System1’s 2026 Q2 Earnings Call: Google Network Volatility and Startpage Monetization Outlooks Clash

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $30.2M, down 61% YOY and down 19% sequentially

Business Commentary:

Product Segment Performance:

• System1's products revenue was $19.5 million, decreasing 19% year-over-year but increasing 3% sequentially.
• The sequential growth was primarily driven by a 5% increase in total sessions.

Start Page Monetization Challenges:

• The company's Start Page private search engine saw 11% sequential growth in user sessions, particularly strong on mobile with a 63% year-over-year increase in mobile app sessions.
• However, monetization challenges due to declining payouts and advertising coverage from Google offset the user growth.

Coupon Follow Rebound:

• The shopping vertical, Coupon Follow, experienced a strong rebound with organic sessions growing 11% versus Q1 and gross profit from paid traffic acquisition increasing 37% year-over-year.
• This was supported by strong success in paid acquisition and advancements in internal AI capabilities.

Partner Network Volatility:

• Marketing gap revenue was $10.7 million, down 80% year-over-year and 42% sequentially, primarily due to reduced monetization and increased volatility in the Google RSOC market.
• A Google partner network-wide change caused a more than 30% drop in monetization, impacting daily net revenue.

Strategic Priorities and Debt Exchange:

• System1 successfully closed a debt exchange, reducing total outstanding debt to $150 million from $302.6 million, with a proforma consolidated net leverage of 5.88x.
• The company is focused on investing in product development, diversifying the partner network, and exploring AI-driven subscription businesses.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed hope for improvement in Google monetization, citing 'green shoots' and reduced volatility. They noted encouraging product growth, a strong rebound in CouponFollow, and confidence in the emerging AI-driven subscription business. The debt exchange was described as an important step to achieve strategic goals and create long-term shareholder value.

Q&A:

• Question from Thomas Forte (Maxim Group): On the start page, can you explain if the monetization challenges are offsetting the impressive growth in usage?
  Response: The monetization challenges more than offset the growth in user sessions. StartPage is benefiting from privacy tailwinds and a user shift away from AI-integrated search engines.

• Question from Thomas Forte (Maxim Group): What are your thoughts on agentic commerce and what is the company doing to exploit the opportunity?
  Response: CouponFollow's assets—verified promo codes and strong affiliate relationships—position it well to provide value to AI commerce apps. The company is figuring out how to offer these to the agentic marketplace.

• Question from Dan Kernos (StoneX): Have we troughed the start page headwind, and should we expect sequential improvement?
  Response: Management feels Google's partner network is becoming less volatile, with 'green shoots' emerging. They hope to see improvement on StartPage and the partner network, but will wait for more data before committing.

• Question from Dan Kernos (StoneX): Can you parse out the 25% decline in revenue per active partner?
  Response: The decline was partly due to deliberate diversification and onboarding of more partners, but also benefited from a consolidated market where fewer large Google partners remain, allowing System1 to scale.

• Question from Dan Kernos (StoneX): What is your exposure and stance regarding Google antitrust trials and potential settlements?
  Response: The company is aware of the litigation, believes claims have value, and is actively engaged in charting the best path forward for its potential claims.

• Question from Dan Kernos (StoneX): Can you give a sense of the monetization work for first-party data?
  Response: First-party data from MapQuest, CouponFollow, and the partner network is valuable to advertisers. The company has a technical platform in place, is starting to sell the data, and expects upside potential as it scales.

Contradiction Point 1

Assessment of Google Partner Network Volatility and Stability

Contradiction on whether network stability is improving or if volatility persists.

Dan Kernos (StoneX) - Dan Kernos (StoneX)

2026Q2: After years of volatility, it feels like Google is starting to reduce volatility, leading to hope that we are troughed and may soon see an upswing. Recent green shoots are promising. - Michael Blend(CEO)

"Have we troughed the headwinds on the product side, and should we expect sequential improvement in future quarters?" - Tom Forte (Maxim Group)

2026Q2: While user growth is strong, revenue is being impacted by Google's reduced ad payout and coverage in the partner network. There are early green shoots suggesting the Google partner network cleanup may be nearing its end. - Tridivesh Kidambi(CFO)

Contradiction Point 2

Status and Nature of Startpage Monetization Challenges

Contradiction on whether monetization challenges are an ongoing issue or if there is clear improvement.

Thomas Forte (Maxim Group) - Thomas Forte (Maxim Group)

2026Q2: The monetization challenges on Startpage are more than offsetting the growth in user sessions. - Triti(CFO)

What are the monetization challenges on the start page despite sequential usage growth? - Tom Forte (Maxim Group)

2026Q2: Hoping Google's partner network cleanup is nearing completion, with some green shoots in monetization appearing. - Michael Blend(CEO)

Contradiction Point 3

Performance and Focus on Bing Network

The company's engagement and reported performance with Bing shifted from active growth to being less emphasized.

Will Thomas Forte of Maxim Group participate in the earnings call? - Thomas Forte (Maxim Group)

2026Q2: The priority is for Google monetization to improve and diversify beyond Google to other search providers. - Michael Blend(CEO)

How are monetization challenges on the start page being addressed despite sequential usage growth? - Thomas Forte (Maxim Group)

20251106-2025 Q3: Performance on the Bing network has improved over the last 2-3 quarters, leading to increased monetization and a shift of some marketing efforts from Google to Bing. - Michael Blend(CEO)

Contradiction Point 4

Nature of Relationship with Google's Partner Network

The company's description of its position within Google's network shifted from being a dominant player to a survivor amidst consolidation.

Dan Kernos (StoneX) - Dan Kernos (StoneX)

2026Q2: System1 is now one of the few high-quality scaled partners left, attracting traffic acquisition partners to its platform. - Michael Blend(CEO)

What portion of the 25% decline in revenue per active partner is attributed to Google versus newer partners scaling? - Thomas Forte (Maxim Group)

20251106-2025 Q3: System1 maintains a strong partnership with Bing, similar to its historical relationship with Google. - Michael Blend(CEO)

Contradiction Point 5

Timing of Improvement in Google Partner Network Volatility

Expectations for when stability and growth will resume differ significantly.

Dan Kernos (StoneX) - Dan Kernos (StoneX)

2026Q2: Placing Startpage within the broader Google Partner Network context... hope that we are troughed and may soon see an upswing. - Michael Blend(CEO)

Has the product side passed the worst of its challenges, and should we expect sequential improvement in upcoming quarters? - Daniel Kurnos (Benchmark)

2025Q2: The volatility is due to Google's rollout of a new product... The company expects this volatility to lessen over the next couple of quarters, after which it will be well-positioned for growth. - Michael Blend(CEO)