Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries System1 Announces Fourth Quarter and Full Year 2023 Financial Results By: System1, Inc. via Business Wire March 18, 2024 at 06:00 AM EDT All Key Financial Results Above the High-End of Guidance Range Fourth Quarter Financial Highlights: Revenue Increased 9% Over Prior Quarter to $96.1 million Gross Profit Increased 1% Over Prior Quarter to $25 million Adjusted Gross Profit Increased 1% Over Prior Quarter to $37.5 million GAAP Net Loss Decreased 2% Over Prior Quarter to $25 million Adjusted EBITDA Increased 24% Over Prior Quarter to $10 million Fiscal Year 2023 Results: Revenue of $402.0 million Gross Profit of $103.4 million Adjusted Gross Profit of $153.3 million GAAP Net Loss of $111.3 million Adjusted EBITDA of $29.2 million System1, Inc. (NYSE: SST) (“System1” or the “Company”), an omnichannel customer acquisition marketing platform, announced its financial results for the fourth quarter and full year 2023. Unless otherwise noted, all financial results are reflect the divestiture of Total Security Limited (“Total Security”), the Company’s anti-virus subscription business, which was completed on November 30, 2023. “We are pleased to report results for Q4 that exceeded our guidance for Revenue, Adjusted Gross Profit and Adjusted EBITDA, despite what continued to be a challenging online advertising environment. I am especially pleased that our core advertising business was able to execute despite significant management focus on the sale of Total Security,” commented Michael Blend, System1’s Co-Founder & Chief Executive Officer. “Looking forward to 2024 and beyond, we expect to benefit from macro tailwinds around increased advertiser demand and the forthcoming deprecation of third-party cookies in Chrome. Coupled with our initiatives to integrate AI within our RAMP platform, a resurgence in our Partner Network business and a streamlined strategic focus following the Total Security sale, we are optimistic about both 2024 and the years ahead.” Tridivesh Kidambi, Chief Financial Officer of System1, commented, “We are pleased to close another strong quarter and finish the year with positive momentum heading into 2024, with reflecting quarter-over-quarter growth on both top line Revenue and Adjusted EBITDA. With the sale of our Total Security consumer subscription business last quarter, we enter 2024 with a streamlined cost structure, a capital-efficient advertising business and substantial liquidity available on our balance sheet. We will continue to be focused on investing for growth in our business, while also strategically deploying our capital to reduce our overall leverage.” Note: Adjusted Gross Profit and Adjusted EBITDA are non-GAAP metrics that are defined and reconciled at the end of this release. Fourth Quarter 2023 and Subsequent Business Highlights Sold subscription business segment for $240 million of gross cash and the retirement of approximately 29.1M Class A shares. Successfully completed a modified “Dutch auction” tender offer in January of 2024, repurchasing $63.7 million of term debt for a purchase price of $40.9 million, exclusive of fees and expenses. This brought the total debt repaid between November 2023 and January 2024 to $155 million. Introduced new enhancements to Owned & Operated product offerings, including a new "proof of delivery" feature for its RoadWarrior route-planning app in connection with the launch of a new marketplace for subscription add-ons. Announced a strategic partnership to power the search results of Ecosia, a leading search engine, representing another achievement for System1’s resurgent Partner Network business. First Quarter 2024 Guidance The Company expects for the first quarter of 2024: Revenue between $82 million and $84 million. Gross Profit between $15 million and $17 million. Adjusted Gross Profit between $28 million and $30 million. Adjusted EBITDA between $(2) million and $(1) million. In reliance on the unreasonable efforts exception for forward-looking information provided under Regulation S-K, the Company is not reasonably able to provide a quantitative reconciliation of Adjusted Gross Profit and Adjusted EBITDA to the most directly comparable GAAP financial measures without unreasonable effort due to uncertainties regarding purchase accounting, stock-based compensation, taxes and other potential adjustments. The variability of these items could have an unpredictable, and potentially significant, impact on the Company’s future GAAP financial results. For the first quarter of 2024, the Company expects interest expense in the range of $7.5 million to $8.0 million, depreciation and amortization expense in the range of $20 million to $21 million, , and acquisition and restructuring costs to be in the range of $2.0 million to $2.5 million. The Company’s achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in its filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment. About System1, Inc. System1 combines best-in-class technology & data science to operate its advanced Responsive Acquisition Marketing Platform (RAMP). System1’s RAMP is omnichannel and omnivertical, and built for a privacy-centric world. RAMP enables the building of powerful brands across multiple consumer verticals, the development & growth of a suite of privacy-focused products, and the delivery of high-intent customers to advertising partners. For more information, visit www.system1.com. Cautionary Statement Regarding Forward-Looking Statements This press release includes “forward-looking statements” “within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, particularly any statements or materials regarding System1’s future results. Forward-looking statements include, but are not limited to, statements regarding System1 or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause System1’s actual financial results or operating performance to be materially different from those expressed or implied by these forward-looking statements. Readers or users of this press release should evaluate the risk factors summarized below, which summary list is not exclusive. Readers or users of this press release should also carefully review the “Risk Factors” and other information included in our registration statements on Form S-4 (including the related proxy statement/prospectus) with respect to the Business Combination with Trebia Acquisition Corp. each filed with the Securities and Exchange Commission (the “SEC”), as well as System1’s Form 10-K, Form 10-Q/As, Form 8-K and other reports filed with the SEC from time to time. Please refer to these SEC filings for additional information regarding the risks and other factors that may impact System1’s business, prospects, financial results and operating performance following completion of the Business Combination. Such risks, uncertainties and assumptions include, but are not limited to: (1) our ability to maintain our key relationships with network partners and advertisers, including our monetization arrangements; (2) our ability to collect, process, effectively utilize and safely store the first party data that we obtain through our services; (3) The performance of our responsive acquisition marketing platform, or RAMP; (4) changes in customer demand for our services and our ability to incorporate to such changes; (5) our ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (6) our ability to improve and maintain adequate internal control over financial reporting and remediate identified material weaknesses; (7) our ability to successfully source and complete acquisitions and to integrate the operations of companies System1 acquires; (8) our ability to raise financing in the future as and when needed or on market terms; (9) our ability to compete with existing competitors and the entry of new competitors in the market; (10) changes in applicable laws or regulations impacting the business which we operate and our ability to maintain compliance with the various laws that our business and operations are subject to; and (11) our ability to protect our intellectual property rights. The foregoing list of factors is not exclusive. Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this press release. System1’s independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the forward-looking statements for the purpose of their inclusion in this press release, and accordingly, do not express an opinion or provide any other form of assurance with respect thereto for the purpose of this press release. System1 will not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that such trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements. Non-GAAP Measures: Adjusted Gross Profit and Adjusted EBITDA Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and represent key metrics used by System1’s management and board of directors to measure the operational strength and performance of its business, to establish budgets, and to develop operational goals for managing its business. Adjusted Gross Profit (Loss) is defined as gross profit plus depreciation and amortization related to cost of revenues. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expenses, deferred compensation, management fees, minority interest expense, restructuring charges, impairment and certain discrete items impacting a particular segment’s results in a particular period. System1 believes Adjusted Gross Profit and Adjusted EBITDA are relevant and useful metrics for investors because it allows investors to view performance in a manner similar to the method used by management. There are limitations on the use of Adjusted Gross Profit and Adjusted EBITDA and it may not be comparable to similarly titled measures of other companies. Other companies, including companies in System1’s industry, may calculate non-GAAP financial measures differently than System1 does, limiting the usefulness of those measures for comparative purposes. Adjusted Gross Profit should not be considered a substitute for revenue. Adjusted EBITDA should not be considered a substitute for income (loss) from operations, net income (loss), or net income (loss) attributable to System1 on a consolidated basis that System1 reports in accordance with GAAP. Although System1 uses Adjusted Gross Profit and Adjusted EBITDA as financial measures to assess the performance of its business, such use is limited because it does not include certain costs necessary to operate System1’s business. System1’s presentation of Adjusted Gross Profit and Adjusted EBITDA should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items. Unaudited Condensed Statements of Operations Three Months Ended December 31, (In thousands) 2023 2022 As Revised Revenue $ 96,120 $ 140,071 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 58,550 97,146 Salaries, commissions, and benefits 24,608 29,039 Selling, general, and administrative 12,303 13,869 Depreciation and amortization 19,737 19,101 Impairment of goodwill — 26,636 Total operating costs and expenses 115,198 185,791 Operating income (loss) (19,078 ) (45,720 ) Other expense (income): Interest expense 11,956 9,692 Loss on extinguishment of related-party debt 1,385 — Change in fair value of warrant liabilities 1,764 (10,360 ) Total other expense (income), net 15,105 (668 ) Loss before income tax (34,183 ) (45,052 ) Income tax benefit (8,757 ) (15,251 ) Net loss from continuing operations (25,426 ) (29,801 ) Net loss from discontinued operations, net of tax (11,105 ) (21,039 ) Net loss (36,531 ) (50,840 ) Less: Net loss from continuing operations attributable to non-controlling interest (6,656 ) (14,082 ) Less: Net loss from discontinued operations attributable to non-controlling interest (2,247 ) (4,007 ) Net loss attributable to System1, Inc. $ (27,628 ) $ (32,751 ) Consolidated Statements of Operations Successor Predecessor (In thousands) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 401,971 $ 612,229 $ 52,712 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 248,745 438,839 41,507 Salaries, commissions, and benefits 106,505 138,045 31,181 Selling, general, and administrative 54,307 50,831 15,665 Depreciation and amortization 78,403 69,469 1,000 Impairment of goodwill — 372,728 — Total operating costs and expenses 487,960 1,069,912 89,353 Operating income (loss) (85,989 ) (457,683 ) (36,641 ) Other expense (income): Interest expense 48,745 31,609 1,049 Loss on extinguishment of related-party debt 2,004 — — Change in fair value of warrant liabilities (5,109 ) 3,751 — Total other expense, net 45,640 35,360 1,049 Loss before income tax (131,629 ) (493,043 ) (37,690 ) Income tax benefit (20,371 ) (108,680 ) (629 ) Net loss from continuing operations (111,258 ) (384,363 ) (37,061 ) Net loss from discontinued operations, net of tax (174,327 ) (56,959 ) — Net loss (285,585 ) (441,322 ) (37,061 ) Less: Net loss from continuing operations attributable to non-controlling interest (25,185 ) (99,841 ) — Less: Net loss from discontinued operations attributable to non-controlling interest (33,179 ) (11,089 ) — Net loss attributable to System1, Inc. $ (227,221 ) $ (330,392 ) $ (37,061 ) Consolidated Balance Sheets (In thousands, except for par values) December 31, 2023 December 31, 2022 As Revised Assets Current assets: Cash and cash equivalents $ 135,343 $ 8,905 Restricted cash, current 3,813 5,717 Accounts receivable, net 56,093 80,428 Prepaid expenses and other current assets 6,754 11,166 Current assets held for sale from discontinued operations — 20,292 Total current assets 202,003 126,508 Restricted cash, non-current 4,294 5,395 Property and equipment, net 3,084 3,162 Internal-use software development costs, net 11,425 6,948 Intangible assets, net 297,001 371,661 Goodwill 82,407 82,407 Operating lease right-of-use assets 4,732 6,484 Other non-current assets 524 2,822 Assets held for sale from discontinued operations — 555,069 Total assets $ 605,470 $ 1,160,456 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 9,499 6,707 Accrued expenses and other current liabilities 59,314 85,780 Operating lease liabilities, current 2,333 2,149 Debt, net 15,271 15,021 Current liabilities held for sale from discontinued operations — 101,418 Total current liabilities 86,417 211,075 Operating lease liabilities, non-current 3,582 5,875 Long-term debt, net 334,232 399,504 Warrant liability 2,688 7,798 Deferred tax liability 8,307 29,396 Other liabilities 929 1,661 Liabilities held for sale from discontinued operations — 34,476 Total liabilities 436,155 689,785 Class A common stock - $0.0001 par value; 500,000 shares authorized, 65,855 Class A shares issued and outstanding as of December 31, 2023 and 2022, respectively 7 9 Class C common stock - $0.0001 par value; 25,000 shares authorized, 21,513 Class C shares issued and outstanding as of December 31, 2023 and 2022, respectively 2 2 Additional paid-in capital 843,112 831,566 Accumulated deficit (707,662 ) (439,296 ) Accumulated other comprehensive loss (181 ) (260 ) Total equity/members' deficit 135,278 392,021 Non-controlling interest 34,037 78,650 Total stockholders' equity 169,315 470,671 Total liabilities and stockholders' equity $ 605,470 $ 1,160,456 The following tables reconcile net loss to Adjusted EBITDA for the periods presented. Three Months Ended December 31, ($ in millions) 2023 2022 As Revised Net loss $ (25.4 ) $ (29.8 ) Plus: Income tax benefit (8.8 ) (15.3 ) Interest expense 12.0 9.7 Depreciation and amortization 19.7 19.1 Impairment of goodwill — 26.6 Other expense 0.2 1.3 Stock-based compensation & distributions to members 5.8 6.9 Non-cash revaluation of warrant liability 1.8 (10.4 ) Loss on extinguishment of related-party debt 1.4 — Acquisition and restructuring costs 3.3 6.2 Adjusted EBITDA $ 10.0 $ 14.3 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Net loss $ (111.3 ) $ (384.4 ) $ (37.1 ) Plus: Income tax benefit (20.4 ) (108.7 ) (0.6 ) Interest expense 48.7 31.6 1.0 Depreciation and amortization 78.4 69.5 1.0 Impairment of goodwill — 372.7 — Other expense 1.0 1.0 (0.1 ) Stock-based compensation & distributions to members 21.2 55.9 23.4 Non-cash revaluation of warrant liability (5.1 ) 3.8 — Loss on extinguishment of related-party debt 2.0 — — Acquisition and restructuring costs 14.7 26.6 13.2 Acquisition earnout — 0.4 — Adjusted EBITDA $ 29.2 $ 68.4 $ 0.8 The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented. ($ in millions) Three months ended December 31, 2023 Three months ended December 31, 2022 As Revised Revenue $ 96.1 $ 140.1 Less: Cost of revenues (excluding depreciation and amortization) (58.6 ) (97.1 ) Less: Depreciation and amortization related to cost of revenues (12.6 ) (12.4 ) Gross profit 24.9 30.6 Add: Depreciation and amortization related to cost of revenues 12.6 12.4 Adjusted Gross Profit $ 37.5 $ 43.0 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 402.0 $ 612.2 $ 52.7 Less: Cost of revenues (excluding depreciation and amortization) (248.7 ) (438.8 ) (41.5 ) Less: Depreciation and amortization related to cost of revenues (49.9 ) (45.6 ) (5.0 ) Gross profit 103.4 127.8 6.2 Add: Depreciation and amortization related to cost of revenues 49.9 45.6 5.0 Adjusted Gross Profit $ 153.3 $ 173.4 $ 11.2 View source version on businesswire.com: https://www.businesswire.com/news/home/20240318357683/en/Contacts Investors: Brett Milotte ICR, Inc. Brett.milotte@icrinc.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
System1 Announces Fourth Quarter and Full Year 2023 Financial Results By: System1, Inc. via Business Wire March 18, 2024 at 06:00 AM EDT All Key Financial Results Above the High-End of Guidance Range Fourth Quarter Financial Highlights: Revenue Increased 9% Over Prior Quarter to $96.1 million Gross Profit Increased 1% Over Prior Quarter to $25 million Adjusted Gross Profit Increased 1% Over Prior Quarter to $37.5 million GAAP Net Loss Decreased 2% Over Prior Quarter to $25 million Adjusted EBITDA Increased 24% Over Prior Quarter to $10 million Fiscal Year 2023 Results: Revenue of $402.0 million Gross Profit of $103.4 million Adjusted Gross Profit of $153.3 million GAAP Net Loss of $111.3 million Adjusted EBITDA of $29.2 million System1, Inc. (NYSE: SST) (“System1” or the “Company”), an omnichannel customer acquisition marketing platform, announced its financial results for the fourth quarter and full year 2023. Unless otherwise noted, all financial results are reflect the divestiture of Total Security Limited (“Total Security”), the Company’s anti-virus subscription business, which was completed on November 30, 2023. “We are pleased to report results for Q4 that exceeded our guidance for Revenue, Adjusted Gross Profit and Adjusted EBITDA, despite what continued to be a challenging online advertising environment. I am especially pleased that our core advertising business was able to execute despite significant management focus on the sale of Total Security,” commented Michael Blend, System1’s Co-Founder & Chief Executive Officer. “Looking forward to 2024 and beyond, we expect to benefit from macro tailwinds around increased advertiser demand and the forthcoming deprecation of third-party cookies in Chrome. Coupled with our initiatives to integrate AI within our RAMP platform, a resurgence in our Partner Network business and a streamlined strategic focus following the Total Security sale, we are optimistic about both 2024 and the years ahead.” Tridivesh Kidambi, Chief Financial Officer of System1, commented, “We are pleased to close another strong quarter and finish the year with positive momentum heading into 2024, with reflecting quarter-over-quarter growth on both top line Revenue and Adjusted EBITDA. With the sale of our Total Security consumer subscription business last quarter, we enter 2024 with a streamlined cost structure, a capital-efficient advertising business and substantial liquidity available on our balance sheet. We will continue to be focused on investing for growth in our business, while also strategically deploying our capital to reduce our overall leverage.” Note: Adjusted Gross Profit and Adjusted EBITDA are non-GAAP metrics that are defined and reconciled at the end of this release. Fourth Quarter 2023 and Subsequent Business Highlights Sold subscription business segment for $240 million of gross cash and the retirement of approximately 29.1M Class A shares. Successfully completed a modified “Dutch auction” tender offer in January of 2024, repurchasing $63.7 million of term debt for a purchase price of $40.9 million, exclusive of fees and expenses. This brought the total debt repaid between November 2023 and January 2024 to $155 million. Introduced new enhancements to Owned & Operated product offerings, including a new "proof of delivery" feature for its RoadWarrior route-planning app in connection with the launch of a new marketplace for subscription add-ons. Announced a strategic partnership to power the search results of Ecosia, a leading search engine, representing another achievement for System1’s resurgent Partner Network business. First Quarter 2024 Guidance The Company expects for the first quarter of 2024: Revenue between $82 million and $84 million. Gross Profit between $15 million and $17 million. Adjusted Gross Profit between $28 million and $30 million. Adjusted EBITDA between $(2) million and $(1) million. In reliance on the unreasonable efforts exception for forward-looking information provided under Regulation S-K, the Company is not reasonably able to provide a quantitative reconciliation of Adjusted Gross Profit and Adjusted EBITDA to the most directly comparable GAAP financial measures without unreasonable effort due to uncertainties regarding purchase accounting, stock-based compensation, taxes and other potential adjustments. The variability of these items could have an unpredictable, and potentially significant, impact on the Company’s future GAAP financial results. For the first quarter of 2024, the Company expects interest expense in the range of $7.5 million to $8.0 million, depreciation and amortization expense in the range of $20 million to $21 million, , and acquisition and restructuring costs to be in the range of $2.0 million to $2.5 million. The Company’s achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in its filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment. About System1, Inc. System1 combines best-in-class technology & data science to operate its advanced Responsive Acquisition Marketing Platform (RAMP). System1’s RAMP is omnichannel and omnivertical, and built for a privacy-centric world. RAMP enables the building of powerful brands across multiple consumer verticals, the development & growth of a suite of privacy-focused products, and the delivery of high-intent customers to advertising partners. For more information, visit www.system1.com. Cautionary Statement Regarding Forward-Looking Statements This press release includes “forward-looking statements” “within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, particularly any statements or materials regarding System1’s future results. Forward-looking statements include, but are not limited to, statements regarding System1 or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause System1’s actual financial results or operating performance to be materially different from those expressed or implied by these forward-looking statements. Readers or users of this press release should evaluate the risk factors summarized below, which summary list is not exclusive. Readers or users of this press release should also carefully review the “Risk Factors” and other information included in our registration statements on Form S-4 (including the related proxy statement/prospectus) with respect to the Business Combination with Trebia Acquisition Corp. each filed with the Securities and Exchange Commission (the “SEC”), as well as System1’s Form 10-K, Form 10-Q/As, Form 8-K and other reports filed with the SEC from time to time. Please refer to these SEC filings for additional information regarding the risks and other factors that may impact System1’s business, prospects, financial results and operating performance following completion of the Business Combination. Such risks, uncertainties and assumptions include, but are not limited to: (1) our ability to maintain our key relationships with network partners and advertisers, including our monetization arrangements; (2) our ability to collect, process, effectively utilize and safely store the first party data that we obtain through our services; (3) The performance of our responsive acquisition marketing platform, or RAMP; (4) changes in customer demand for our services and our ability to incorporate to such changes; (5) our ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (6) our ability to improve and maintain adequate internal control over financial reporting and remediate identified material weaknesses; (7) our ability to successfully source and complete acquisitions and to integrate the operations of companies System1 acquires; (8) our ability to raise financing in the future as and when needed or on market terms; (9) our ability to compete with existing competitors and the entry of new competitors in the market; (10) changes in applicable laws or regulations impacting the business which we operate and our ability to maintain compliance with the various laws that our business and operations are subject to; and (11) our ability to protect our intellectual property rights. The foregoing list of factors is not exclusive. Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this press release. System1’s independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the forward-looking statements for the purpose of their inclusion in this press release, and accordingly, do not express an opinion or provide any other form of assurance with respect thereto for the purpose of this press release. System1 will not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that such trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements. Non-GAAP Measures: Adjusted Gross Profit and Adjusted EBITDA Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and represent key metrics used by System1’s management and board of directors to measure the operational strength and performance of its business, to establish budgets, and to develop operational goals for managing its business. Adjusted Gross Profit (Loss) is defined as gross profit plus depreciation and amortization related to cost of revenues. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expenses, deferred compensation, management fees, minority interest expense, restructuring charges, impairment and certain discrete items impacting a particular segment’s results in a particular period. System1 believes Adjusted Gross Profit and Adjusted EBITDA are relevant and useful metrics for investors because it allows investors to view performance in a manner similar to the method used by management. There are limitations on the use of Adjusted Gross Profit and Adjusted EBITDA and it may not be comparable to similarly titled measures of other companies. Other companies, including companies in System1’s industry, may calculate non-GAAP financial measures differently than System1 does, limiting the usefulness of those measures for comparative purposes. Adjusted Gross Profit should not be considered a substitute for revenue. Adjusted EBITDA should not be considered a substitute for income (loss) from operations, net income (loss), or net income (loss) attributable to System1 on a consolidated basis that System1 reports in accordance with GAAP. Although System1 uses Adjusted Gross Profit and Adjusted EBITDA as financial measures to assess the performance of its business, such use is limited because it does not include certain costs necessary to operate System1’s business. System1’s presentation of Adjusted Gross Profit and Adjusted EBITDA should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items. Unaudited Condensed Statements of Operations Three Months Ended December 31, (In thousands) 2023 2022 As Revised Revenue $ 96,120 $ 140,071 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 58,550 97,146 Salaries, commissions, and benefits 24,608 29,039 Selling, general, and administrative 12,303 13,869 Depreciation and amortization 19,737 19,101 Impairment of goodwill — 26,636 Total operating costs and expenses 115,198 185,791 Operating income (loss) (19,078 ) (45,720 ) Other expense (income): Interest expense 11,956 9,692 Loss on extinguishment of related-party debt 1,385 — Change in fair value of warrant liabilities 1,764 (10,360 ) Total other expense (income), net 15,105 (668 ) Loss before income tax (34,183 ) (45,052 ) Income tax benefit (8,757 ) (15,251 ) Net loss from continuing operations (25,426 ) (29,801 ) Net loss from discontinued operations, net of tax (11,105 ) (21,039 ) Net loss (36,531 ) (50,840 ) Less: Net loss from continuing operations attributable to non-controlling interest (6,656 ) (14,082 ) Less: Net loss from discontinued operations attributable to non-controlling interest (2,247 ) (4,007 ) Net loss attributable to System1, Inc. $ (27,628 ) $ (32,751 ) Consolidated Statements of Operations Successor Predecessor (In thousands) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 401,971 $ 612,229 $ 52,712 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 248,745 438,839 41,507 Salaries, commissions, and benefits 106,505 138,045 31,181 Selling, general, and administrative 54,307 50,831 15,665 Depreciation and amortization 78,403 69,469 1,000 Impairment of goodwill — 372,728 — Total operating costs and expenses 487,960 1,069,912 89,353 Operating income (loss) (85,989 ) (457,683 ) (36,641 ) Other expense (income): Interest expense 48,745 31,609 1,049 Loss on extinguishment of related-party debt 2,004 — — Change in fair value of warrant liabilities (5,109 ) 3,751 — Total other expense, net 45,640 35,360 1,049 Loss before income tax (131,629 ) (493,043 ) (37,690 ) Income tax benefit (20,371 ) (108,680 ) (629 ) Net loss from continuing operations (111,258 ) (384,363 ) (37,061 ) Net loss from discontinued operations, net of tax (174,327 ) (56,959 ) — Net loss (285,585 ) (441,322 ) (37,061 ) Less: Net loss from continuing operations attributable to non-controlling interest (25,185 ) (99,841 ) — Less: Net loss from discontinued operations attributable to non-controlling interest (33,179 ) (11,089 ) — Net loss attributable to System1, Inc. $ (227,221 ) $ (330,392 ) $ (37,061 ) Consolidated Balance Sheets (In thousands, except for par values) December 31, 2023 December 31, 2022 As Revised Assets Current assets: Cash and cash equivalents $ 135,343 $ 8,905 Restricted cash, current 3,813 5,717 Accounts receivable, net 56,093 80,428 Prepaid expenses and other current assets 6,754 11,166 Current assets held for sale from discontinued operations — 20,292 Total current assets 202,003 126,508 Restricted cash, non-current 4,294 5,395 Property and equipment, net 3,084 3,162 Internal-use software development costs, net 11,425 6,948 Intangible assets, net 297,001 371,661 Goodwill 82,407 82,407 Operating lease right-of-use assets 4,732 6,484 Other non-current assets 524 2,822 Assets held for sale from discontinued operations — 555,069 Total assets $ 605,470 $ 1,160,456 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 9,499 6,707 Accrued expenses and other current liabilities 59,314 85,780 Operating lease liabilities, current 2,333 2,149 Debt, net 15,271 15,021 Current liabilities held for sale from discontinued operations — 101,418 Total current liabilities 86,417 211,075 Operating lease liabilities, non-current 3,582 5,875 Long-term debt, net 334,232 399,504 Warrant liability 2,688 7,798 Deferred tax liability 8,307 29,396 Other liabilities 929 1,661 Liabilities held for sale from discontinued operations — 34,476 Total liabilities 436,155 689,785 Class A common stock - $0.0001 par value; 500,000 shares authorized, 65,855 Class A shares issued and outstanding as of December 31, 2023 and 2022, respectively 7 9 Class C common stock - $0.0001 par value; 25,000 shares authorized, 21,513 Class C shares issued and outstanding as of December 31, 2023 and 2022, respectively 2 2 Additional paid-in capital 843,112 831,566 Accumulated deficit (707,662 ) (439,296 ) Accumulated other comprehensive loss (181 ) (260 ) Total equity/members' deficit 135,278 392,021 Non-controlling interest 34,037 78,650 Total stockholders' equity 169,315 470,671 Total liabilities and stockholders' equity $ 605,470 $ 1,160,456 The following tables reconcile net loss to Adjusted EBITDA for the periods presented. Three Months Ended December 31, ($ in millions) 2023 2022 As Revised Net loss $ (25.4 ) $ (29.8 ) Plus: Income tax benefit (8.8 ) (15.3 ) Interest expense 12.0 9.7 Depreciation and amortization 19.7 19.1 Impairment of goodwill — 26.6 Other expense 0.2 1.3 Stock-based compensation & distributions to members 5.8 6.9 Non-cash revaluation of warrant liability 1.8 (10.4 ) Loss on extinguishment of related-party debt 1.4 — Acquisition and restructuring costs 3.3 6.2 Adjusted EBITDA $ 10.0 $ 14.3 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Net loss $ (111.3 ) $ (384.4 ) $ (37.1 ) Plus: Income tax benefit (20.4 ) (108.7 ) (0.6 ) Interest expense 48.7 31.6 1.0 Depreciation and amortization 78.4 69.5 1.0 Impairment of goodwill — 372.7 — Other expense 1.0 1.0 (0.1 ) Stock-based compensation & distributions to members 21.2 55.9 23.4 Non-cash revaluation of warrant liability (5.1 ) 3.8 — Loss on extinguishment of related-party debt 2.0 — — Acquisition and restructuring costs 14.7 26.6 13.2 Acquisition earnout — 0.4 — Adjusted EBITDA $ 29.2 $ 68.4 $ 0.8 The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented. ($ in millions) Three months ended December 31, 2023 Three months ended December 31, 2022 As Revised Revenue $ 96.1 $ 140.1 Less: Cost of revenues (excluding depreciation and amortization) (58.6 ) (97.1 ) Less: Depreciation and amortization related to cost of revenues (12.6 ) (12.4 ) Gross profit 24.9 30.6 Add: Depreciation and amortization related to cost of revenues 12.6 12.4 Adjusted Gross Profit $ 37.5 $ 43.0 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 402.0 $ 612.2 $ 52.7 Less: Cost of revenues (excluding depreciation and amortization) (248.7 ) (438.8 ) (41.5 ) Less: Depreciation and amortization related to cost of revenues (49.9 ) (45.6 ) (5.0 ) Gross profit 103.4 127.8 6.2 Add: Depreciation and amortization related to cost of revenues 49.9 45.6 5.0 Adjusted Gross Profit $ 153.3 $ 173.4 $ 11.2 View source version on businesswire.com: https://www.businesswire.com/news/home/20240318357683/en/Contacts Investors: Brett Milotte ICR, Inc. Brett.milotte@icrinc.com
All Key Financial Results Above the High-End of Guidance Range Fourth Quarter Financial Highlights: Revenue Increased 9% Over Prior Quarter to $96.1 million Gross Profit Increased 1% Over Prior Quarter to $25 million Adjusted Gross Profit Increased 1% Over Prior Quarter to $37.5 million GAAP Net Loss Decreased 2% Over Prior Quarter to $25 million Adjusted EBITDA Increased 24% Over Prior Quarter to $10 million Fiscal Year 2023 Results: Revenue of $402.0 million Gross Profit of $103.4 million Adjusted Gross Profit of $153.3 million GAAP Net Loss of $111.3 million Adjusted EBITDA of $29.2 million
System1, Inc. (NYSE: SST) (“System1” or the “Company”), an omnichannel customer acquisition marketing platform, announced its financial results for the fourth quarter and full year 2023. Unless otherwise noted, all financial results are reflect the divestiture of Total Security Limited (“Total Security”), the Company’s anti-virus subscription business, which was completed on November 30, 2023. “We are pleased to report results for Q4 that exceeded our guidance for Revenue, Adjusted Gross Profit and Adjusted EBITDA, despite what continued to be a challenging online advertising environment. I am especially pleased that our core advertising business was able to execute despite significant management focus on the sale of Total Security,” commented Michael Blend, System1’s Co-Founder & Chief Executive Officer. “Looking forward to 2024 and beyond, we expect to benefit from macro tailwinds around increased advertiser demand and the forthcoming deprecation of third-party cookies in Chrome. Coupled with our initiatives to integrate AI within our RAMP platform, a resurgence in our Partner Network business and a streamlined strategic focus following the Total Security sale, we are optimistic about both 2024 and the years ahead.” Tridivesh Kidambi, Chief Financial Officer of System1, commented, “We are pleased to close another strong quarter and finish the year with positive momentum heading into 2024, with reflecting quarter-over-quarter growth on both top line Revenue and Adjusted EBITDA. With the sale of our Total Security consumer subscription business last quarter, we enter 2024 with a streamlined cost structure, a capital-efficient advertising business and substantial liquidity available on our balance sheet. We will continue to be focused on investing for growth in our business, while also strategically deploying our capital to reduce our overall leverage.” Note: Adjusted Gross Profit and Adjusted EBITDA are non-GAAP metrics that are defined and reconciled at the end of this release. Fourth Quarter 2023 and Subsequent Business Highlights Sold subscription business segment for $240 million of gross cash and the retirement of approximately 29.1M Class A shares. Successfully completed a modified “Dutch auction” tender offer in January of 2024, repurchasing $63.7 million of term debt for a purchase price of $40.9 million, exclusive of fees and expenses. This brought the total debt repaid between November 2023 and January 2024 to $155 million. Introduced new enhancements to Owned & Operated product offerings, including a new "proof of delivery" feature for its RoadWarrior route-planning app in connection with the launch of a new marketplace for subscription add-ons. Announced a strategic partnership to power the search results of Ecosia, a leading search engine, representing another achievement for System1’s resurgent Partner Network business. First Quarter 2024 Guidance The Company expects for the first quarter of 2024: Revenue between $82 million and $84 million. Gross Profit between $15 million and $17 million. Adjusted Gross Profit between $28 million and $30 million. Adjusted EBITDA between $(2) million and $(1) million. In reliance on the unreasonable efforts exception for forward-looking information provided under Regulation S-K, the Company is not reasonably able to provide a quantitative reconciliation of Adjusted Gross Profit and Adjusted EBITDA to the most directly comparable GAAP financial measures without unreasonable effort due to uncertainties regarding purchase accounting, stock-based compensation, taxes and other potential adjustments. The variability of these items could have an unpredictable, and potentially significant, impact on the Company’s future GAAP financial results. For the first quarter of 2024, the Company expects interest expense in the range of $7.5 million to $8.0 million, depreciation and amortization expense in the range of $20 million to $21 million, , and acquisition and restructuring costs to be in the range of $2.0 million to $2.5 million. The Company’s achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in its filings with the U.S. Securities and Exchange Commission. The outlook does not take into account the impact of any unanticipated developments in the business or changes in the operating environment. About System1, Inc. System1 combines best-in-class technology & data science to operate its advanced Responsive Acquisition Marketing Platform (RAMP). System1’s RAMP is omnichannel and omnivertical, and built for a privacy-centric world. RAMP enables the building of powerful brands across multiple consumer verticals, the development & growth of a suite of privacy-focused products, and the delivery of high-intent customers to advertising partners. For more information, visit www.system1.com. Cautionary Statement Regarding Forward-Looking Statements This press release includes “forward-looking statements” “within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, particularly any statements or materials regarding System1’s future results. Forward-looking statements include, but are not limited to, statements regarding System1 or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause System1’s actual financial results or operating performance to be materially different from those expressed or implied by these forward-looking statements. Readers or users of this press release should evaluate the risk factors summarized below, which summary list is not exclusive. Readers or users of this press release should also carefully review the “Risk Factors” and other information included in our registration statements on Form S-4 (including the related proxy statement/prospectus) with respect to the Business Combination with Trebia Acquisition Corp. each filed with the Securities and Exchange Commission (the “SEC”), as well as System1’s Form 10-K, Form 10-Q/As, Form 8-K and other reports filed with the SEC from time to time. Please refer to these SEC filings for additional information regarding the risks and other factors that may impact System1’s business, prospects, financial results and operating performance following completion of the Business Combination. Such risks, uncertainties and assumptions include, but are not limited to: (1) our ability to maintain our key relationships with network partners and advertisers, including our monetization arrangements; (2) our ability to collect, process, effectively utilize and safely store the first party data that we obtain through our services; (3) The performance of our responsive acquisition marketing platform, or RAMP; (4) changes in customer demand for our services and our ability to incorporate to such changes; (5) our ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (6) our ability to improve and maintain adequate internal control over financial reporting and remediate identified material weaknesses; (7) our ability to successfully source and complete acquisitions and to integrate the operations of companies System1 acquires; (8) our ability to raise financing in the future as and when needed or on market terms; (9) our ability to compete with existing competitors and the entry of new competitors in the market; (10) changes in applicable laws or regulations impacting the business which we operate and our ability to maintain compliance with the various laws that our business and operations are subject to; and (11) our ability to protect our intellectual property rights. The foregoing list of factors is not exclusive. Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this press release. System1’s independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the forward-looking statements for the purpose of their inclusion in this press release, and accordingly, do not express an opinion or provide any other form of assurance with respect thereto for the purpose of this press release. System1 will not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that such trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements. Non-GAAP Measures: Adjusted Gross Profit and Adjusted EBITDA Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and represent key metrics used by System1’s management and board of directors to measure the operational strength and performance of its business, to establish budgets, and to develop operational goals for managing its business. Adjusted Gross Profit (Loss) is defined as gross profit plus depreciation and amortization related to cost of revenues. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expenses, deferred compensation, management fees, minority interest expense, restructuring charges, impairment and certain discrete items impacting a particular segment’s results in a particular period. System1 believes Adjusted Gross Profit and Adjusted EBITDA are relevant and useful metrics for investors because it allows investors to view performance in a manner similar to the method used by management. There are limitations on the use of Adjusted Gross Profit and Adjusted EBITDA and it may not be comparable to similarly titled measures of other companies. Other companies, including companies in System1’s industry, may calculate non-GAAP financial measures differently than System1 does, limiting the usefulness of those measures for comparative purposes. Adjusted Gross Profit should not be considered a substitute for revenue. Adjusted EBITDA should not be considered a substitute for income (loss) from operations, net income (loss), or net income (loss) attributable to System1 on a consolidated basis that System1 reports in accordance with GAAP. Although System1 uses Adjusted Gross Profit and Adjusted EBITDA as financial measures to assess the performance of its business, such use is limited because it does not include certain costs necessary to operate System1’s business. System1’s presentation of Adjusted Gross Profit and Adjusted EBITDA should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items. Unaudited Condensed Statements of Operations Three Months Ended December 31, (In thousands) 2023 2022 As Revised Revenue $ 96,120 $ 140,071 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 58,550 97,146 Salaries, commissions, and benefits 24,608 29,039 Selling, general, and administrative 12,303 13,869 Depreciation and amortization 19,737 19,101 Impairment of goodwill — 26,636 Total operating costs and expenses 115,198 185,791 Operating income (loss) (19,078 ) (45,720 ) Other expense (income): Interest expense 11,956 9,692 Loss on extinguishment of related-party debt 1,385 — Change in fair value of warrant liabilities 1,764 (10,360 ) Total other expense (income), net 15,105 (668 ) Loss before income tax (34,183 ) (45,052 ) Income tax benefit (8,757 ) (15,251 ) Net loss from continuing operations (25,426 ) (29,801 ) Net loss from discontinued operations, net of tax (11,105 ) (21,039 ) Net loss (36,531 ) (50,840 ) Less: Net loss from continuing operations attributable to non-controlling interest (6,656 ) (14,082 ) Less: Net loss from discontinued operations attributable to non-controlling interest (2,247 ) (4,007 ) Net loss attributable to System1, Inc. $ (27,628 ) $ (32,751 ) Consolidated Statements of Operations Successor Predecessor (In thousands) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 401,971 $ 612,229 $ 52,712 Operating costs and expenses: Cost of revenues (excluding depreciation and amortization) 248,745 438,839 41,507 Salaries, commissions, and benefits 106,505 138,045 31,181 Selling, general, and administrative 54,307 50,831 15,665 Depreciation and amortization 78,403 69,469 1,000 Impairment of goodwill — 372,728 — Total operating costs and expenses 487,960 1,069,912 89,353 Operating income (loss) (85,989 ) (457,683 ) (36,641 ) Other expense (income): Interest expense 48,745 31,609 1,049 Loss on extinguishment of related-party debt 2,004 — — Change in fair value of warrant liabilities (5,109 ) 3,751 — Total other expense, net 45,640 35,360 1,049 Loss before income tax (131,629 ) (493,043 ) (37,690 ) Income tax benefit (20,371 ) (108,680 ) (629 ) Net loss from continuing operations (111,258 ) (384,363 ) (37,061 ) Net loss from discontinued operations, net of tax (174,327 ) (56,959 ) — Net loss (285,585 ) (441,322 ) (37,061 ) Less: Net loss from continuing operations attributable to non-controlling interest (25,185 ) (99,841 ) — Less: Net loss from discontinued operations attributable to non-controlling interest (33,179 ) (11,089 ) — Net loss attributable to System1, Inc. $ (227,221 ) $ (330,392 ) $ (37,061 ) Consolidated Balance Sheets (In thousands, except for par values) December 31, 2023 December 31, 2022 As Revised Assets Current assets: Cash and cash equivalents $ 135,343 $ 8,905 Restricted cash, current 3,813 5,717 Accounts receivable, net 56,093 80,428 Prepaid expenses and other current assets 6,754 11,166 Current assets held for sale from discontinued operations — 20,292 Total current assets 202,003 126,508 Restricted cash, non-current 4,294 5,395 Property and equipment, net 3,084 3,162 Internal-use software development costs, net 11,425 6,948 Intangible assets, net 297,001 371,661 Goodwill 82,407 82,407 Operating lease right-of-use assets 4,732 6,484 Other non-current assets 524 2,822 Assets held for sale from discontinued operations — 555,069 Total assets $ 605,470 $ 1,160,456 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 9,499 6,707 Accrued expenses and other current liabilities 59,314 85,780 Operating lease liabilities, current 2,333 2,149 Debt, net 15,271 15,021 Current liabilities held for sale from discontinued operations — 101,418 Total current liabilities 86,417 211,075 Operating lease liabilities, non-current 3,582 5,875 Long-term debt, net 334,232 399,504 Warrant liability 2,688 7,798 Deferred tax liability 8,307 29,396 Other liabilities 929 1,661 Liabilities held for sale from discontinued operations — 34,476 Total liabilities 436,155 689,785 Class A common stock - $0.0001 par value; 500,000 shares authorized, 65,855 Class A shares issued and outstanding as of December 31, 2023 and 2022, respectively 7 9 Class C common stock - $0.0001 par value; 25,000 shares authorized, 21,513 Class C shares issued and outstanding as of December 31, 2023 and 2022, respectively 2 2 Additional paid-in capital 843,112 831,566 Accumulated deficit (707,662 ) (439,296 ) Accumulated other comprehensive loss (181 ) (260 ) Total equity/members' deficit 135,278 392,021 Non-controlling interest 34,037 78,650 Total stockholders' equity 169,315 470,671 Total liabilities and stockholders' equity $ 605,470 $ 1,160,456 The following tables reconcile net loss to Adjusted EBITDA for the periods presented. Three Months Ended December 31, ($ in millions) 2023 2022 As Revised Net loss $ (25.4 ) $ (29.8 ) Plus: Income tax benefit (8.8 ) (15.3 ) Interest expense 12.0 9.7 Depreciation and amortization 19.7 19.1 Impairment of goodwill — 26.6 Other expense 0.2 1.3 Stock-based compensation & distributions to members 5.8 6.9 Non-cash revaluation of warrant liability 1.8 (10.4 ) Loss on extinguishment of related-party debt 1.4 — Acquisition and restructuring costs 3.3 6.2 Adjusted EBITDA $ 10.0 $ 14.3 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Net loss $ (111.3 ) $ (384.4 ) $ (37.1 ) Plus: Income tax benefit (20.4 ) (108.7 ) (0.6 ) Interest expense 48.7 31.6 1.0 Depreciation and amortization 78.4 69.5 1.0 Impairment of goodwill — 372.7 — Other expense 1.0 1.0 (0.1 ) Stock-based compensation & distributions to members 21.2 55.9 23.4 Non-cash revaluation of warrant liability (5.1 ) 3.8 — Loss on extinguishment of related-party debt 2.0 — — Acquisition and restructuring costs 14.7 26.6 13.2 Acquisition earnout — 0.4 — Adjusted EBITDA $ 29.2 $ 68.4 $ 0.8 The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented. ($ in millions) Three months ended December 31, 2023 Three months ended December 31, 2022 As Revised Revenue $ 96.1 $ 140.1 Less: Cost of revenues (excluding depreciation and amortization) (58.6 ) (97.1 ) Less: Depreciation and amortization related to cost of revenues (12.6 ) (12.4 ) Gross profit 24.9 30.6 Add: Depreciation and amortization related to cost of revenues 12.6 12.4 Adjusted Gross Profit $ 37.5 $ 43.0 Successor Predecessor System1, Inc. S1 Holdco LLC ($ in millions) Year Ended December 31, 2023 Period from January 27, 2022 through December 31, 2022 Period from January 1, 2022 through January 26, 2022 As Revised Revenue $ 402.0 $ 612.2 $ 52.7 Less: Cost of revenues (excluding depreciation and amortization) (248.7 ) (438.8 ) (41.5 ) Less: Depreciation and amortization related to cost of revenues (49.9 ) (45.6 ) (5.0 ) Gross profit 103.4 127.8 6.2 Add: Depreciation and amortization related to cost of revenues 49.9 45.6 5.0 Adjusted Gross Profit $ 153.3 $ 173.4 $ 11.2 View source version on businesswire.com: https://www.businesswire.com/news/home/20240318357683/en/
