ 150 $ (33,802) $ — $ (33,802) Amounts attributable to System1, Inc.: Net loss from continuing operations $ (33,952) $ 150 (b) $ (33,802) $ 10,166 $ (23,636) Net loss from discontinued operations — — — (10,166) (10,166) Net loss attributable to System1, Inc. $ (33,952) $ 150 $ (33,802) $ — $ (33,802) Basic and diluted net loss per share: Continuing operations $ (0.37) $ 0.01 (b) $ (0.36) $ 0.11 $ (0.25) Discontinued operations — — — (0.11) (0.11) Basic and diluted net loss per share $ (0.37) $ 0.01 $ (0.36) $ — $ (0.36) Weighted average number of shares outstanding - basic and diluted 92,460 311 (b) 92,771 92,771 The following table reflects the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Currently Reported Net loss $ (43,126) $ 200 (a) (d) $ (42,926) Other comprehensive income (loss) Foreign currency translation income (loss) (108) (108) Comprehensive loss (43,234) 200 (43,034) Comprehensive loss attributable to non-controlling interest (9,220) 50 (b) (9,170) Comprehensive loss attributable to System1, Inc. $ (34,014) $ 150 $ (33,864) The following tables reflect the revisions to the previously issued condensed consolidated statement of changes in stockholders' equity for the quarter ended March 31, 2023. Although the impact is pervasive throughout the condensed consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant impact is a reduction of net loss of $0.2 million, an increase of non-controlling interest of $0.5 million, a reduction in accumulated deficit of $0.2 million and a reduction in additional paid-in-capital of $0.2 million. Class A Common Stock Class C Common Stock Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Deficit Accumulated Other Comprehensive Income Non-Controlling Interest Total Stockholders’ As Previously Reported Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 $ 831,566 $ (439,296) $ (260) $ 78,650 $ 470,671 Net loss — — — — — (33,952) — (9,174) (43,126) Cumulative-effect of adoption of ASU 2016-13 — — — — — (326) — — (326) Issuance of restricted stock, net of forfeitures and shares withheld for taxes 832 — — — (1,730) — — — (1,730) Issuance of common stock in connection with settlement of incentive plan 407 — — — 1,659 — — — 1,659 Conversion of Class C shares to Class A shares 234 — (234) — 955 — — (955) — Increase in tax receivable agreement liability — — — — (441) — — — (441) Other comprehensive income (loss) — — — — — — (62) (47) (109) Stock-based compensation — — — — 6,963 — — — 6,963 Balance at March 31, 2023 93,147 $ 9 21,513 $ 2 $ 838,972 $ (473,574) $ (322) $ 68,474 $ 433,561 Revision Adjustments Net loss — — — — — 150 — 50 200 (a) (b) (d) Issuance of restricted stock, net of forfeitures and shares withheld for taxes — — — — 281 — — (281) — (a) (b) Issuance of common stock in connection with settlement of incentive plan — — — — 160 — — (160) — (b) Conversion of Class C shares to Class A shares — — — — 92 — — (92) — (b) Other comprehensive income (loss) — — — — — — — — — (c) Stock-based compensation — — — — (760) — — 958 198 (a) (b) Balance at March 31, 2023 — $ — — $ — $ (227) $ 150 $ — $ 475 $ 398 As Revised Net loss — — — — — (33,802) — (9,124) (42,926) Cumulative-effect of adoption of ASU 2016-13 — — — — — (326) — — (326) Issuance of restricted stock, net of forfeitures and shares withheld for taxes 832 — — — (1,449) — — (281) (1,730) Issuance of common stock in connection with settlement of incentive plan 407 — — — 1,819 — — (160) 1,659 Conversion of Class C shares to Class A shares 234 — (234) — 1,047 — — (1,047) — Increase in tax receivable agreement liability — — — — (441) — — — (441) Other comprehensive income (loss) — — — — — — (62) (47) (109) Stock-based compensation — — — — 6,203 — — 958 7,161 Balance at March 31, 2023 93,147 $ 9 21,513 $ 2 $ 838,745 $ (473,424) $ (322) $ 68,949 $ 433,959 The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Currently Reported Cash Flows from Operating Activities Net loss $ (43,126) $ 200 (a) (d) $ (42,926) Stock-based compensation 13,925 197 (a) 14,122 Deferred tax benefits (7,373) (496) (d) (7,869) Changes in operating assets and liabilities Accrued expenses and other liabilities (4,660) (397) (a) (5,057) Other long-term liabilities (149) 496 (d) 347 Net cash used in operating activities $ (5,801) $ — $ (5,801) Use of Estimates The preparation of the condensed 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 condensed 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 condensed 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 condensed 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. 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 concentration as a percentage of total revenue for our key advertising partner Google is 83% and 89%, for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 , 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 May 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 March 31, 2024 , Google and Yahoo, represented 68% and 5%, respectively, of our accounts receivables balance. As of December 31, 2023 , these two Advertising Partners represented 69% and 6%, respectively, of our accounts receivables balance. |
Goodwill, Internal-Use Software
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2024 | |
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 Goodwill was $82.4 million as of March 31, 2024 and December 31, 2023, all attributable to the Partner Network reportable segment. No impairment of goodwill was identified for any of the periods presented. Internal-use software development costs, net and intangible assets, net Internal-use software development costs and intangible assets consisted of the following (in thousands): March 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 15,842 $ (3,297) $ 12,545 Intangible assets: Developed technology $ 196,128 $ (106,613) $ 89,515 Trademarks and trade names 236,053 (50,950) 185,103 Software 5,100 (2,659) 2,441 Customer relationships 2,900 (1,623) 1,277 Total $ 440,181 $ (161,845) $ 278,336 December 31, 2023 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 The internal-use software development costs includes construction in progress which is not being amortized of $4.2 million and $3.5 million as of March 31, 2024 and December 31, 2023 , respectively. Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands): Three Months Ended March 31, 2024 2023 Amortization expense for internal-use software development $ 934 $ 557 Amortization expense for intangible assets $ 18,665 $ 18,665 No impairment of internal-use software development cost or intangible assets was identified for any of the periods presented. As of March 31, 2024, the weighted average amortization period for all intangible assets was 7 years. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
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): March 31, 2024 December 31, 2023 Accrued revenue share $ 17,905 $ 16,365 Accrued marketing expenses 15,073 19,737 Accrued payroll and related benefits 8,205 13,751 Accrued professional fees 2,611 1,455 Deferred revenue 1,693 1,757 Accrued tax liability 1,352 1,233 Other liabilities 5,512 5,016 Accrued expenses and other current liabilities $ 52,351 $ 59,314 |
Debt, Net
Debt, Net | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Debt, Net | Debt, Net We entered into a term 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 . The 2022 Revolving Facility provided for borrowing availability of up to $50.0 million . As of March 31, 2024 , there was no balance outstanding on the 2022 Revolving Facility and principal of $296.3 million was outstanding on the Term Loan. Through December 31, 2025, the outstanding Term Loan is subject to quarterly amortization payments of $5.0 million. From March 31, 2026, the Term Loan is subject to quarterly amortization payments of $7.5 million. 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 the second quarter 2022, 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 our financial covenants as of March 31, 2024. 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 $19.7 million before fees and expenses incurred. The interest rate on the 2022 Revolving Facility is the adjusted SOFR plus 2.5% with an adjusted SOFR floor of 0%. As of March 31, 2024 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): March 31, 2024 December 31, 2023 Term Loan 1,2 $ 284,787 $ 349,503 Total Debt, net $ 284,787 $ 349,503 _______________ 1 Includes unamortized discount of $11.5 million and $14.7 million, and unamortized loan fees of $0.6 million and $0.8 million, as of March 31, 2024, and December 31, 2023, 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 $180.7 million and $222.7 million as of March 31, 2024 and December 31, 2023, respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are the sole managing member of S1 Holdco, LLC ("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 recorded an immaterial benefit for income taxes for the three months ended March 31, 2024 and a benefit from income taxes of $3.8 million for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024 and 2023 was 0.4% and 11.2%, respectively. The provision for income taxes differs from the amount of income tax computed by applying the U.S. statutory federal tax rate of 21% to the loss before income taxes due to the exclusion of non-controlling loss, state taxes, foreign rate differential, non-deductible expenses, increase to the valuation allowance related to unrealizable deferred tax assets, and outside basis adjustments. As of March 31, 2024, 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. During the three months ended March 31, 2024 , and 2023 , inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement. The total amount of Tax Receivable Agreement Payments due under the Tax Receivable Agreement was $0.9 million and $0.8 million as of March 31, 2024 and December 31, 2023 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024, we remain contractually obligated to spend $10.0 million towards this commitment. As of March 31, 2024, we had various non-cancelable operating lease commitments for office space which have been recorded as Operating lease liabilities. 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 condensed 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 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 intend to defend ourselves 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 March 31, 2024 . |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2024 | |
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 (in thousands): March 31, 2024 December 31, 2023 Level 1 Public Warrants $ 2,438 $ 2,688 The fair value of the Public Warrants has been estimated using the Public Warrants’ quoted market price. There were no transfers in or out of levels during the periods presented. Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis For further information on the fair value assessment of goodwill refer to Note 3, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share 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) : Three Months Ended March 31, 2024 2023 Basic and diluted net loss per share Net loss from continuing operations attributable to System1, Inc. $ (0.16) $ (0.25) Net loss from discontinued operations, net of tax attributable to System1, Inc. — (0.11) Basic and Diluted net loss per share $ (0.16) $ (0.36) Numerator: Net loss from continuing operations attributable to System1, Inc. $ (10,537) $ (23,636) Net loss from discontinued operations, net of tax attributable to System1, Inc. — (10,166) Net loss attributable to System1, Inc. $ (10,537) $ (33,802) Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss per share 67,781 92,771 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 | 3 Months Ended |
Mar. 31, 2024 | |
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 include 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 condensed 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): Three Months Ended March 31, 2024 2023 Owned and Operated Advertising $ 69,030 $ 106,025 Partner Network 15,887 15,093 Total revenue $ 84,917 $ 121,118 The following table summarizes adjusted gross profit by reportable segments (in thousands): Three Months Ended March 31, 2024 2023 Owned and Operated Advertising $ 22,462 $ 29,839 Partner Network 10,919 10,217 Adjusted gross profit 33,381 40,056 Other cost of revenue 2,162 1,891 Salaries and benefits 24,483 28,147 Selling, general, and administrative 12,728 14,855 Depreciation and amortization 19,804 19,392 Interest expense, net 7,970 11,402 Gain from debt extinguishment (19,676) — Change in fair value of warrant liabilities (251) (1,409) Loss before income tax $ (13,839) $ (34,222) The following table summarizes revenue by geographic region (in thousands): Three Months Ended March 31, 2024 2023 United States $ 81,682 $ 117,199 Other countries 3,235 3,919 Total revenue $ 84,917 $ 121,118 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We recorded the following total stock-based compensation expense (in thousands) : Three Months Ended March 31, 2024 2023 Stock-based compensation expense $ 3,970 $ 5,832 CouponFollow Incentive Plan As of March 31, 2024 , 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 set forth in the CouponFollow Incentive Plan. In the quarter ended March 31, 2024 we issued 1.0 million Class A Common Stock with an aggregate fair value of $1.7 million, net of shares withheld for taxes, on the date of the settlement to settle the second $3.3 million Fixed Amount. We recognized a gain of $0.5 million, being the difference between the fair value of the Class A common stock issued and the carrying value of the liability. During the quarter ended March 31, 2024, we recognized $0.8 million for the third Fixed Amount within salaries and benefits expenses on the condensed consolidated statements of operations. Our March 31, 2024 short-term restricted cash included $2.8 million for which the restriction was released related to the amount we paid during the quarter ended March 31, 2024 for continued services from certain individuals of CouponFollow. The amount was released from escrow in April 2024. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2024 | |
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 financial benchmarks included in the Protected Incentive Plan, will, as a result of the Protected sale, no longer be achievable. The financial results of Protected are presented as a loss from discontinued operations, net of taxes in the condensed consolidated statements of operations. The following table presents the summarized discontinued operations condensed consolidated statements of operations (in thousands) : Three Months Ended March 31, 2023 Revenue $ 46,736 Operating expenses: Cost of revenue (excluding depreciation and amortization) 37,449 Salaries and benefits 10,547 Selling, general, and administrative 2,317 Depreciation and amortization 9,982 Total operating expenses 60,295 Operating loss (13,559) Other expense, net 49 Loss from discontinued operations before income taxes (13,608) Income tax benefit (1,075) Net loss from discontinued operations $ (12,533) 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 condensed consolidated statements of cash flows (in thousands): Three Months Ended March 31, 2023 Depreciation and amortization $ 9,982 Stock-based compensation $ 8,290 Capital expenditures $ 496 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. We incurred credit card processing fees related to Paysafe for the three months ended March 31, 2023 of $1.1 million. Office Facilities Protected had an agreement with JDI Property Holdings Limited (“JDIP”), an entity controlled by one of our directors, which allowed Protected to use space at their property in exchange for GBP 0.1 million per year. Protected Incentive Plan Installment Payments In 2022 in connection with the acquisition of Protected, we effected an incentive plan for eligible recipients, providing up to $100 million payable in fully-vested shares of our Class A common stock 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) in March 2024. |
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) in March 2024. |
Use of Estimates | Use of Estimates The preparation of the condensed 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 condensed 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 condensed 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 condensed 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 condensed consolidated balance sheet as of March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Liabilities and Stockholders' Equity Current liabilities: Accrued expenses and other current liabilities 85,727 890 86,617 (a) (14,620) 71,997 Total current liabilities 199,354 890 200,244 — 200,244 Deferred tax liability 35,995 830 36,825 (d) (13,318) 23,507 Total liabilities 669,119 1,720 670,839 — 670,839 Stockholders’ Equity / Members’ Deficit Additional paid-in capital 837,093 1,652 838,745 (a) (b) — 838,745 Accumulated deficit (479,579) 6,155 (473,424) (a) (b) (d) — (473,424) Accumulated other comprehensive loss (479) 156 (323) (d) — (323) Total stockholders' equity attributable to System1, Inc. 357,046 7,963 365,009 — 365,009 Non-controlling interest 78,632 (9,683) 68,949 (b) — 68,949 Total stockholders' equity 435,678 (1,720) 433,958 — 433,958 Total liabilities and stockholders' equity $ 1,104,797 $ — $ 1,104,797 $ — $ 1,104,797 The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of Protected to the previously issued condensed consolidated statement of operations, for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Revised Impact of Reclassification of Discontinued Operations As Currently Reported Salaries and benefits 38,398 296 (a) 38,694 (10,547) 28,147 Total operating expenses 205,346 296 205,642 (60,295) 145,347 Operating loss (37,492) (296) (37,788) 13,559 (24,229) Other expense (income): Interest expense, net 11,451 — 11,451 (49) 11,402 Total other (income) expense, net 10,042 — 10,042 (49) 9,993 Loss before income tax (47,534) (296) (47,830) 13,608 (34,222) Income tax benefit (4,408) (496) (d) (4,904) 1,075 (3,829) Net loss from continuing operations (43,126) 200 (42,926) 12,533 (30,393) Net loss from discontinued operations, net of tax — — — (12,533) (12,533) Net loss (43,126) 200 (42,926) — (42,926) Less: Net loss from continuing operations attributable to non-controlling interest (9,174) 50 (b) (9,124) 2,367 (6,757) Less: Net loss from discontinued operations attributable to non-controlling interest — — — (2,367) (2,367) Net loss attributable to System1, Inc. $ (33,952) $ 150 $ (33,802) $ — $ (33,802) Amounts attributable to System1, Inc.: Net loss from continuing operations $ (33,952) $ 150 (b) $ (33,802) $ 10,166 $ (23,636) Net loss from discontinued operations — — — (10,166) (10,166) Net loss attributable to System1, Inc. $ (33,952) $ 150 $ (33,802) $ — $ (33,802) Basic and diluted net loss per share: Continuing operations $ (0.37) $ 0.01 (b) $ (0.36) $ 0.11 $ (0.25) Discontinued operations — — — (0.11) (0.11) Basic and diluted net loss per share $ (0.37) $ 0.01 $ (0.36) $ — $ (0.36) Weighted average number of shares outstanding - basic and diluted 92,460 311 (b) 92,771 92,771 The following table reflects the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Currently Reported Net loss $ (43,126) $ 200 (a) (d) $ (42,926) Other comprehensive income (loss) Foreign currency translation income (loss) (108) (108) Comprehensive loss (43,234) 200 (43,034) Comprehensive loss attributable to non-controlling interest (9,220) 50 (b) (9,170) Comprehensive loss attributable to System1, Inc. $ (34,014) $ 150 $ (33,864) The following tables reflect the revisions to the previously issued condensed consolidated statement of changes in stockholders' equity for the quarter ended March 31, 2023. Although the impact is pervasive throughout the condensed consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant impact is a reduction of net loss of $0.2 million, an increase of non-controlling interest of $0.5 million, a reduction in accumulated deficit of $0.2 million and a reduction in additional paid-in-capital of $0.2 million. Class A Common Stock Class C Common Stock Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Deficit Accumulated Other Comprehensive Income Non-Controlling Interest Total Stockholders’ As Previously Reported Balance at December 31, 2022 91,674 $ 9 21,747 $ 2 $ 831,566 $ (439,296) $ (260) $ 78,650 $ 470,671 Net loss — — — — — (33,952) — (9,174) (43,126) Cumulative-effect of adoption of ASU 2016-13 — — — — — (326) — — (326) Issuance of restricted stock, net of forfeitures and shares withheld for taxes 832 — — — (1,730) — — — (1,730) Issuance of common stock in connection with settlement of incentive plan 407 — — — 1,659 — — — 1,659 Conversion of Class C shares to Class A shares 234 — (234) — 955 — — (955) — Increase in tax receivable agreement liability — — — — (441) — — — (441) Other comprehensive income (loss) — — — — — — (62) (47) (109) Stock-based compensation — — — — 6,963 — — — 6,963 Balance at March 31, 2023 93,147 $ 9 21,513 $ 2 $ 838,972 $ (473,574) $ (322) $ 68,474 $ 433,561 Revision Adjustments Net loss — — — — — 150 — 50 200 (a) (b) (d) Issuance of restricted stock, net of forfeitures and shares withheld for taxes — — — — 281 — — (281) — (a) (b) Issuance of common stock in connection with settlement of incentive plan — — — — 160 — — (160) — (b) Conversion of Class C shares to Class A shares — — — — 92 — — (92) — (b) Other comprehensive income (loss) — — — — — — — — — (c) Stock-based compensation — — — — (760) — — 958 198 (a) (b) Balance at March 31, 2023 — $ — — $ — $ (227) $ 150 $ — $ 475 $ 398 As Revised Net loss — — — — — (33,802) — (9,124) (42,926) Cumulative-effect of adoption of ASU 2016-13 — — — — — (326) — — (326) Issuance of restricted stock, net of forfeitures and shares withheld for taxes 832 — — — (1,449) — — (281) (1,730) Issuance of common stock in connection with settlement of incentive plan 407 — — — 1,819 — — (160) 1,659 Conversion of Class C shares to Class A shares 234 — (234) — 1,047 — — (1,047) — Increase in tax receivable agreement liability — — — — (441) — — — (441) Other comprehensive income (loss) — — — — — — (62) (47) (109) Stock-based compensation — — — — 6,203 — — 958 7,161 Balance at March 31, 2023 93,147 $ 9 21,513 $ 2 $ 838,745 $ (473,424) $ (322) $ 68,949 $ 433,959 The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the three months ended March 31, 2023 (in thousands): As Previously Reported Revision Adjustment As Currently Reported Cash Flows from Operating Activities Net loss $ (43,126) $ 200 (a) (d) $ (42,926) Stock-based compensation 13,925 197 (a) 14,122 Deferred tax benefits (7,373) (496) (d) (7,869) Changes in operating assets and liabilities Accrued expenses and other liabilities (4,660) (397) (a) (5,057) Other long-term liabilities (149) 496 (d) 347 Net cash used in operating activities $ (5,801) $ — $ (5,801) |
Goodwill, Internal-Use Softwa_2
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Internal-use software development costs and intangible assets consisted of the following (in thousands): March 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Internal-use software development costs $ 15,842 $ (3,297) $ 12,545 Intangible assets: Developed technology $ 196,128 $ (106,613) $ 89,515 Trademarks and trade names 236,053 (50,950) 185,103 Software 5,100 (2,659) 2,441 Customer relationships 2,900 (1,623) 1,277 Total $ 440,181 $ (161,845) $ 278,336 December 31, 2023 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 Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands): Three Months Ended March 31, 2024 2023 Amortization expense for internal-use software development $ 934 $ 557 Amortization expense for intangible assets $ 18,665 $ 18,665 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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): March 31, 2024 December 31, 2023 Accrued revenue share $ 17,905 $ 16,365 Accrued marketing expenses 15,073 19,737 Accrued payroll and related benefits 8,205 13,751 Accrued professional fees 2,611 1,455 Deferred revenue 1,693 1,757 Accrued tax liability 1,352 1,233 Other liabilities 5,512 5,016 Accrued expenses and other current liabilities $ 52,351 $ 59,314 |
Debt, Net (Tables)
Debt, Net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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): March 31, 2024 December 31, 2023 Term Loan 1,2 $ 284,787 $ 349,503 Total Debt, net $ 284,787 $ 349,503 _______________ 1 Includes unamortized discount of $11.5 million and $14.7 million, and unamortized loan fees of $0.6 million and $0.8 million, as of March 31, 2024, and December 31, 2023, 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 $180.7 million and $222.7 million as of March 31, 2024 and December 31, 2023, respectively. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 (in thousands): March 31, 2024 December 31, 2023 Level 1 Public Warrants $ 2,438 $ 2,688 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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) : Three Months Ended March 31, 2024 2023 Basic and diluted net loss per share Net loss from continuing operations attributable to System1, Inc. $ (0.16) $ (0.25) Net loss from discontinued operations, net of tax attributable to System1, Inc. — (0.11) Basic and Diluted net loss per share $ (0.16) $ (0.36) Numerator: Net loss from continuing operations attributable to System1, Inc. $ (10,537) $ (23,636) Net loss from discontinued operations, net of tax attributable to System1, Inc. — (10,166) Net loss attributable to System1, Inc. $ (10,537) $ (33,802) Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss per share 67,781 92,771 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The following table summarizes revenue by reportable segments (in thousands): Three Months Ended March 31, 2024 2023 Owned and Operated Advertising $ 69,030 $ 106,025 Partner Network 15,887 15,093 Total revenue $ 84,917 $ 121,118 The following table summarizes adjusted gross profit by reportable segments (in thousands): Three Months Ended March 31, 2024 2023 Owned and Operated Advertising $ 22,462 $ 29,839 Partner Network 10,919 10,217 Adjusted gross profit 33,381 40,056 Other cost of revenue 2,162 1,891 Salaries and benefits 24,483 28,147 Selling, general, and administrative 12,728 14,855 Depreciation and amortization 19,804 19,392 Interest expense, net 7,970 11,402 Gain from debt extinguishment (19,676) — Change in fair value of warrant liabilities (251) (1,409) Loss before income tax $ (13,839) $ (34,222) |
Schedule of Revenues Disaggregated by Geographic Region | The following table summarizes revenue by geographic region (in thousands): Three Months Ended March 31, 2024 2023 United States $ 81,682 $ 117,199 Other countries 3,235 3,919 Total revenue $ 84,917 $ 121,118 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Total Stock-Based Compensation Expense | We recorded the following total stock-based compensation expense (in thousands) : Three Months Ended March 31, 2024 2023 Stock-based compensation expense $ 3,970 $ 5,832 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following table presents the summarized discontinued operations condensed consolidated statements of operations (in thousands) : Three Months Ended March 31, 2023 Revenue $ 46,736 Operating expenses: Cost of revenue (excluding depreciation and amortization) 37,449 Salaries and benefits 10,547 Selling, general, and administrative 2,317 Depreciation and amortization 9,982 Total operating expenses 60,295 Operating loss (13,559) Other expense, net 49 Loss from discontinued operations before income taxes (13,608) Income tax benefit (1,075) Net loss from discontinued operations $ (12,533) 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 condensed consolidated statements of cash flows (in thousands): Three Months Ended March 31, 2023 Depreciation and amortization $ 9,982 Stock-based compensation $ 8,290 Capital expenditures $ 496 |
Organization and Description _2
Organization and Description of Business (Details) | 3 Months Ended |
Mar. 31, 2024 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Accrued expenses and other current liabilities | $ (52,351) | $ (59,314) | |
Additional paid-in capital | (850,202) | $ (843,112) | |
Net income (loss) | $ 10,537 | $ 33,802 | |
Revision of Prior Period, Error Correction, Adjustment | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Accrued expenses and other current liabilities | 900 | ||
Additional paid-in capital | 1,700 | ||
Salaries and benefits expense | 300 | ||
Net income (loss) | 200 | ||
Reduction of noncontrolling interest | 500 | ||
Increase in accumulated deficit | 200 | ||
Increase in additional paid-in-capital | $ 200 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 |
Current liabilities: | |||
Accrued expenses and other current liabilities | $ 52,351 | $ 59,314 | |
Total current liabilities | 77,971 | 86,417 | |
Deferred tax liability | 7,649 | 8,307 | |
Total liabilities | 360,654 | 436,155 | |
Stockholders' equity: | |||
Additional paid-in capital | 850,202 | 843,112 | |
Accumulated deficit | (718,199) | (707,662) | |
Accumulated other comprehensive loss | (271) | (181) | |
Total stockholders' equity attributable to System1, Inc. | 131,741 | 135,278 | |
Non-controlling interest | 28,664 | 34,037 | |
Total stockholders' equity | 160,405 | 169,315 | $ 433,959 |
Total liabilities and stockholders' equity | $ 521,059 | $ 605,470 | |
As Previously Reported | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | 85,727 | ||
Total current liabilities | 199,354 | ||
Deferred tax liability | 35,995 | ||
Total liabilities | 669,119 | ||
Stockholders' equity: | |||
Additional paid-in capital | 837,093 | ||
Accumulated deficit | (479,579) | ||
Accumulated other comprehensive loss | (479) | ||
Total stockholders' equity attributable to System1, Inc. | 357,046 | ||
Non-controlling interest | 78,632 | ||
Total stockholders' equity | 435,678 | ||
Total liabilities and stockholders' equity | 1,104,797 | ||
Revision Adjustment | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | 890 | ||
Total current liabilities | 890 | ||
Deferred tax liability | 830 | ||
Total liabilities | 1,720 | ||
Stockholders' equity: | |||
Additional paid-in capital | 1,652 | ||
Accumulated deficit | 6,155 | ||
Accumulated other comprehensive loss | 156 | ||
Total stockholders' equity attributable to System1, Inc. | 7,963 | ||
Non-controlling interest | (9,683) | ||
Total stockholders' equity | (1,720) | ||
Total liabilities and stockholders' equity | 0 | ||
As Revised | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | 86,617 | ||
Total current liabilities | 200,244 | ||
Deferred tax liability | 36,825 | ||
Total liabilities | 670,839 | ||
Stockholders' equity: | |||
Additional paid-in capital | 838,745 | ||
Accumulated deficit | (473,424) | ||
Accumulated other comprehensive loss | (323) | ||
Total stockholders' equity attributable to System1, Inc. | 365,009 | ||
Non-controlling interest | 68,949 | ||
Total stockholders' equity | 433,958 | ||
Total liabilities and stockholders' equity | 1,104,797 | ||
Impact of Reclassification of Discontinued Operations | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | (14,620) | ||
Total current liabilities | 0 | ||
Deferred tax liability | (13,318) | ||
Total liabilities | 0 | ||
Stockholders' equity: | |||
Additional paid-in capital | 0 | ||
Accumulated deficit | 0 | ||
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 | ||
As Currently Reported | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | 71,997 | ||
Total current liabilities | 200,244 | ||
Deferred tax liability | 23,507 | ||
Total liabilities | 670,839 | ||
Stockholders' equity: | |||
Additional paid-in capital | 838,745 | ||
Accumulated deficit | (473,424) | ||
Accumulated other comprehensive loss | (323) | ||
Total stockholders' equity attributable to System1, Inc. | 365,009 | ||
Non-controlling interest | 68,949 | ||
Total stockholders' equity | 433,958 | ||
Total liabilities and stockholders' equity | $ 1,104,797 |
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 | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Salaries and benefits | $ 24,483 | $ 28,147 |
Total operating expenses | 110,713 | 145,347 |
Operating loss | (25,796) | (24,229) |
Interest expense, net | 7,970 | 11,402 |
Total other (income) expense, net | (11,957) | 9,993 |
Loss before income tax | (13,839) | (34,222) |
Income tax benefit | (48) | (3,829) |
Net loss from continuing operations | (13,791) | (30,393) |
Net loss from discontinued operations, net of tax | 0 | (12,533) |
Net loss | (13,791) | (42,926) |
Less: Net loss from continuing operations attributable to non-controlling interest | (3,254) | (6,757) |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | (2,367) |
Net loss attributable to System1, Inc. | (10,537) | (33,802) |
Net loss from continuing operations | (10,537) | (23,636) |
Net loss from discontinued operations | $ 0 | $ (10,166) |
Basic net loss per share, continuing operations (in dollars per share) | $ (0.16) | $ (0.25) |
Diluted net loss per share, continuing operations (in dollars per share) | (0.16) | (0.25) |
Basic net loss per share, discontinued operations (in dollars per share) | 0 | (0.11) |
Diluted net loss per share, discontinued operations (in dollars per share) | 0 | (0.11) |
Basic net loss per share (in dollars per share) | (0.16) | (0.36) |
Diluted net loss per share (in dollars per share) | $ (0.16) | $ (0.36) |
Weighted average number of shares outstanding - basic (in shares) | 67,781 | 92,771 |
Weighted average number of shares outstanding - diluted (in shares) | 67,781 | 92,771 |
As Previously Reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Salaries and benefits | $ 38,398 | |
Total operating expenses | 205,346 | |
Operating loss | (37,492) | |
Interest expense, net | 11,451 | |
Total other (income) expense, net | 10,042 | |
Loss before income tax | (47,534) | |
Income tax benefit | (4,408) | |
Net loss from continuing operations | (43,126) | |
Net loss from discontinued operations, net of tax | 0 | |
Net loss | (43,126) | |
Less: Net loss from continuing operations attributable to non-controlling interest | (9,174) | |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | |
Net loss attributable to System1, Inc. | (33,952) | |
Net loss from continuing operations | (33,952) | |
Net loss from discontinued operations | $ 0 | |
Basic net loss per share, continuing operations (in dollars per share) | $ (0.37) | |
Diluted net loss per share, continuing operations (in dollars per share) | (0.37) | |
Basic net loss per share, discontinued operations (in dollars per share) | 0 | |
Diluted net loss per share, discontinued operations (in dollars per share) | 0 | |
Basic net loss per share (in dollars per share) | (0.37) | |
Diluted net loss per share (in dollars per share) | $ (0.37) | |
Weighted average number of shares outstanding - basic (in shares) | 92,460 | |
Weighted average number of shares outstanding - diluted (in shares) | 92,460 | |
Revision Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Salaries and benefits | $ 296 | |
Total operating expenses | 296 | |
Operating loss | (296) | |
Interest expense, net | 0 | |
Total other (income) expense, net | 0 | |
Loss before income tax | (296) | |
Income tax benefit | (496) | |
Net loss from continuing operations | 200 | |
Net loss from discontinued operations, net of tax | 0 | |
Net loss | 200 | |
Less: Net loss from continuing operations attributable to non-controlling interest | 50 | |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | |
Net loss attributable to System1, Inc. | 150 | |
Net loss from continuing operations | 150 | |
Net loss from discontinued operations | $ 0 | |
Basic net loss per share, continuing operations (in dollars per share) | $ 0.01 | |
Diluted net loss per share, continuing operations (in dollars per share) | 0.01 | |
Basic net loss per share, discontinued operations (in dollars per share) | 0 | |
Diluted net loss per share, discontinued operations (in dollars per share) | 0 | |
Basic net loss per share (in dollars per share) | 0.01 | |
Diluted net loss per share (in dollars per share) | $ 0.01 | |
Weighted average number of shares outstanding - basic (in shares) | 311 | |
Weighted average number of shares outstanding - diluted (in shares) | 311 | |
As Revised | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Salaries and benefits | $ 38,694 | |
Total operating expenses | 205,642 | |
Operating loss | (37,788) | |
Interest expense, net | 11,451 | |
Total other (income) expense, net | 10,042 | |
Loss before income tax | (47,830) | |
Income tax benefit | (4,904) | |
Net loss from continuing operations | (42,926) | |
Net loss from discontinued operations, net of tax | 0 | |
Net loss | (42,926) | |
Less: Net loss from continuing operations attributable to non-controlling interest | (9,124) | |
Less: Net loss from discontinued operations attributable to non-controlling interest | 0 | |
Net loss attributable to System1, Inc. | (33,802) | |
Net loss from continuing operations | (33,802) | |
Net loss from discontinued operations | $ 0 | |
Basic net loss per share, continuing operations (in dollars per share) | $ (0.36) | |
Diluted net loss per share, continuing operations (in dollars per share) | (0.36) | |
Basic net loss per share, discontinued operations (in dollars per share) | 0 | |
Diluted net loss per share, discontinued operations (in dollars per share) | 0 | |
Basic net loss per share (in dollars per share) | (0.36) | |
Diluted net loss per share (in dollars per share) | $ (0.36) | |
Weighted average number of shares outstanding - basic (in shares) | 92,771 | |
Weighted average number of shares outstanding - diluted (in shares) | 92,771 | |
Impact of Reclassification of Discontinued Operations | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Salaries and benefits | $ (10,547) | |
Total operating expenses | (60,295) | |
Operating loss | 13,559 | |
Interest expense, net | (49) | |
Total other (income) expense, net | (49) | |
Loss before income tax | 13,608 | |
Income tax benefit | 1,075 | |
Net loss from continuing operations | 12,533 | |
Net loss from discontinued operations, net of tax | (12,533) | |
Net loss | 0 | |
Less: Net loss from continuing operations attributable to non-controlling interest | 2,367 | |
Less: Net loss from discontinued operations attributable to non-controlling interest | (2,367) | |
Net loss attributable to System1, Inc. | 0 | |
Net loss from continuing operations | 10,166 | |
Net loss from discontinued operations | $ (10,166) | |
Basic net loss per share, continuing operations (in dollars per share) | $ 0.11 | |
Diluted net loss per share, continuing operations (in dollars per share) | 0.11 | |
Basic net loss per share, discontinued operations (in dollars per share) | (0.11) | |
Diluted net loss per share, discontinued operations (in dollars per share) | (0.11) | |
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 | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net loss | $ (13,791) | $ (42,926) |
Foreign currency translation income (loss) | (135) | (109) |
Comprehensive loss | (13,926) | (43,035) |
Comprehensive loss attributable to non-controlling interest | (3,299) | (9,170) |
Comprehensive loss attributable to System1, Inc. | $ (10,627) | (33,865) |
As Previously Reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net loss | (43,126) | |
Foreign currency translation income (loss) | (108) | |
Comprehensive loss | (43,234) | |
Comprehensive loss attributable to non-controlling interest | (9,220) | |
Comprehensive loss attributable to System1, Inc. | (34,014) | |
Revision Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net loss | 200 | |
Foreign currency translation income (loss) | ||
Comprehensive loss | 200 | |
Comprehensive loss attributable to non-controlling interest | 50 | |
Comprehensive loss attributable to System1, Inc. | 150 | |
As Revised | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net loss | (42,926) | |
Foreign currency translation income (loss) | (108) | |
Comprehensive loss | (43,034) | |
Comprehensive loss attributable to non-controlling interest | (9,170) | |
Comprehensive loss attributable to System1, Inc. | $ (33,864) |
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 | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | $ 169,315 | ||
Net loss | (13,791) | $ (42,926) | |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (991) | ||
Issuance of common stock in connection with settlement of incentive plan | 1,707 | ||
Conversion of Class C shares to Class A shares | 0 | ||
Increase in tax receivable agreement liability | (110) | ||
Other comprehensive income (loss) | (135) | ||
Stock-based compensation | 4,405 | ||
Ending balance | 160,405 | 433,959 | |
Additional Paid-In-Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 843,112 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 178 | ||
Issuance of common stock in connection with settlement of incentive plan | 2,464 | ||
Conversion of Class C shares to Class A shares | 241 | ||
Increase in tax receivable agreement liability | (110) | ||
Stock-based compensation | 4,317 | ||
Ending balance | 850,202 | 838,745 | |
Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (707,662) | ||
Net loss | (10,537) | ||
Ending balance | (718,199) | (473,424) | |
Accumulated Other Comprehensive Income | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (181) | ||
Other comprehensive income (loss) | (90) | ||
Ending balance | (271) | (322) | |
Non-Controlling Interest | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 34,037 | ||
Net loss | (3,254) | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (1,169) | ||
Issuance of common stock in connection with settlement of incentive plan | (757) | ||
Conversion of Class C shares to Class A shares | (241) | ||
Other comprehensive income (loss) | (45) | ||
Stock-based compensation | 88 | ||
Ending balance | $ 28,664 | $ 68,949 | |
Class A Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 65,855 | ||
Beginning balance | $ 7 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 1,498 | ||
Issuance of common stock in connection with the acquisition of business (in shares) | 970 | ||
Conversion of Class C shares to Class A shares (in shares) | 309 | ||
Ending balance (in shares) | 68,632 | 93,147 | |
Ending balance | $ 7 | $ 9 | |
Class C Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 21,513 | ||
Beginning balance | $ 2 | ||
Conversion of Class C shares to Class A shares (in shares) | (309) | ||
Ending balance (in shares) | 21,204 | 21,513 | |
Ending balance | $ 2 | $ 2 | |
As Previously Reported | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 470,671 | ||
Net loss | (43,126) | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (1,730) | ||
Issuance of common stock in connection with settlement of incentive plan | 1,659 | ||
Conversion of Class C shares to Class A shares | 0 | ||
Increase in tax receivable agreement liability | (441) | ||
Other comprehensive income (loss) | (109) | ||
Stock-based compensation | 6,963 | ||
Ending balance | 433,561 | $ 470,671 | |
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 [Member] | ||
As Previously Reported | Cumulative Effect, Period of Adoption, Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (326) | ||
Ending balance | $ (326) | ||
As Previously Reported | Additional Paid-In-Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 831,566 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (1,730) | ||
Issuance of common stock in connection with settlement of incentive plan | 1,659 | ||
Conversion of Class C shares to Class A shares | 955 | ||
Increase in tax receivable agreement liability | (441) | ||
Stock-based compensation | 6,963 | ||
Ending balance | 838,972 | 831,566 | |
As Previously Reported | Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (439,296) | ||
Net loss | (33,952) | ||
Ending balance | (473,574) | (439,296) | |
As Previously Reported | Accumulated Deficit | Cumulative Effect, Period of Adoption, Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (326) | ||
Ending balance | (326) | ||
As Previously Reported | Accumulated Other Comprehensive Income | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (260) | ||
Other comprehensive income (loss) | (62) | ||
Ending balance | (322) | (260) | |
As Previously Reported | Non-Controlling Interest | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 78,650 | ||
Net loss | (9,174) | ||
Conversion of Class C shares to Class A shares | (955) | ||
Other comprehensive income (loss) | (47) | ||
Ending balance | $ 68,474 | $ 78,650 | |
As Previously Reported | Class A Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 91,674 | ||
Beginning balance | $ 9 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 832 | ||
Issuance of common stock in connection with the acquisition of business (in shares) | 407 | ||
Conversion of Class C shares to Class A shares (in shares) | 234 | ||
Ending balance (in shares) | 93,147 | 91,674 | |
Ending balance | $ 9 | $ 9 | |
As Previously Reported | Class C Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 21,747 | ||
Beginning balance | $ 2 | ||
Conversion of Class C shares to Class A shares (in shares) | (234) | ||
Ending balance (in shares) | 21,513 | 21,747 | |
Ending balance | $ 2 | $ 2 | |
Revision Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | 200 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 0 | ||
Issuance of common stock in connection with settlement of incentive plan | 0 | ||
Conversion of Class C shares to Class A shares | 0 | ||
Other comprehensive income (loss) | 0 | ||
Stock-based compensation | 198 | ||
Ending balance | 398 | ||
Revision Adjustment | Additional Paid-In-Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 281 | ||
Issuance of common stock in connection with settlement of incentive plan | 160 | ||
Conversion of Class C shares to Class A shares | 92 | ||
Stock-based compensation | (760) | ||
Ending balance | (227) | ||
Revision Adjustment | Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | 150 | ||
Ending balance | 150 | ||
Revision Adjustment | Accumulated Other Comprehensive Income | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Other comprehensive income (loss) | 0 | ||
Ending balance | 0 | ||
Revision Adjustment | Non-Controlling Interest | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | 50 | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (281) | ||
Issuance of common stock in connection with settlement of incentive plan | (160) | ||
Conversion of Class C shares to Class A shares | (92) | ||
Stock-based compensation | 958 | ||
Ending balance | $ 475 | ||
Revision Adjustment | Class A Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Ending balance (in shares) | 0 | ||
Ending balance | $ 0 | ||
Revision Adjustment | Class C Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Ending balance (in shares) | 0 | ||
Ending balance | $ 0 | ||
As Revised | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | (42,926) | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (1,730) | ||
Issuance of common stock in connection with settlement of incentive plan | 1,659 | ||
Conversion of Class C shares to Class A shares | 0 | ||
Increase in tax receivable agreement liability | (441) | ||
Other comprehensive income (loss) | (109) | ||
Stock-based compensation | 7,161 | ||
Ending balance | 433,959 | ||
As Revised | Cumulative Effect, Period of Adoption, Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (326) | ||
Ending balance | (326) | ||
As Revised | Additional Paid-In-Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (1,449) | ||
Issuance of common stock in connection with settlement of incentive plan | 1,819 | ||
Conversion of Class C shares to Class A shares | 1,047 | ||
Increase in tax receivable agreement liability | (441) | ||
Stock-based compensation | 6,203 | ||
Ending balance | 838,745 | ||
As Revised | Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | (33,802) | ||
Ending balance | (473,424) | ||
As Revised | Accumulated Deficit | Cumulative Effect, Period of Adoption, Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (326) | ||
Ending balance | $ (326) | ||
As Revised | Accumulated Other Comprehensive Income | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Other comprehensive income (loss) | (62) | ||
Ending balance | (322) | ||
As Revised | Non-Controlling Interest | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Net loss | (9,124) | ||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (281) | ||
Issuance of common stock in connection with settlement of incentive plan | (160) | ||
Conversion of Class C shares to Class A shares | (1,047) | ||
Other comprehensive income (loss) | (47) | ||
Stock-based compensation | 958 | ||
Ending balance | $ 68,949 | ||
As Revised | Class A Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | 832 | ||
Issuance of common stock in connection with the acquisition of business (in shares) | 407 | ||
Conversion of Class C shares to Class A shares (in shares) | 234 | ||
Ending balance (in shares) | 93,147 | ||
Ending balance | $ 9 | ||
As Revised | Class C Common Stock | Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Conversion of Class C shares to Class A shares (in shares) | (234) | ||
Ending balance (in shares) | 21,513 | ||
Ending balance | $ 2 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flows from Operating Activities | ||
Net loss | $ (13,791) | $ (42,926) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Stock-based compensation | 3,970 | 14,122 |
Deferred tax benefits | (656) | (7,869) |
Accrued expenses and other liabilities | (3,654) | (5,057) |
Other long-term liabilities | (587) | 347 |
Net cash used in operating activities | $ (15,987) | (5,801) |
As Previously Reported | ||
Cash Flows from Operating Activities | ||
Net loss | (43,126) | |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Stock-based compensation | 13,925 | |
Deferred tax benefits | (7,373) | |
Accrued expenses and other liabilities | (4,660) | |
Other long-term liabilities | (149) | |
Net cash used in operating activities | (5,801) | |
Revision Adjustment | ||
Cash Flows from Operating Activities | ||
Net loss | 200 | |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Stock-based compensation | 197 | |
Deferred tax benefits | (496) | |
Accrued expenses and other liabilities | (397) | |
Other long-term liabilities | 496 | |
Net cash used in operating activities | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Capital Resources and Liquidity (Details) | 3 Months Ended | ||
Mar. 31, 2024 contract | Mar. 31, 2023 | Dec. 31, 2023 customer | |
Product Information [Line Items] | |||
Number of customers | customer | 2 | ||
Product Information [Line Items] | |||
Number of contract | 2 | ||
Google | Revenue Benchmark | Advertising Partner Risk | |||
Product Information [Line Items] | |||
Concentration risk, percentage | 83% | 89% | |
Google | Accounts Receivable | Advertising Partner Risk | |||
Product Information [Line Items] | |||
Concentration risk, percentage | 68% | 69% | |
Microsoft | |||
Product Information [Line Items] | |||
Number of contract | 1 | ||
Yahoo | Accounts Receivable | Advertising Partner Risk | |||
Product Information [Line Items] | |||
Concentration risk, percentage | 5% | 6% |
Goodwill, Internal-Use Softwa_3
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 82,407,000 | $ 82,407,000 | |
Goodwill impairment loss | 0 | ||
Internal-use software development costs | 4,200,000 | $ 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_4
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 15,842 | $ 13,788 |
Accumulated Amortization | (3,297) | (2,363) |
Net Carrying Amount | 12,545 | 11,425 |
Gross Carrying Amount | 440,181 | 440,181 |
Accumulated Amortization | (161,845) | (143,180) |
Net Carrying Amount | 278,336 | 297,001 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 196,128 | 196,128 |
Accumulated Amortization | (106,613) | (94,354) |
Net Carrying Amount | 89,515 | 101,774 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 236,053 | 236,053 |
Accumulated Amortization | (50,950) | (45,050) |
Net Carrying Amount | 185,103 | 191,003 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,100 | 5,100 |
Accumulated Amortization | (2,659) | (2,341) |
Net Carrying Amount | 2,441 | 2,759 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,900 | 2,900 |
Accumulated Amortization | (1,623) | (1,435) |
Net Carrying Amount | $ 1,277 | $ 1,465 |
Goodwill, Internal-Use Softwa_5
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 | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense for internal-use software development | $ 934 | $ 557 |
Amortization expense for intangible assets | $ 18,665 | $ 18,665 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Payables and Accruals [Abstract] | ||
Accrued revenue share | $ 17,905 | $ 16,365 |
Accrued marketing expenses | 15,073 | 19,737 |
Accrued payroll and related benefits | 8,205 | 13,751 |
Accrued professional fees | 2,611 | 1,455 |
Deferred revenue | 1,693 | 1,757 |
Accrued tax liability | 1,352 | 1,233 |
Other liabilities | 5,512 | 5,016 |
Accrued expenses and other current liabilities | $ 52,351 | $ 59,314 |
Debt, Net - Narrative (Details)
Debt, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 42 Months Ended | |||
Jan. 17, 2024 | Jan. 27, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2026 | Dec. 31, 2025 | |
Debt Instrument [Line Items] | ||||||
Period of financial report distribution to lender | 120 days | |||||
Additional remediate period | 30 days | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Long-term line of credit | $ 50 | $ 0 | ||||
Debt Instrument covenant percentage | 35% | |||||
Credit agreement, leverage ratio | 5.40 | |||||
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 | $ 296.3 | |||||
Debt instrument,discount percentage | 64.20% | |||||
Term Loan | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Principle amount | $ 63.7 | |||||
Debt instrument, repurchase amount | 40.9 | |||||
Debt outstanding amount | 301.3 | |||||
Estimated gain on the repurchase | $ 19.7 | |||||
Term Loan | Revolving Credit Facility | Forecast | ||||||
Debt Instrument [Line Items] | ||||||
Amortization quarterly payment | $ 7.5 | $ 5 | ||||
Term Loan | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Term of loan | 5 years 6 months | |||||
Principle amount | $ 400 | |||||
Proceeds from term loan | $ 376 | |||||
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 | Mar. 31, 2024 | Dec. 31, 2023 |
Debt Instrument [Line Items] | ||
Total Debt, net | $ 284,787 | $ 349,503 |
Unamortized discount | 11,500 | 14,700 |
Loan fees | 600 | 800 |
Fair Value, Inputs, Level 2 | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 180,700 | 222,700 |
Term Loan | Secured Debt | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total Debt, net | $ 284,787 | $ 349,503 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Income Tax Examination [Line Items] | |||
Income tax expense (benefit) | $ (48) | $ (3,829) | |
Effective income tax rate reconciliation, (percent) | 0.40% | 11.20% | |
S1 Holdco, LLC | |||
Income Tax Examination [Line Items] | |||
TRA payment including interest amount | $ 0 | $ 0 | |
TRA payments due | $ 900 | $ 800 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Jun. 30, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Obligated to pay, year one | $ 5 | |
Obligated to pay, year two | $ 5 | |
Remaining contractual obligated to be pay | $ 10 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Public Warrants | Level 1 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Public Warrants | $ 2,438 | $ 2,688 |
Net Loss Per Share - Basic And
Net Loss Per Share - Basic And Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Net loss from continuing operations attributable to System1, Inc., Basic (in dollars per share) | $ (0.16) | $ (0.25) |
Net loss from continuing operations attributable to System1, Inc., Diluted (in dollars per share) | (0.16) | (0.25) |
Net loss from discontinued operations, net of tax attributable to System1, Inc., Basic (in dollars per share) | 0 | (0.11) |
Net loss from discontinued operations, net of tax attributable to System1, Inc., Diluted (in dollars per share) | 0 | (0.11) |
Basic net loss per share (in dollars per share) | (0.16) | (0.36) |
Diluted net loss per share (in dollars per share) | $ (0.16) | $ (0.36) |
Numerator: | ||
Net loss from continuing operations attributable to System1, Inc. | $ (10,537) | $ (23,636) |
Net loss from discontinued operations, net of tax attributable to System1, Inc. | 0 | (10,166) |
Net loss attributable to System1, Inc. | $ (10,537) | $ (33,802) |
Denominator: | ||
Weighted-average common shares outstanding used in computing basic net loss per share (in shares) | 67,781 | 92,771 |
Weighted-average common shares outstanding used in computing diluted net loss per share (in shares) | 67,781 | 92,771 |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 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) | 3 Months Ended |
Mar. 31, 2024 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 | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 84,917 | $ 121,118 |
Adjusted gross profit | 33,381 | 40,056 |
Other cost of revenue | 2,162 | 1,891 |
Salaries and benefits | 24,483 | 28,147 |
Selling, general, and administrative | 12,728 | 14,855 |
Depreciation and amortization | 19,804 | 19,392 |
Interest expense, net | 7,970 | 11,402 |
Gain from debt extinguishment | (19,676) | 0 |
Change in fair value of warrant liabilities | (251) | (1,409) |
Loss before income tax | (13,839) | (34,222) |
Owned and Operated Advertising | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 69,030 | 106,025 |
Adjusted gross profit | 22,462 | 29,839 |
Partner Network | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 15,887 | 15,093 |
Adjusted gross profit | $ 10,919 | $ 10,217 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Revenues Disaggregated by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 84,917 | $ 121,118 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 81,682 | 117,199 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 3,235 | $ 3,919 |
Stock-Based Compensation - Tota
Stock-Based Compensation - Total Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 3,970 | $ 5,832 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - CouponFollow Incentive Plan shares in Millions, $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Cash EBITDA | $ 3.3 |
Recognized fixed amount | 0.8 |
Short-term restricted cash | $ 2.8 |
Class A Common Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of common stock in connection with the acquisition of business (in shares) | shares | 1 |
Aggregate fair value | $ 1.7 |
Difference between fair value of common stock issued to settle the earnout liability and the carrying value of the earnout liability | $ 0.5 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) $ / shares in Units, £ in Millions, $ in Millions | 3 Months Ended | ||||
Aug. 30, 2022 USD ($) shares | Mar. 31, 2024 USD ($) $ / shares shares | Mar. 31, 2024 GBP (£) | Dec. 31, 2023 $ / shares shares | Nov. 30, 2023 USD ($) $ / shares shares | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Common stock outstanding (in shares) | shares | 21,204,000 | 21,513,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
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 | 68,632,000 | 65,855,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Paysafe | Related Party | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Credit card processing fees | $ 1.1 | ||||
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 | ||||
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 | ||||
Cash rewards | $ 20 | ||||
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 | ||||
Common stock outstanding (in shares) | shares | 29,100,000 | ||||
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 - State
Discontinued Operations - Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net loss from discontinued operations | $ 0 | $ (10,166) |
JDIL | Discontinued Operations, Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenue | 46,736 | |
Cost of revenue (excluding depreciation and amortization) | 37,449 | |
Salaries and benefits | 10,547 | |
Selling, general, and administrative | 2,317 | |
Depreciation and amortization | 9,982 | |
Total operating expenses | 60,295 | |
Operating loss | (13,559) | |
Other expense, net | 49 | |
Loss from discontinued operations before income taxes | (13,608) | |
Income tax benefit | (1,075) | |
Net loss from discontinued operations | $ (12,533) |
Discontinued Operations - Depre
Discontinued Operations - Depreciation, Amortization, Capital Expenditures (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
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 |
JDIL | Discontinued Operations, Held-for-sale | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Depreciation and amortization | $ 9,982 |
Stock-based compensation | 8,290 |
Capital expenditures | $ 496 |