System1 2025 Q1 Earnings Misses Expectations as Net Loss Widens 44%

System1 (SST) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company missed expectations as total revenue declined by 12.3% to $74.51 million compared to the previous year. Additionally, System1's net loss widened by 44% year-over-year, resulting in a deeper loss per share. The company is refraining from providing financial guidance for Q2 2025 due to uncertainties related to Google’s policy changes and broader online advertising demand volatility.

Revenue
System1 experienced a revenue downturn in Q1 2025, with figures reflecting a 12.3% decrease to $74.51 million. Within this total, the Owned and Operated Advertising segment generated $57.92 million, while the Partner Network contributed $16.59 million, collectively making up the company's total revenue.

Earnings/Net Income
System1 reported an EPS loss of $0.21 in Q1 2025, widening from a $0.16 loss in Q1 2024. The net loss increased by 44%, totaling $19.86 million compared to $13.79 million in the prior year. The earnings report indicates ongoing challenges for the company.

Price Action
The stock price of System1 has dropped 6.63% during the latest trading day, has dropped 7.40% during the most recent full trading week, and has jumped 12.48% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing SST shares following a dip in revenue has historically yielded a 9.16% annual return with positive outcomes in 66.88% of months. However, investors should be mindful of the associated risks, as the approach also experienced a maximum drawdown of 23.55%. This indicates that while there is potential for profitable returns, volatility remains a significant factor, particularly given the current challenges faced by System1. The company's ongoing adaptation to AI-powered automation and its efforts in navigating Google-related changes are pivotal in its pursuit of medium and long-term growth.

CEO Commentary
Michael Blend, Co-Founder & Chief Executive Officer, highlighted that System1 delivered a solid Q1 2025 with revenue around $75 million and adjusted gross profit of $41.5 million, reflecting a 33% year-over-year increase. He noted strong execution in owned and operated products, which saw a 51% revenue increase. However, the marketing-driven businesses faced challenges due to Google-related product changes. Blend emphasized the company's shift to AI-powered automation through Agentic coding, significantly enhancing productivity and allowing for faster product development. He expressed cautious optimism about navigating Google’s volatility while positioning the company for medium and long-term growth.

Guidance
System1 is not providing financial guidance for Q2 2025 due to uncertainty surrounding Google’s policy changes and broader online advertising demand volatility. The CEO mentioned that the company remains well-positioned amid these challenges and anticipates that as Google transitions to the RSOC product, new opportunities for growth will arise.

Additional News
System1 continues to integrate advanced AI capabilities into its RAMP platform, enhancing campaign rollout scales and optimization accuracy. The company sees this as a pathway to greater monetization efficiency across its business segments. Additionally, MapQuest, a subsidiary of System1, launched the "Gulf of Mexico/America Naming Generator," which attracted approximately 280,000 active users and generated 820,000 names, boosting downloads of its mobile application. CouponFollow.com also reported a robust start to the year with a 162% year-over-year increase in organic sessions, renewing and expanding key brand partnerships. These developments underscore System1's commitment to leveraging technology for growth despite broader market uncertainties.