System1 (SST) Q2 2024 earnings summary

Executive summary

• Q2 2024 results exceeded the high end of guidance for revenue, gross profit, and Adjusted EBITDA, driven by RAMP platform investments, international growth, and operational efficiency.

• Revenue for Q2 2024 was $94.6 million, up $9.7 million sequentially but down 2% year-over-year; net loss attributable to System1, Inc. was $26.4 million, an improvement from $34.3 million loss in Q2 2023.

• Adjusted EBITDA was $9.9 million, up from $400,000 in Q1 and $6.1 million last year.

• Management highlighted improved stability in digital advertising, successful execution, and alignment of interests with shareholders through an equity plan tied to EBITDA targets.

• Sale of the Protected/Total Security business completed in late 2023; results now reported as discontinued operations.

Financial highlights

• Q2 2024 revenue was $94.6 million, down 2% year-over-year but up 11% sequentially, exceeding guidance by $4.6 million.

• Adjusted Gross Profit was $38.8 million, down from $40.9 million in Q2 2023 but up 24% sequentially, $3.8 million above guidance.

• Adjusted EBITDA reached $9.9 million, up from $6.1 million in Q2 2023.

• Net loss attributable to System1, Inc. was $26.4 million, or $(0.38) per share, compared to $34.3 million, or $(0.37) per share, in Q2 2023.

• Cash and cash equivalents at June 30, 2024 were $75.7 million; $50 million available on the revolving credit facility.

Outlook and guidance

• Q3 2024 revenue guidance: $86–88 million, roughly flat year-over-year at midpoint.

• Q3 Adjusted Gross Profit guidance: $36–38 million, flat year-over-year at midpoint, with 150 bps gross margin expansion.

• Q3 Adjusted EBITDA guidance: $8–10 million, up 11% year-over-year at midpoint.

• Management expects existing cash, cash flows from operations, and financing activities to be sufficient for at least the next 12 months.

• No significant contribution from new initiatives expected in 2024; new products to be in market in H2 but not modeled for material impact.