sst-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from ______ to ______

Commission File Number 001-39331

System1, Inc.

(Exact name of registrant as specified in its charter)


Delaware						92-3978051
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

4235 Redwood Avenue Los Angeles, CA						90066
(Address of Principal Executive Offices)						(Zip Code)

(310) 924-6037

(Registrant’s telephone number including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

SST

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 4, 2025 there were 8,045,545 shares of Class A common stock, $0.0001 par value per share, and 1,869,607 shares of Class C common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page

Part I - Financial Information		1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

Part II - Other Information		28

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	29
Item 6.	Exhibits	29

Signatures		30

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

System1, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except par value)


	June 30, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	63,648	$	63,607
Restricted cash, current	1,243		3,970
Accounts receivable, net	70,218		62,916
Prepaid expenses and other current assets	6,251		3,984
Total current assets	141,360		134,477
Restricted cash, non-current	378		371
Property and equipment, net	1,816		2,104
Internal-use software development costs, net	14,214		14,436
Intangible assets, net	185,340		222,341
Goodwill	82,407		82,407
Operating lease right-of-use assets	3,401		2,644
Other non-current assets	333		349
Total assets	$	429,249	$	459,129

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	28,058	$	10,401
Accrued expenses and other current liabilities	69,117		76,200
Operating lease liabilities, current	1,166		2,089
Current debt, net	21,544		16,405
Total current liabilities	119,885		105,095
Operating lease liabilities, non-current	2,860		1,365
Non-current debt, net	241,795		255,118
Deferred tax liability	5,225		6,199
Other non-current liabilities	6,040		6,356
Total liabilities	375,805		374,133
Commitments and contingencies (Note 7)
Stockholders' equity:
Class A common stock $0.0001 par value; 500,000 shares authorized, 8,011 and 7,365 Class A shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	1		1
Class C common stock $0.0001 par value; 25,000 shares authorized, 1,869 and 1,870 Class C shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	—		—
Additional paid-in capital	874,008		863,041
Accumulated deficit	(815,680)		(782,335)
Accumulated other comprehensive loss	(133)		(443)
Total stockholders' equity attributable to System1, Inc.	58,196		80,264
Non-controlling interest	(4,752)		4,732
Total stockholders' equity	53,444		84,996
Total liabilities and stockholders' equity	$	429,249	$	459,129

The accompanying notes are an integral part of these condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except for per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue	$	78,115	$	94,581	$	152,628	$	179,498
Operating expenses:
Cost of revenue	50,212		68,507		96,289		134,825
Salaries and benefits	26,297		33,937		51,285		58,420
Selling, general, and administrative	17,511		21,223		34,085		41,135
Total operating expenses	94,020		123,667		181,659		234,380
Operating loss	(15,905)		(29,086)		(29,031)		(54,882)
Other expense (income):
Interest expense, net	7,116		7,871		14,201		15,841
Gain on extinguishment of debt	—		(433)		—		(20,109)
Change in fair value of warrant liabilities	68		(1,501)		100		(1,752)
Total other expense (income), net	7,184		5,937		14,301		(6,020)
Loss before income tax	(23,089)		(35,023)		(43,332)		(48,862)
Income tax benefit	(1,547)		(178)		(1,934)		(226)
Net loss	(21,542)		(34,845)		(41,398)		(48,636)
Less: Net loss attributable to non-controlling interest	(4,079)		(8,472)		(8,052)		(11,726)
Net loss attributable to System1, Inc.	$	(17,463)	$	(26,373)	$	(33,346)	$	(36,910)

Basic and diluted net loss per share:	$	(2.23)	$	(3.80)	$	(4.37)	$	(5.38)

Weighted average number of shares outstanding - basic and diluted	7,820		6,938		7,631		6,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss (Unaudited)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net loss	$	(21,542)	$	(34,845)	$	(41,398)	$	(48,636)
Other comprehensive income (loss):
Foreign currency translation income (loss)	369		(96)		382		(231)
Comprehensive loss	(21,173)		(34,941)		(41,016)		(48,867)
Comprehensive loss attributable to non-controlling interest	(4,009)		(8,544)		(7,980)		(11,843)
Comprehensive loss attributable to System1, Inc.	$	(17,164)	$	(26,397)	$	(33,036)	$	(37,024)

The accompanying notes are an integral part of these condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In thousands)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders' Equity
Balance at December 31, 2024	7,365	$	1	1,870	$	—	$	863,041	$	(782,335)	$	(443)	$	4,732	$	84,996
Net loss	—	—		—	—		—		(15,883)		—		(3,973)		(19,856)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	120	—		—	—		33		—		—		(325)		(292)
Other comprehensive income	—	—		—	—		—		—		11		2		13
Stock-based compensation	—	—		—	—		2,766		—		—		44		2,810
Distributions to members, net of contributions	—	—		—	—		—		—		—		(12)		(12)
Balance at March 31, 2025	7,485	1		1,870	—		865,840		(798,218)		(432)		468		67,659
Net loss	—	—		—	—		—		(17,463)		—		(4,079)		(21,542)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	75	—		—	—		145		—		—		(165)		(20)
Conversion of Class C shares to Class A shares	1	—		(1)	—		—		—		—		—		—
Issuance of common stock in private placement	450	—		—	—		3,275		—		—		(1,025)		2,250
Class A common stock repurchases	—	—		—	—		—		1		—		—		1
Other comprehensive income	—	—		—	—		—		—		299		70		369
Stock-based compensation	—	—		—	—		4,748		—		—		—		4,748
Distributions to members, net of contributions	—	—		—	—		—		—		—		(21)		(21)
Balance at June 30, 2025	8,011	$	1	1,869	$	—	$	874,008	$	(815,680)	$	(133)	$	(4,752)	$	53,444

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In thousands)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders' Equity
Balance at December 31, 2023	6,585	$	1	2,151	$	—	$	843,120	$	(707,662)	$	(181)	$	34,037	$	169,315
Net loss	—	—		—	—		—		(10,537)		—		(3,254)		(13,791)
Issuance of common stock in connection with settlement of incentive plan	97	—		—	—		2,464		—		—		(757)		1,707
Conversion of Class C shares to Class A shares	31	—		(31)	—		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	150	—		—	—		178		—		—		(1,169)		(991)
Other comprehensive loss	—	—		—	—		—		—		(90)		(45)		(135)
Stock-based compensation	—	—		—	—		4,317		—		—		88		4,405
Contributions from members, net of distributions	—	—		—	—		—		—		—		5		5
Balance at March 31, 2024	6,863	1		2,120	—		850,210		(718,199)		(271)		28,664		160,405
Net loss	—	—		—	—		—		(26,373)		—		(8,472)		(34,845)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	62	—		—	—		284		—		—		(308)		(24)
Other comprehensive loss	—	—		—	—		—		—		(24)		(72)		(96)
Stock-based compensation	—

SEC Form 10-Q filed by System1 Inc.