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- **Revenue decline driven by Google transition**: Marketing revenue down 43% YoY due to AFD sunset, while Product segment grew 8% YoY.
- **AI and international expansion**: Launched Vanish for private AI chat and expanded CouponFollow to Germany and France.
- **Marketing recovery expected**: Transition to RSOC complete, but near-term volatility anticipated; Bing partnership being leveraged.
- **Financial stability**: $54.6 million cash balance; cost control measures reduced expenses 4% YoY.
- **Key risk**: Ongoing dispute over $1.5 million in invalid traffic with potential legal action.


**【CEO Summary Section】**
- Q3 revenue was $61.6 million, down 31% YoY, driven by a 43% YoY decline in the Marketing segment due to Google's AFD sunset. Product segment revenue grew 8% YoY to $22.5 million.
- Sessions increased 23% YoY, with Startpage, MapQuest, and CouponFollow contributing to growth. New AI-powered product, Vanish, launched to offer private AI chat access.
- Marketing transition to Google's RSOC product is complete, but near-term volatility expected. CouponFollow expanded internationally with German and French sites.
- Focus on direct user acquisition and AI-driven product development to reduce third-party dependency.

**【CFO Financial Commentary】**
- Adjusted gross profit was $36.1 million (down 4% YoY), with Product segment profit at $21.2 million (up 6% YoY). Adjusted EBITDA was $9.9 million (down 4% YoY).
- AFD contributed minimal Q3 gross profit ($1.5 million), with full transition to RSOC completed. Operating expenses decreased 4% YoY to $26.2 million.
- Cash balance of $54.6 million; net leverage 4.1x. No Q4 guidance provided, but expects marketing stabilization in 2026.

**【Q&A Highlights】**
- **Microsoft/Bing Partnership**: Shifting marketing efforts to Bing as performance improves, with potential to capitalize on Bing's market share gains.
- **AI Strategy**: Launching Vanish for private AI chat and exploring AI-driven agents in verticals. Working with OpenAI, Anthropic, and others to integrate AI into products.
- **Traffic Quality**: Pursuing reimbursement for $1.5 million in invalid traffic from a partner, with legal action possible.


System1, Inc. (SST) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SST

SST fundamentals

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