Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from ______ to ______

Commission File Number 001-39331

System1, Inc.

(Exact name of registrant as specified in its charter)


Delaware						92-3978051
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

4235 Redwood Avenue Los Angeles, CA						90066
(Address of Principal Executive Offices)						(Zip Code)

(310) 924-6037

(Registrant’s telephone number including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

SST

The New York Stock Exchange

Redeemable warrants, each whole warrant exercisable for one Class A common stock at an exercise price of $11.50 per share

SST.WS

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 5, 2024, there were 69,539,856 shares of Class A common stock, $0.0001 par value per share, outstanding and 21,203,676 shares issued and outstanding of Class C common stock, $0.0001 par value per share.

Table of Contents


		Page

Part I. - Financial Information		1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34

Part II - Other Information		37

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37

Signatures		40

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

System1, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except par value)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	75,651	$	135,343
Restricted cash, current	4,253		3,813
Accounts receivable, net	61,915		56,093
Prepaid expenses and other current assets	6,805		6,754
Total current assets	148,624		202,003
Restricted cash, non-current	371		4,294
Property and equipment, net	2,613		3,084
Internal-use software development costs, net	13,447		11,425
Intangible assets, net	259,671		297,001
Goodwill	82,407		82,407
Operating lease right-of-use assets	3,759		4,732
Other non-current assets	444		524
Total assets	$	511,336	$	605,470
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,248	$	9,499
Accrued expenses and other current liabilities	76,817		59,314
Operating lease liabilities, current	2,385		2,333
Debt, net	16,272		15,271
Total current liabilities	101,722		86,417
Operating lease liabilities, non-current	2,339		3,582
Long-term debt, net	263,338		334,232
Warrant liability	936		2,688
Deferred tax liability	7,042		8,307
Other non-current liabilities	6,680		929
Total liabilities	$	382,057	$	436,155
Commitments and contingencies (Note 7)
Stockholders' equity:
Class A common stock $0.0001 par value; 500,000 shares authorized, 69,255 and 65,855 Class A shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	$	7	$	7
Class C common stock $0.0001 par value; 25,000 shares authorized, 21,204 and 21,513 Class C shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	2		2
Additional paid-in capital	854,270		843,112
Accumulated deficit	(744,572)		(707,662)
Accumulated other comprehensive loss	(295)		(181)
Total stockholders' equity attributable to System1, Inc.	109,412		135,278
Non-controlling interest	19,867		34,037
Total stockholders' equity	129,279		169,315
Total liabilities and stockholders' equity	$	511,336	$	605,470

See notes to condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except for per share)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	94,581	$	96,914	$	179,498	$	218,032
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	55,798		56,657		109,496		139,610
Salaries and benefits	33,937		27,054		58,420		55,201
Selling, general, and administrative	13,989		15,340		26,717		30,195
Depreciation and amortization	19,943		19,688		39,747		39,080
Total operating expenses	123,667		118,739		234,380		264,086
Operating loss	(29,086)		(21,825)		(54,882)		(46,054)
Other expense (income):
Interest expense, net	7,871		12,334		15,841		23,736
Gain from debt extinguishment	(433)		—		(20,109)		—
Change in fair value of warrant liabilities	(1,501)		2,018		(1,752)		609
Total other expense (income), net	5,937		14,352		(6,020)		24,345
Loss before income tax	(35,023)		(36,177)		(48,862)		(70,399)
Income tax benefit	(178)		(6,670)		(226)		(10,499)
Net loss from continuing operations	(34,845)		(29,507)		(48,636)		(59,900)
Net loss from discontinued operations, net of tax	—		(13,484)		—		(26,017)
Net loss	(34,845)		(42,991)		(48,636)		(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,472)		(6,165)		(11,726)		(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		(2,525)		—		(4,892)
Net loss attributable to System1, Inc.	$	(26,373)	$	(34,301)	$	(36,910)	$	(68,103)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(26,373)	$	(23,342)	$	(36,910)	$	(46,978)
Net loss from discontinued operations	—		(10,959)		—		(21,125)
Net loss attributable to System1, Inc.	$	(26,373)	$	(34,301)	$	(36,910)	$	(68,103)

Basic and diluted net loss per share:
Continuing operations	$	(0.38)	$	(0.25)	$	(0.54)	$	(0.50)
Discontinued operations	—		(0.12)		—		(0.23)
Basic and diluted net loss per share	$	(0.38)	$	(0.37)	$	(0.54)	$	(0.73)

Weighted average number of shares outstanding - basic and diluted	69,383		93,799		68,582		93,288

See notes to condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(34,845)	$	(42,991)	$	(48,636)	$	(85,917)
Other comprehensive (loss) income:
Foreign currency translation (loss) income	(96)		186		(231)		78
Comprehensive loss	(34,941)		(42,805)		(48,867)		(85,839)
Comprehensive loss attributable to non-controlling interest	(8,544)		(8,640)		(11,843)		(17,780)
Comprehensive loss attributable to System1, Inc.	$	(26,397)	$	(34,165)	$	(37,024)	$	(68,059)

See notes to condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In thousands)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2023	65,855	$	7	21,513	$	2	$	843,112	$	(707,662)	$	(181)	$	34,037	$	169,315
Net loss	—	—		—	—		—		(10,537)		—		(3,254)		(13,791)
Issuance of common stock in connection with settlement of incentive plan	970	—		—	—		2,464		—		—		(757)		1,707
Conversion of Class C shares to Class A shares	309	—		(309)	—		241		—		—		(241)		—
Tax receivable agreement liability and deferred taxes arising from LLC interest ownership exchanges and the issuance of common stock from equity incentive plans	—	—		—	—		(110)		—		—		—		(110)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	1,498	—		—	—		178		—		—		(1,169)		(991)
Other comprehensive loss	—	—		—	—		—		—		(90)		(45)		(135)
Stock-based compensation	—	—		—	—		4,317		—		—		88		4,405
Contributions from members, net of distributions	—	—		—	—		—		—		—		5		5
Balance at March 31, 2024	68,632	$	7	21,204	$	2	$	850,202	$	(718,199)	$	(271)	$	28,664	$	160,405
Net loss	—	—		—	—		—		(26,373)		—		(8,472)		(34,845)


Issuance of restricted stock, net of forfeitures and shares withheld for taxes	623	—		—	—		284		—		—		(308)		(24)
Other comprehensive loss	—	—		—	—		—		—		(24)		(72)		(96)
Stock-based compensation	—	—		—	—		3,784		—		—		87		3,871
Distributions to members	—	—		—	—		—		—		—		(32)		(32)
Balance at June 30, 2024	69,255	$	7	21,204	$	2	$	854,270	$	(744,572)	$	(295)	$	19,867	$	129,279


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at December 31, 2022	91,674	$	9	21,747	$	2	$	831,566	$	(439,296)	$	(260)	$	78,650	$	470,671
Net loss	—	—		—	—		—		(33,802)		—		(9,124)		(42,926)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,449)		—		—		(281)		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,819		—		—		(160)		1,659
Conversion of Class C shares to Class A shares	234	—		(234)	—		1,047		—		—		(1,047)		—
Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,203		—		—		958		7,161
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,745	$	(473,424)	$	(322)	$	68,949	$	433,959
Net loss	—	—		—	—		—		(34,301)		—		(8,690)		(42,991)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(133)		—		—		(181)		(314)



Other comprehensive income (loss)	—	—		—	—		—		—		208		(22)		186
Stock-based compensation	—	—		—	—		4,956		—		—		615		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	843,568	$	(507,725)	$	(114)	$	60,671	$	396,411

See notes to condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024		2023
Cash Flows from Operating Activities
Net loss	$	(48,636)	$	(85,917)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	39,762		57,426
Stock-based compensation	7,412		31,852


Amortization of debt issuance costs	2,002		2,933
Noncash lease expense	931		878
Change in fair value of warrant liabilities	(1,752)		608
Deferred tax benefits	(1,262)		(14,285)
Gain from debt extinguishment	(20,109)		—
Share-based liabilities	10,253		—
Other, net	(192)		1,086
Changes in operating assets and liabilities:
Accounts receivable	(5,823)		16,158
Prepaid expenses and other current assets	26		(1,265)
Accounts payable	(3,251)		7,818
Accrued expenses and other current liabilities	15,747		(12,545)
Deferred revenue	16		10,297
Long-term earnout liabilities	—		(15,000)
Other non-current liabilities	(1,146)		1,308
Net cash (used in) provided by operating activities	(6,022)		1,352
Cash Flows from Investing Activities
Purchases of property and equipment	—		(1,581)

Capitalized software development costs	(3,218)		(3,487)

Net cash used in investing activities	(3,218)		(5,068)
Cash Flows from Financing Activities
Proceeds from related-party loan, net of lender fees	—		39,000
Repayments of related party loan, inclusive of lender fees	—		(34,000)



Repayment of Term Loan	(51,786)		(10,000)


Payment of acquisition holdback	—		(1,250)

Taxes paid related to net settlement of stock awards	(2,116)		(3,052)



Distributions to members, net of contributions	(27)		(66)
Net cash used in financing activities	(53,929)		(9,368)
Effect of exchange rate changes in cash, cash equivalents and restricted cash	(6)		199
Net decrease in cash, cash equivalents and restricted cash	(63,175)		(12,885)
Cash and cash equivalents and restricted cash, beginning of the period	143,450		39,075
Cash and cash equivalents and restricted cash, end of the period	$	80,275	$	26,190
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	75,651	$	15,451
Restricted cash	4,624		10,739

Total cash, cash equivalents and restricted cash	$	80,275	$	26,190

Supplemental cash flow information:
Capitalized assets financed by accounts payable	$	—	$	53
Stock-based compensation included in capitalized software development costs	$	814	$	1,124
Settlement of incentive plan through issuance of common stock	$	1,707	$	1,658

See notes to condensed consolidated financial statements.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1.Organization and Description of Business

System1, Inc. and subsidiaries (the "Company", "we", "our" or "us") operates an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers and publishers.

We provide our omnichannel customer acquisition platform services through our proprietary responsive acquisition marketing platform ("RAMP"). Operating seamlessly across major advertising networks and advertising category verticals to acquire high-intent end-users, RAMP allows us to monetize these acquired end users through our relationships with third party advertisers and advertising networks ("Advertising Partners"). RAMP operates across our network of owned and operated websites, allowing us to monetize end-user traffic that we source from various acquisition marketing channels, including Google, Facebook, Outbrain, and TikTok. RAMP also allows third party advertising platforms and publishers ("Network Partners") to send end-user traffic to, and monetize end user traffic on, our owned and operated websites or through our monetization agreements.

We have two reportable segments: Owned and Operated Advertising and Partner Network (see Note 10, Segment Reporting).

2.Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC") on March 15, 2024.

In our opinion, the unaudited interim condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows. Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on the results of operations, financial position or cash flows for any period presented. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2024 or future operating periods.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.

We completed the sale of Total Security Limited, formerly known as Protected.net Group Limited ("Protected") on November 30, 2023. The results of operations of our Protected business prior to its sale are presented as net loss from discontinued operations in our condensed consolidated statements of operations in the periods applicable (see Note 12, Discontinued Operations).

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Revision of Previously Issued Consolidated Financial Statements

During the fourth quarter of 2023, we identified certain errors related to our previously issued financial statements as of and for the three and six months ended June 30, 2023 as follows:

a.Additional paid-in capital was understated by $1.2 million as of June 30, 2023, and salaries and benefits expense was overstated by $0.9 million and $0.6 million for the three and six months ended June 30, 2023, respectively, as a result of not accelerating expenses upon the forfeiture of certain cash and equity Replacement Awards (as defined in Note 9, Net Loss Per Share) previously granted in 2022 that impacted the condensed consolidated balance sheet, condensed consolidated statements of operations, condensed consolidated statements of changes in stockholders' equity, and condensed consolidated statement of cash flows.

b.We did not appropriately account for changes in equity and earnings per share, specifically:

(i) the carrying amount of non-controlling interest was not updated as changes in ownership events occurred during each reporting period;

(ii) certain equity Replacement Awards granted during 2022 were not properly considered in the allocation of net income (loss) to controlling and non-controlling interest and earnings per share. These errors impacted the condensed consolidated balance sheets, condensed consolidated statement of operations, condensed consolidated statements of changes in stockholders' equity, and condensed consolidated statement of cash flows.

c.We made additional corrections for other immaterial errors.

d.We adjusted for the tax impacts of the revisions related to such errors described above.

e.We adjusted for a $6.8 million misclassification of cash held in a treasury deposit account from restricted cash, current to cash and cash equivalents, as there were no legal restrictions on the balance.

We concluded that the errors were not material, either individually or in the aggregate, to our previously issued condensed consolidated financial statements for the impacted period. To correct the immaterial errors, we have revised our previously issued condensed consolidated financial statements as of and for the period ended June 30, 2023.

We have revised the condensed consolidated balance sheet, condensed consolidated statement of operations, condensed consolidated statement of comprehensive income (loss), condensed consolidated statement of changes in stockholders' equity, and condensed consolidated statement of cash flows for the period ended June 30, 2023, as well as the associated Notes to the condensed consolidated financial statements to reflect the correction of these immaterial errors in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. The following tables reflect the errors discussed in a through e above.

The following table reflects the revisions and the impact of reporting Discontinued Operations related to the sale of our Protected business to the previously issued condensed consolidated balance sheet as of June 30, 2023 (in thousands):

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	As Previously Reported		Revision Adjustment		As Revised			Impact of Reclassification of Discontinued Operations		As Currently Reported
Assets
Current assets:
Cash and cash equivalents	$	8,603	$	6,848	$	15,451	(e)	$	(11,149)	$	4,302
Restricted cash, current	11,762		(6,848)		4,914		(e)	(1,649)		3,265
Total current assets	95,130		—		95,130			—		95,130
Liabilities and Stockholders' Equity
Deferred tax liability	$	29,851	$	534	$	30,385	(d)	$	(11,956)	$	18,429
Total liabilities	681,268		534		681,802			—		681,802
Stockholders’ Equity / Members’ Deficit
Additional paid-in capital	$	842,350	$	1,218	$	843,568	(a) (b)	$	—	$	843,568
Accumulated deficit	(514,809)		7,084		(507,725)		(a) (b) (d)	—		(507,725)
Accumulated other comprehensive loss	(270)		156		(114)		(d)	—		(114)

Total stockholders' equity attributable to System1, Inc.	$	327,282	$	8,458	$	335,740		$	—	$	335,740
Non-controlling interest	69,663		(8,992)		60,671		(b)	—		60,671
Total stockholders' equity	$	396,945	$	(534)	$	396,411		$	—	$	396,411
Total liabilities and stockholders' equity	$	1,078,213	$	—	$	1,078,213		$	—	$	1,078,213

The following tables reflect the revisions and the impact of reporting Discontinued Operations related to the sale of our Protected business to the previously issued condensed consolidated statement of operations, for the three and six months ended June 30, 2023 (in thousands):

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	43,991	$	(890)	(a)	$	43,101	$	(16,047)	$	27,054



Total operating expenses	183,660		(890)			182,770		(64,031)		118,739
Operating loss	(36,422)		890			(35,532)		13,707		(21,825)






Loss before income tax	$	(50,782)	$	890		$	(49,892)	$	13,715	$	(36,177)
Income tax benefit	(6,605)		(296)		(d)	(6,901)		231		(6,670)
Net loss from continuing operations	(44,177)		1,186			(42,991)		13,484		(29,507)
Net loss from discontinued operations, net of tax	—		—			—		(13,484)		(13,484)
Net loss	(44,177)		1,186			(42,991)		—		(42,991)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,947)		257		(b)	(8,690)		2,525		(6,165)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(2,525)		(2,525)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(35,230)	$	929	(a) (b) (d)	$	(34,301)	$	10,959	$	(23,342)
Net loss from discontinued operations	—		—			—		(10,959)		(10,959)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Basic and diluted net loss per share:
Continuing operations	$	(0.38)	$	0.01	(b)	$	(0.37)	$	0.12	$	(0.25)
Discontinued operations	—		—			—		(0.12)		(0.12)
Basic and diluted net loss per share	$	(0.38)	$	0.01		$	(0.37)	$	—	$	(0.37)

Weighted average number of shares outstanding - basic and diluted	93,425		374		(b)	93,799				93,799

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	82,389	$	(594)	(a)	$	81,795	$	(26,594)	$	55,201



Total operating expenses	389,006		(594)			388,412		(124,326)		264,086
Operating loss	(73,914)		594			(73,320)		27,266		(46,054)






Loss before income tax	$	(98,316)	$	594		$	(97,722)	$	27,323	$	(70,399)
Income tax benefit	(11,013)		(792)		(d)	(11,805)		1,306		(10,499)
Net loss from continuing operations	(87,303)		1,386			(85,917)		26,017		(59,900)
Net loss from discontinued operations, net of tax	—		—			—		(26,017)		(26,017)
Net loss	(87,303)		1,386			(85,917)		—		(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(18,121)		307		(b)	(17,814)		4,892		(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(4,892)		(4,892)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(69,182)	$	1,079	(a) (b) (d)	$	(68,103)	$	21,125	$	(46,978)
Net loss from discontinued operations	—		—			—		(21,125)		(21,125)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Basic and diluted net loss per share:
Continuing operations	$	(0.74)	$	0.01	(b)	$	(0.73)	$	0.23	$	(0.50)
Discontinued operations	—		—			—		(0.23)		(0.23)
Basic and diluted net loss per share	$	(0.74)	$	0.01		$	(0.73)	$	—	$	(0.73)

Weighted average number of shares outstanding - basic and diluted	92,945		343		(b)	93,288				93,288

The following tables reflect the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three and six months ended June 30, 2023 (in thousands):


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(44,177)	$	1,186	(a) (d)	$	(42,991)
Other comprehensive income (loss)
Foreign currency translation income (loss)	187		(1)		(c)	186
Comprehensive loss	(43,990)		1,185			(42,805)
Comprehensive loss attributable to non-controlling interest	(8,897)		257		(b)	(8,640)
Comprehensive loss attributable to System1, Inc.	$	(35,093)	$	928		$	(34,165)

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Other comprehensive (loss) income:
Foreign currency translation (loss) income	79		(1)		(c)	78
Comprehensive loss	(87,224)		1,385			(85,839)
Comprehensive loss attributable to non-controlling interest	(18,087)		307		(b)	(17,780)
Comprehensive loss attributable to System1, Inc.	$	(69,137)	$	1,078		$	(68,059)

The following tables reflect the revisions to the previously issued condensed consolidated statement of changes in stockholders' equity for the six months ended June 30, 2023 (in thousands). Although the impact of such revisions is pervasive throughout the condensed consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant revisions include a reduction of net loss of $1.4 million, an increase of non-controlling interest of $1.2 million, a reduction in accumulated deficit of $1.1 million and a reduction in additional paid-in-capital of $0.7 million.


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
As Previously Reported
Balance at December 31, 2022	91,674	$	9	21,747	$	2	$	831,566	$	(439,296)	$	(260)	$	78,650	$	470,671
Net loss	—	—		—	—		—		(33,952)		—		(9,174)		(43,126)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,730)		—		—		—		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,659		—		—		—		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		955		—		—		(955)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,963		—		—		—		6,963
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,972	$	(473,574)	$	(322)	$	68,474	$	433,561
Net loss	—	—		—	—		—		(35,230)		—		(8,947)		(44,177)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(314)		—		—		—		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		209		(22)		187

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Stock-based compensation	—	—		—	—		5,571		—		—		—		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	844,229	$	(508,804)	$	(113)	$	59,505	$	394,828

Revision Adjustments
Net loss	—	$	—	—	$	—	$	—	$	150	$	—	$	50	$	200	(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		281		—		—		(281)		—		(a) (b)
Issuance of common stock in connection with settlement of incentive plan	—	—		—	—		160		—		—		(160)		—		(b)

Conversion of Class C shares to Class A shares	—	—		—	—		92		—		—		(92)		—		(b)



Stock-based compensation	—	—		—	—		(760)		—		—		958		198		(a) (b)
Balance at March 31, 2023	—	$	—	—	$	—	$	(227)	$	150	$	—	$	475	$	398
Net loss	—	—		—	—		—		929		—		257		1,186		(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		181		—		—		(181)		—		(a) (b)





Other comprehensive loss	—	—		—	—		—		—		(1)		—		(1)		(c)
Stock-based compensation	—	—		—	—		(615)		—		—		615		—		(a) (b)
Balance at June 30, 2023	—	$	—	—	$	—	$	(661)	$	1,079	$	(1)	$	1,166	$	1,583

As Revised
Net loss	—	$	—	—	$	—	—		$	(33,802)	$	—	$	(9,124)	$	(42,926)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,449)		—		—		(281)		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,819		—		—		(160)		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		1,047		—		—		(1,047)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,203		—		—		958		7,161

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,745	$	(473,424)	$	(322)	$	68,949	$	433,959
Net loss	—	—		—	—		—		(34,301)		—		(8,690)		(42,991)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(133)		—		—		(181)		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		208		(22)		186
Stock-based compensation	—	—		—	—		4,956		—		—		615		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	843,568	$	(507,725)	$	(114)	$	60,671	$	396,411

The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the six months ended June 30, 2023 (in thousands):


	As Previously Reported		Revision Adjustment			As Currently Reported
Cash Flows from Operating Activities
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Stock-based compensation	31,656		196		(a)	31,852
Other, net 1	3,588		431		(c)	4,019
Deferred tax benefits	(13,493)		(792)		(d)	(14,285)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(834)		(431)		(c)	(1,265)
Accrued expenses and other current liabilities	(10,963)		(1,582)		(c)	(12,545)
Other non-current liabilities	516		792		(c)	1,308
Net cash provided by operating activities	1,352		—			1,352
_______________

1 To conform to current period presentation, the amount related to amortization of debt issuance costs included in other, net has been reclassified to amortization of debt issuance costs in the condensed consolidated statement of cash flows.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management’s estimates are based on historical information available as of the date of the condensed consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, valuation of goodwill, acquired intangible assets, assets held for sale and long-lived assets, valuation and recognition of stock-based compensation awards, income taxes, contingent consideration and determination of the fair value of the warrant liabilities. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Risks

We are subject to certain business and operational risks, including competition from alternative technologies, as well as dependence on key Advertising Partners, key employees, key contracts, and growth to achieve our business and operational objectives.

As of June 30, 2024, we had two paid search advertising partnership agreements with Google and one paid search advertising partnership agreement with Microsoft. One of the Google agreements expires on February 28, 2025. Under certain circumstances, each of these agreements may be terminated by either us or the respective Advertising Partner immediately or with minimal notice.

During the three months ended June 30, 2024, we recorded revenue of $6.6 million from an Advertising Partner and a contra revenue liability of $5.9 million due to certain Network Partners related to traffic sent to our platform by those Network Partners that generated search advertising revenue. We have currently withheld payment to the impacted Network Partners pending a comprehensive ongoing review of whether such traffic generating the search advertising revenue was valid or otherwise complied with the terms of our commercial arrangements with such Network Partners. For any traffic determined to be either invalid or not in compliance with such commercial arrangements, the corresponding amounts may be withheld from our Network Partners as a result of such violations and in that case, would be recognized as revenue in the period in which such final determination is made (currently expected to be in 2024).

3.Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net

Goodwill

Goodwill was $82.4 million as of June 30, 2024 and December 31, 2023, all of which is attributable to the Partner Network reporting unit. No impairment of goodwill was recognized in any of the periods presented.

Internal-use Software Development Costs, Net and Intangible Assets, Net

Internal-use software development costs and intangible assets consisted of the following (in thousands):


	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	17,820	$	(4,373)	$	13,447
Intangible assets:
Developed technology	$	196,128	$	(118,870)	$	77,258
Trademarks and trade names	236,053		(56,850)		179,203
Software	5,100		(2,978)		2,122
Customer relationships	2,900		(1,812)		1,088
Total	$	440,181	$	(180,510)	$	259,671

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	13,788	$	(2,363)	$	11,425
Intangible assets:
Developed technology	$	196,128	$	(94,354)	$	101,774
Trademarks and trade names	236,053		(45,050)		191,003
Software	5,100		(2,341)		2,759
Customer relationships	2,900		(1,435)		1,465
Total	$	440,181	$	(143,180)	$	297,001

The internal-use software development costs include construction in progress (which amounts are not subject to amortization until placed in service) of $4.2 million and $3.5 million as of June 30, 2024 and December 31, 2023, respectively.

Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense for internal-use software development	$	1,076	$	839	$	2,010	$	1,396
Amortization expense for intangible assets	$	18,665	$	18,665	$	37,330	$	37,330

No impairment of internal-use software development cost or intangible assets was recognized for any of the periods presented.

As of June 30, 2024, the weighted average amortization period for all intangible assets was 7 years.

4.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following items as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
Accrued revenue share	$	29,066	$	16,365
Accrued marketing expenses	12,744		19,737
Accrued payroll and related benefits	11,420		13,751



Accrued interest payable	5,175		311

Other current liabilities	18,412		9,150
Accrued expenses and other current liabilities	$	76,817	$	59,314

CouponFollow Incentive Plan

As of June 30, 2024, the Company determined it is probable that the CouponFollow business would achieve certain performance conditions during the Performance Periods, and accordingly, recognized a short-term liability within accrued expenses and other current liabilities of $4.7 million and a non-current liability of $5.6 million within other non-current liabilities in our condensed consolidated balance sheets for the Tier 1 and Tier 2 amounts set forth in the CouponFollow Incentive Plan. The carrying amount of the share-based liabilities approximates its fair value.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the six months ended June 30, 2024, we issued 1.0 million shares of Class A common stock with an aggregate fair value of $1.7 million, net of shares withheld for taxes, on the date of the settlement to settle the second installment of the Fixed Amount in the amount of $3.3 million. We recognized a gain of $0.5 million for the difference between the fair value of the Class A common stock issued and the carrying value of the liability. For the six months ended June 30, 2024, we recognized $0.8 million for the third installment of the Fixed Amount within salaries and benefits expenses on the condensed consolidated statements of operations.

5.Debt, Net

We entered into a term loan ("Term Loan") and revolving facility ("2022 Revolving Facility") with Bank of America, N.A., on January 27, 2022, providing for a 5.5-year term loan with a principal balance of $400.0 million and with the net proceeds of $376.0 million. The 2022 Revolving Facility provided for borrowing availability of up to $50.0 million. As of June 30, 2024, there was no balance outstanding on the 2022 Revolving Facility, and principal of $290.1 million was outstanding on the Term Loan. Through December 31, 2025, the outstanding Term Loan is subject to quarterly amortization payments of $5.0 million. From March 31, 2026, the Term Loan is subject to quarterly amortization payments of $7.5 million. The Term Loan matures in 2027.

For every interest period, the interest rate on the Term Loan is the adjusted Secured Overnight Financing Rate ("SOFR") plus 4.75%. The Term Loan is amortized in quarterly installments on each scheduled payment date. The Term Loan comes with a leverage covenant, which goes into effect only if the utilization on the 2022 Revolving Facility exceeds 35% of the $50.0 million 2022 Revolving Facility at each quarter-end starting the second quarter 2022, such that the first lien leverage ratio (as defined in the credit agreement) should not exceed 5.40. The facility has certain financial and nonfinancial covenants, including a leverage ratio. The facility also requires that we deliver our audited consolidated financial statements to our lender within 120 days of our fiscal year end, December 31. Should we fail to distribute the financial statements to our lender within 120 days, we are allowed an additional 30 days to cure. We were in compliance with our financial covenants as of June 30, 2024.

The interest rate on the 2022 Revolving Facility is the adjusted SOFR plus 2.5% with an adjusted SOFR floor of 0%. As of June 30, 2024, we had $50.0 million available on the 2022 Revolving Facility.

On January 17, 2024, we completed the repurchase of $63.7 million in principal amount of our Term Loan for an aggregate purchase price of $40.9 million (at discount of 64.2% of its par value) pursuant to a Dutch auction tender offer. Following the repurchase, the outstanding principal amount of the Term Loan was $301.3 million. We used available cash on hand to fund the repurchase. Our gain on the repurchase was $19.7 million before fees and expenses incurred to negotiate, document and consummate the repurchase.

On April 30, 2024, we completed the repurchase of an additional $1.2 million in principal amount of our Term Loan for an aggregate purchase price of $0.7 million (at discount of 60.0% of its par value) pursuant to a privately negotiated repurchase transaction. Following the repurchase, the outstanding principal amount of the Term Loan was $295.0 million. We used available cash on hand to fund the repurchase. Our gain on the repurchase was $0.4 million before fees and expenses incurred to negotiate, document and consummate the additional repurchase.

On August 1, 2024, the Company undertook a corporate reorganization, the result of which was that all of the assets and business operations of System1 are now held by System1 Holdings, LLC ("System1 Holdings"), a newly formed intermediate holding company of which the Company maintains the controlling interest and where the non-controlling interest is held by the Company's Class C common stockholders. Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco, LLC ("S1 Holdco"), the previous intermediate holding company, and 100% of S1 Media, LLC ("S1 Media"), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with the Company’s owned & operated products businesses, which includes CouponFollow, Startpage and Mapquest, and (c) S1 Holdco holds the Company’s remaining assets and business operations associated with the Company's digital advertising businesses, including its proprietary RAMP platform. S1 Holdco and its subsidiaries remain obligors and guarantors

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

under the Company's Term Loan and 2022 Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.

The carrying values of our debt, net of discounts, deferred financing and debt issuance costs were as follows (in thousands):


	June 30, 2024		December 31, 2023
Term Loan 1, 2	$	279,610	$	349,503
Total Debt, net	$	279,610	$	349,503
_______________
1 Includes unamortized discount of $9.9 million and $14.7 million and unamortized loan fees of $0.5 million and $0.8 million, as of June 30, 2024 and December 31, 2023, respectively, recorded as a reduction of the carrying amount of the debt and amortized to interest expense using the effective interest method.
2 Estimated fair value of the Term Loan was $177.0 million and $222.7 million as of June 30, 2024 and December 31, 2023, respectively.

6.Income Taxes

We are the sole managing member of S1 Holdco and, as a result, consolidate the financial results of S1 Holdco. S1 Holdco is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, S1 Holdco is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by S1 Holdco is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of S1 Holdco, as well as any stand-alone income or loss generated by us.

We recorded a benefit for income taxes of $0.2 million and $0.2 million for the three and six months ended June 30, 2024 and a benefit from income taxes of $6.7 million and $10.5 million for the three and six months ended June 30, 2023, respectively. The effective tax rate was 0.5% and 0.4% for the three and six months ended June 30, 2024, respectively and 18.4% and 14.9% for the three and six months ended June 30, 2023, respectively. The provision for income taxes differs from the amount of income tax computed by applying the U.S. statutory federal tax rate of 21% to the loss before income taxes due to the exclusion of non-controlling loss, state taxes, foreign rate differential, non-deductible expenses, increase to the valuation allowance related to unrealizable deferred tax assets, and outside basis adjustments. As of June 30, 2024, we had a full valuation allowance on our U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets would not be realized.

During the three and six months ended June 30, 2024 and 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement. The total amount of Tax Receivable Agreement Payments due under the Tax Receivable Agreement was $0.9 million and $0.8 million as of June 30, 2024 and December 31, 2023, respectively.

As discussed in Note 5, Debt, Net, on August 1, 2024, the Company undertook a corporate reorganization.

7.Commitments and Contingencies

In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million in each annual period between July 2023 and June 2026. As of June 30, 2024, we remain contractually obligated to spend $10.0 million towards this commitment.

As of June 30, 2024, we had various non-cancelable operating lease commitments for office space which have been recorded as Operating lease liabilities.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Litigation

We are subject to various legal proceedings and claims that arise in the ordinary course of business. We believe the ultimate liability, if any, with respect to these actions will not materially affect the consolidated financial position, results of operations, or cash flows reflected in the condensed consolidated financial statements. There can be no assurance, however, that the ultimate resolution of such actions will not materially or adversely affect our consolidated financial position, results of operations, or cash flows. We accrued for losses when the loss is deemed probable and the liability can reasonably be estimated.

In October 2023, a putative California class action complaint (the "Complaint") was filed against us and our Protected business regarding alleged violations of California’s Auto Renewal Law requirements related to the marketing and sale of its subscription service offerings for anti-virus and ad-blocking software (the "Protected Software") to consumers. The Complaint alleges claims under California’s false advertising and unfair competition laws and primarily alleges that the marketing and sales checkout flows for the Protected Software did not clearly and conspicuously disclose that the named plaintiffs set forth in the Complaint were purchasing the Protected Software for a promotional period which would auto-renew after the applicable promotional period. While we dispute the claims alleged, we have reached a tentative settlement during June 2024, which would include a release of such claims by the relevant class, which tentative settlement is still subject to court approval and finalizing other terms and conditions. The amount of such tentative settlement has been accrued accordingly in accrued expenses and other current liabilities in our condensed consolidated balance sheets as of June 30, 2024.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments we could be required to make under these indemnification provisions may not be subject to claims related to these indemnifications. As a result, we believe the estimated fair value of these agreements was immaterial. Accordingly, we have no liabilities recorded for these agreements as of June 30, 2024.

8.Fair Value Measurement

Financial Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis (in thousands):


	June 30, 2024		December 31, 2023
	Level 1
Public Warrants	$	936	$	2,688

The fair value of the Public Warrants has been estimated using the Public Warrants’ quoted market price. There were no transfers in or out of levels during the periods presented.

Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis

For further information on the fair value assessment of goodwill, refer to Note 3, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

9.Net Loss Per Share

Basic net loss per share was calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. Basic and diluted net loss per share was calculated as follows (in thousands, except per share):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Basic and diluted net loss per share
Net loss from continuing operations attributable to System1, Inc.	$	(0.38)	$	(0.25)	$	(0.54)	$	(0.50)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(0.12)		—		(0.23)
Basic and diluted net loss per share	$	(0.38)	$	(0.37)	$	(0.54)	$	(0.73)
Numerator:
Net loss from continuing operations attributable to System1, Inc.	$	(26,373)	$	(23,342)	$	(36,910)	$	(46,978)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(10,959)		—		(21,125)
Net loss attributable to System1, Inc.	$	(26,373)	$	(34,301)	$	(36,910)	$	(68,103)
Denominator:
Weighted-average common shares outstanding used in computing basic and diluted net loss per share	69,383		93,799		68,582		93,288

For the periods presented in the table above, a total of 16.8 million Public Warrants were excluded from the computation of net loss per share as the impact was anti-dilutive.

Pursuant to the Merger, we were required to replace certain unvested profits interests awards, value creation units and Class F units that were outstanding as of the closing of the Business Combination, with a combination of a restricted stock unit and cash awards (collectively, "Replacement Awards"). We do not consider unvested Class A common stock related to the Replacement Awards as outstanding for accounting purposes as they are subject to continued service requirements or contingencies. These shares are not included in the denominator of the net loss per share calculation until the employee provides the requisite service resulting in the vesting of the award or the contingency is removed, or upon termination of an employee at which point the common stock underlying the award becomes issuable to the previous investors. Shares associated with the vested or forfeited Replacement Awards are deemed to be issued and outstanding for accounting purposes on the day of vest or forfeiture.

10.Segment Reporting

We have two operating and reportable segments: Owned and Operated Advertising and Partner Network. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and assess performance. Our Chief Executive Officer, who is considered to be our CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

The CODM measures and evaluates reportable segments based on segment operating revenue as well as adjusted gross profit. The tables below include the following operating expenses that are not allocated to the reporting segments presented to our CODM: depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments. The CODM does not consider these expenses for the purposes of making decisions to allocate resources among segments or to

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

assess segment performance, however these costs are included in reported condensed consolidated net loss from continuing operations before income tax and are included in the reconciliation that follows.

The following table summarizes revenue by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	77,396	$	77,300	$	146,426	$	183,325
Partner Network	17,185		19,614		33,072		34,707
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

The following table summarizes Adjusted gross profit by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	27,378	$	27,589	$	49,840	$	57,428
Partner Network	13,490		14,808		24,409		25,025
Adjusted gross profit	40,868		42,397		74,249		82,453
Other cost of revenue	2,085		2,140		4,247		4,031
Salaries and benefits	33,937		27,054		58,420		55,201
Selling, general, and administrative	13,989		15,340		26,717		30,195
Depreciation and amortization	19,943		19,688		39,747		39,080

Interest expense, net	7,871		12,334		15,841		23,736
Gain from debt extinguishment	(433)		—		(20,109)		—
Change in fair value of warrant liabilities	(1,501)		2,018		(1,752)		609
Loss before income tax	$	(35,023)	$	(36,177)	$	(48,862)	$	(70,399)

The following table summarizes revenue by geographic region (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	91,215	$	93,410	$	172,897	$	210,609
Other countries	3,366		3,504		6,601		7,423
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

11.Stock-Based Compensation

We recorded the following total stock-based compensation expense (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock-based compensation expense	$	3,442	$	4,294	$	7,412	$	10,126

Stock Appreciation Rights Plan

During the quarter ended June 30, 2024, the Company adopted the 2024 Stock Appreciation Rights Plan (the "Plan"), to enhance its ability to attract, retain, and motivate individuals who are expected to make significant contributions to the Company's future financial and operating performance. The maximum number of Class A common stock that may be issued pursuant to awards of Stock Appreciation Rights ("SARs") granted under the Plan ("Awards") is 23.8 million shares.

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

In July 2024, we granted 22.4 million SARs in accordance with the Plan. Each Award of SARs shall vest and become exercisable as follows, subject to the employee's continued status as a service provider through the applicable Vesting Date (as defined in the Plan), and the term of any Stock Appreciation Right shall not exceed seven years: (1) twenty-five percent (25%) of the SARs subject to the Award (the “Tranche I SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve-month period concluding on or after the applicable date of grant equals or exceeds $50.0 million; (2) twenty-five percent (25%) of the SARs subject to the Award (the “Tranche II SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve-month period concluding on or after the applicable date of grant equals or exceeds $60.0 million; (3) twenty-five percent (25%) of the SARs subject to the Award (the “Tranche III SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve-month period concluding on or after the applicable date of grant equals or exceeds $70.0 million; and (4) the remaining twenty-five percent (25%) of the SARs subject to the Award (the “Tranche IV SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve-month period concluding on or after the applicable date of grant equals or exceeds $80.0 million.

In July 2024, we granted 3.1 million restricted stock unit awards in accordance with the 2022 Incentive Award Plan.

12.Discontinued Operations

Sale of Protected

On November 30, 2023, we completed the sale of our Protected business, our subscription reporting unit. Total consideration comprised of: (a) $240.0 million in cash, subject to certain adjustments, (b) the return and subsequent cancellation of approximately 29.1 million shares of our Class A common stock, par value $0.0001 per share, owned by JDI and other entities and individuals affiliated with the Purchasing Parties and (c) confirmation from JDI, Protected and the Protected CEO that the financial performance benchmarks related to the financial benchmarks included in the Protected Incentive Plan (as defined below), will, as a result of the Protected sale, no longer be achievable.

The financial results of Protected are presented as a loss from discontinued operations, net of taxes in the condensed consolidated statements of operations. The following table presents the summarized discontinued operations condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Revenue	$	50,324	$	97,060
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	37,225		74,674
Salaries and benefits	16,047		26,594
Selling, general, and administrative	2,395		4,712
Depreciation and amortization	8,364		18,346


Total operating expenses	64,031		124,326
Operating loss	(13,707)		(27,266)
Other expense, net	8		57
Loss from discontinued operations before income taxes	(13,715)		(27,323)
Income tax benefit	(231)		(1,306)
Net loss from discontinued operations	$	(13,484)	$	(26,017)

System1, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the subscription business that are included in the condensed consolidated statements of cash flows (in thousands):


	Six Months Ended June 30, 2023
Depreciation and amortization	$	18,346
Stock-based compensation	21,726
Capital expenditures	1,053

Transition Service Agreement

In connection with a transition service agreement entered into with the sale of our Protected business, we agreed to provide certain services for which full reimbursement of cost will be provided through the earlier of November 20, 2024 or the date Protected is able to independently participate in Google's advertising purchasing programs.

Discontinued Operations Related-Party Transactions

Payment Processing Agreement

Protected utilizes multiple credit card payment processors, including Paysafe Financial Services Limited ("Paysafe"). In March 2021, Paysafe completed a merger with Foley Trasimene Acquisition Corp. II ("Foley Trasimene"), a special purpose acquisition company sponsored by entities affiliated with a sponsor of Trebia who was also a member of our Board of Directors. We incurred credit card processing fees related to Paysafe for the three and six months ended June 30, 2023 of $1.0 million and $2.1 million, respectively.

Office Facilities

Protected had an agreement with JDI Property Holdings Limited ("JDIP"), an entity controlled by one of our directors, which allowed Protected to use space at their property in exchange for GBP 0.1 million per year.

Protected Incentive Plan Installment Payments

In 2022, in connection with the acquisition of Protected, we effected an incentive plan for eligible recipients (the "Protected Incentive Plan"), providing up to $100.0 million payable in fully-vested shares of our Class A common stock contingent upon the achievement of the future performance of Protected’s business. The Protected Incentive Plan originally was to be paid out in two tranches based on performance of the business for 2023 and 2024. The first award (2023), consisting of $50.0 million of Class A common stock payable in January 2024, was modified to a cash award resulting in $20.0 million of payments in 2022 and 2023 with an additional final $10.0 million, payable upon the achievement of certain performance thresholds around marketing spend and operating contribution of Protected on or before December 31, 2024. On November 30, 2023, none of the performance thresholds were met, and therefore, none of the additional cash bonus payments have been paid.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

SYSTEM1 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated or the context otherwise requires, references in this section to "the Company," "System1," "we," "us," "our" and other similar terms refer to System1, Inc and its subsidiaries.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ending December 31, 2023. In addition to historical information, the following discussion and analysis contains forward-looking statements. Our actual results may differ significantly from those projected in such forward-looking statements. Factors that might cause future results to differ materially from those projected in such forward-looking statements include, but are not limited to, those discussed in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements."

References to "Notes" are notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. The condensed consolidated financial statements as of and for the three and six months ended June 30, 2023 have been revised to correct prior period errors as discussed in Item I, "Financial Statements - Note 2, Summary of Significant Accounting Policies." Accordingly, this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations reflects the impact of those revisions.

Company Overview

We operate an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers and publishers.

Through RAMP, we process approximately 175 million daily advertising campaign optimizations and ingest over 13 billion rows of data daily across approximately 41 advertising vertical categories as of June 30, 2024. We are able to efficiently monetize user intent by linking data on consumer engagement, such as first party search data like traffic sources, device type and search queries, with data on monetization rates and advertising spend. This context-enriched data, combined with our proprietary and data science driven algorithms, creates a closed-loop system that is not reliant on personally identifiable information or information obtained through third-party cookies, but which allows RAMP to efficiently match consumer demand with the appropriate advertiser or advertising experience across advertising category verticals.

We focus on monetizing user traffic acquired by our Network Partners. Since launching, it has expanded to support additional advertising formats across multiple advertising platforms, and has acquired several leading websites, enabling it to control the entire flow of the user acquisition experience, by monetizing user traffic through our network of owned and operated websites. As of June 30, 2024, we own and operate approximately 40 websites, including leading search engines like info.com and Startpage.com, and digital media publishing websites and internet utilities, such as HowStuffWorks, MapQuest, CouponFollow and ActiveBeat.

On June 28, 2021, we entered into a Business Combination Agreement (as amended on November 30, 2021, January 10, 2022 and January 25, 2022), ("Business Combination Agreement") by and among us, S1 Holdco, LLC ("S1 Holdco") and Total Security Limited, formerly known as Protected.net Group Limited ("Protected"). On January 26, 2022 ("Closing Date"), we consummated the business combination ("Merger") pursuant to the Business Combination Agreement. Following the consummation of the Merger, the combined company was organized via an "Up-C" structure, in which substantially all of the assets and business operations of System1 are held by S1 Holdco, and our combined business continues to operate through the domestic and foreign subsidiaries of S1 Holdco.

On August 1, 2024, the Company undertook a corporate reorganization, the result of which was that all of the assets and business operations of System1 are now held by System1 Holdings, a newly formed intermediate holding company of which the Company maintains the controlling interest and where the non-controlling interest is held by the Company's Class C common stockholders. Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco (the previous intermediate holding company) and 100% of S1 Media, LLC (“S1 Media”), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with the Company’s owned & operated products businesses, which includes CouponFollow, Startpage and Mapquest, and (c) S1 Holdco holds the Company’s remaining assets and business operations associated with the Company's digital advertising businesses, including its proprietary RAMP platform. S1 Holdco and its subsidiaries remain obligors and guarantors under the Company's Term Loan and 2022 Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.

Our primary operations are in the United States, and we also have operations in Canada and the Netherlands. Operations outside the United States are subject to risks inherent in operating under different legal systems as well as various political and economic environments. Among the risks are changes in existing tax laws, changes in the regulatory framework in foreign jurisdictions, data privacy laws, possible limitations on foreign investment and income repatriation, government foreign exchange controls, exposure to currency exchange fluctuations and employment laws impacting foreign employees. We do not engage in hedging activities to mitigate our exposure to fluctuations in foreign currency exchange rates.

As a result of the current uncertainty in economic activity, including geopolitical developments and other macroeconomic factors such as rising interest rates, inflation and the impact of earlier supply chain disruptions, we are unable to predict the size and duration of the impact on our revenue and our results of operations.

Sale of Protected

We completed the sale of our Protected business on November 30, 2023. The results of operations of our Protected business prior to its sale are presented as net loss from discontinued operations in our condensed consolidated statements of operations for all periods presented. Unless otherwise noted, the information contained in this Management Discussion and Analysis relates solely to our continuing operations and does not include the operations of our Protected business (see Item I, "Financial Statements - Note 12, Discontinued Operations").

Components of Our Results of Operations

Revenue

We earn revenue by deploying components of our RAMP to our owned and operated websites to acquire and monetize end-users via advertising offerings from our Advertising Partners. For this revenue stream, we are the principal in the transaction and report revenue on a gross basis for the amounts received from our Advertising

Partners. Additionally, revenue is earned from revenue-sharing arrangements with our Network Partners, whereby our Network Partners acquire end-users and use RAMP to monetize those end-users via our relationships with Advertising Partners. We have determined that we are the agent in these transactions and therefore report revenue on a net basis, based on the difference between amounts received by us from our Advertising Partners, less amounts remitted to our Network Partners based on the underlying revenue-sharing agreements.

We recognize revenue upon delivering user-traffic to our Advertising Partners based on a cost-per-click or cost-per-thousand impression basis. The payment terms with our Advertising Partners is typically 30 days.

Revenue may fluctuate from period to period due to a number of factors including seasonality and the shift in mix of user acquisition sources from Advertising Partners.

We have two reportable segments:

•Owned and Operated Advertising ("O&O"); and

•Partner Network.

Operating Expenses

We classify our operating expenses into the following categories:

Cost of revenue (excluding depreciation and amortization). Cost of revenue (excluding depreciation and amortization) primarily consists of traffic acquisition costs, which are the costs to place advertisements to acquire customers to our websites and services, as well as domain name registration costs and licensing costs to provide mapping services to Mapquest.com. We do not pre-pay any traffic acquisition costs, and therefore, such costs are expensed as incurred.

Salaries and benefits. Salaries and benefits expenses include salaries, bonuses, stock-based compensation, and employee benefits costs.

Selling, general, and administrative. Selling, general, and administrative expenses consist of fees for professional services, occupancy costs and travel and entertainment. These costs are expensed as incurred.

Depreciation and amortization. Depreciation and amortization expenses are primarily attributable to our capital investment(s) and consist of property and equipment depreciation and amortization of intangible assets with finite lives.

Other Expenses

Other expenses consist of the following:

Interest expense, net. Interest expense consists of interest on our debt and the amortization of deferred financing costs and debt discount.

Gain from debt extinguishment. Gain from the repurchase of a portion of our Term Loan indebtedness at a discount.

Change in fair value of warrant liabilities. The mark to market of our liability-classified Public Warrants.

Income tax benefit

As of June 30, 2024, we are the sole managing member of S1 Holdco and, as a result, consolidate the financial results of S1 Holdco. S1 Holdco is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, S1 Holdco is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by S1 Holdco is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in

addition to state and local income taxes with respect to its allocable share of any taxable income or loss of S1 Holdco, as well as any stand-alone income or loss generated by us.

Results of Operations

Comparisons of the three and six months ended June 30, 2024 and 2023

The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentage information):


	Three Months Ended June 30,								2024 vs. 2023 Change
	2024		% of Total Revenue		2023		% of Total Revenue		($)		(%)
Revenue	$	94,581	100	%	$	96,914	100	%	$	(2,333)	(2)	%
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	55,798		59	%	56,657		58	%	(859)		(2)	%
Salaries and benefits	33,937		36	%	27,054		28	%	6,883		25	%
Selling, general, and administrative	13,989		15	%	15,340		16	%	(1,351)		(9)	%
Depreciation and amortization	19,943		21	%	19,688		20	%	255		1	%
Total operating expenses	123,667		131	%	118,739		123	%	4,928		4	%
Operating loss	(29,086)		(31)	%	(21,825)		(23)	%	(7,261)		33	%
Other expense (income):
Interest expense, net	7,871		8	%	12,334		13	%	(4,463)		(36)	%
Gain from debt extinguishment	(433)		—	%	—		—	%	(433)		—	%
Change in fair value of warrant liabilities	(1,501)		(2)	%	2,018		2	%	(3,519)		(174)	%
Total other (income) expense, net	5,937		6	%	14,352		15	%	(8,415)		(59)	%
Loss before income tax	(35,023)		(37)	%	(36,177)		(37)	%	1,154		(3)	%
Income tax benefit	(178)		—	%	(6,670)		(7)	%	6,492		(97)	%
Net loss from continuing operations	(34,845)		(37)	%	(29,507)		(30)	%	(5,338)		18	%
Net loss from discontinued operations, net of tax	—		—	%	(13,484)		(14)	%	13,484		(100)	%
Net loss	(34,845)		(37)	%	(42,991)		(44)	%	8,146		(19)	%
Less: Net loss from continuing operations attributable to non-controlling interest	(8,472)		(9)	%	(6,165)		(6)	%	(2,307)		37	%
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—	%	(2,525)		(3)	%	2,525		(100)	%
Net loss attributable to System1, Inc.	$	(26,373)	(28)	%	$	(34,301)	(35)	%	$	7,928	(23)	%

* Percentages may not sum due to rounding


	Six Months Ended June 30,								2024 vs. 2023 Change
	2024		% of Total Revenue		2023		% of Total Revenue		($)		(%)
Revenue	$	179,498	100	%	$	218,032	100	%	$	(38,534)	(18)	%
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	109,496		61	%	139,610		64	%	(30,114)		(22)	%
Salaries and benefits	58,420		33	%	55,201		25	%	3,219		6	%
Selling, general, and administrative	26,717		15	%	30,195		14	%	(3,478)		(12)	%
Depreciation and amortization	39,747		22	%	39,080		18	%	667		2	%
Total operating expenses	234,380		131	%	264,086		121	%	(29,706)		(11)	%
Operating loss	(54,882)		(31)	%	(46,054)		(21)	%	(8,828)		19	%
Other expense (income):
Interest expense, net	15,841		9	%	23,736		11	%	(7,895)		(33)	%
Gain from debt extinguishment	(20,109)		(11)	%	—		—	%	(20,109)		—	%
Change in fair value of warrant liabilities	(1,752)		(1)	%	609		—	%	(2,361)		(388)	%
Total other expense (income), net	(6,020)		(3)	%	24,345		11	%	(30,365)		(125)	%
Loss before income tax	(48,862)		(27)	%	(70,399)		(32)	%	21,537		(31)	%
Income tax benefit	(226)		—	%	(10,499)		(5)	%	10,273		(98)	%
Net loss from continuing operations	(48,636)		(27)	%	(59,900)		(27)	%	11,264		(19)	%
Net loss from discontinued operations, net of tax	—		—	%	(26,017)		(12)	%	26,017		(100)	%
Net loss	(48,636)		(27)	%	(85,917)		(39)	%	37,281		(43)	%
Less: Net loss from continuing operations attributable to non-controlling interest	(11,726)		(7)	%	(12,922)		(6)	%	1,196		(9)	%
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—	%	(4,892)		(2)	%	4,892		(100)	%
Net loss attributable to System1, Inc.	$	(36,910)	(21)	%	$	(68,103)	(31)	%	$	31,193	(46)	%

* Percentages may not sum due to rounding

Revenue and Cost Metrics

The key non-financial performance metrics we use to evaluate our business, track the effectiveness of our operations and measure our performance are total advertising spend, number of Owned & Operated Advertising sessions (“O&O sessions”), number of Partner Network sessions (“Network sessions”), Owned & Operated Advertising cost-per-session (“O&O CPS”), Owned & Operated Advertising revenue-per-session (“O&O RPS”) and Partner Network revenue-per-session (“Network RPS”).

We define total advertising spend as the amount of advertising that is spent by us to acquire traffic to our owned and operated websites. We believe total advertising spend is a relevant measure to gauge the effectiveness of our Company to deploy capital to acquire monetizable traffic to our Owned & Operated websites, which is a key driver of our Owned & Operated reporting segments.

We define O&O sessions as the total number of monetizable user visits to our Owned & Operated Advertising websites. We define Network sessions as the number of monetizable user visits delivered by our Network Partners to RAMP. Monetizable visits exclude those visits identified by our Advertising Partners as spam, bot, or other invalid traffic.

We define O&O CPS as advertising spend divided by O&O sessions. We believe O&O CPS is a relevant measure to gauge the efficiency of operations and processes in deploying advertising spend, especially when evaluated in combination with total advertising spend.

We define O&O RPS as O&O revenue divided by O&O sessions. We define Network RPS as Network Partner revenue divided by Network sessions. We believe both O&O RPS and Network RPS are key measures to evaluate our effectiveness in converting monetizable traffic into revenue.

Revenue

The following table presents our revenue by reportable segment (in thousands):


	Three Months Ended June 30,				2024 vs. 2023 Change
	2024		2023		($)		(%)
Owned and Operated Advertising	$	77,396	$	77,300	$	96	—%
Partner Network	17,185		19,614		(2,429)		(12)%
Total revenue	$	94,581	$	96,914	$	(2,333)	(2)%


	Six Months Ended June 30,				2024 vs. 2023 Change
	2024		2023		($)		(%)
Owned and Operated Advertising	$	146,426	$	183,325	$	(36,899)	(20)%
Partner Network	33,072		34,707		(1,635)		(5)%
Total revenue	$	179,498	$	218,032	$	(38,534)	(18)%

Owned and Operated Advertising

Owned and Operated Advertising revenue was flat for the three months ended June 30, 2024 as compared to the prior year comparative period, and decreased for the six months ended June 30, 2024 as compared to the prior year comparative period. For the three months ended June 30, 2024 compared to the prior year comparative period, O&O sessions increased approximately 1.2 billion to 2.0 billion from 820 million, and O&O RPS decreased by $0.05 to $0.04 from $0.09. For the six months ended June 30, 2024 compared to the prior year comparative period, O&O sessions increased approximately 1.4 billion to 3.2 billion from 1.8 billion, and O&O RPS decreased by $0.05 to $0.05 from $0.10. The year-over-year declines in RPS were related to a mix shift to lower RPS traffic, as well as a softening of domestic advertiser demand starting in the third quarter of 2023.

Partner Network

Partner Network revenue decreased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods. For the three months ended June 30, 2024 compared to the prior year comparative period, Network sessions increased approximately 1.3 billion to 2.0 billion from 677 million, and Network RPS decreased by $0.02 to $0.01 from $0.03. For the six months ended June 30, 2024 compared to the prior year comparative period, Network sessions increased approximately 2.5 billion (revised) to 3.6 billion from 1.1 billion, and Network RPS decreased by $0.02 to $0.01 (revised) from $0.03. This is primarily due to a softening of domestic advertiser demand starting in the third quarter of 2023, as well as instability experienced in the Advertising Partner ecosystem generally starting in the fourth quarter of 2023.

Cost of revenue (excluding depreciation and amortization)

Cost of revenue (excluding depreciation and amortization) remained relatively consistent for the three months ended June 30, 2024 and decreased for the six months ended June 30, 2024 in line with the changes in O&O revenue discussed above. For the three and six months ended June 30, 2024, compared to prior year comparative periods, our O&O CPS decreased $0.04 to $0.02 from $0.06 and $0.04 to $0.03 from $0.07, respectively. This is primarily due to a mix shift away to lower CPS traffic.

Our chief operating decision maker measures and evaluates reportable segments based on segment operating revenue as well as adjusted gross profit and other measures. We define and calculate adjusted gross profit as revenue less advertising expense incurred to acquire users. The remaining cost of revenue consists of non-advertising expenses such as set-up costs, royalties and fees. We exclude the following items from segment adjusted gross profit: depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments.

The following table presents our Adjusted gross profit by reportable segment (in thousands):


	Three Months Ended June 30,				2024 vs. 2023 Change
	2024		2023		($)		(%)
Owned and Operated Advertising	$	27,378	$	27,589	$	(211)	(1)	%
Partner Network	13,490		14,808		(1,318)		(9)	%


	Six Months Ended June 30,				2024 vs. 2023 Change
	2024		2023		($)		(%)
Owned and Operated Advertising	$	49,840	$	57,428	$	(7,588)	(13)	%
Partner Network	24,409		25,025		(616)		(2)	%

Refer to the Revenue and Cost of revenue (excluding depreciation and amortization) discussions above.

Salaries and benefits

Salaries and benefits increased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods. The increase was primarily due to $10.3 million recorded in June 2024 related to CouponFollow share-based liabilities (see Item I, "Financial Statements - Note 4, Accrued Expenses and Other Current Liabilities"). The increase was partially offset by a $0.9 million and $2.7 million decrease in stock-based compensation and $2.0 million and $3.7 million decrease in payroll-related expenses due to a reduction in workforce for the three and six months ended June 30, 2024, respectively.

Selling, general, and administrative

Selling, general, and administrative expense decreased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods, primarily due to $2.5 million and $4.2 million decrease in advisory, consulting, and legal fees, and to a lesser extent insurance costs, and a decrease in bad debt expense of $1.7 million for each of the current year periods, respectively.

Depreciation and amortization

Depreciation and amortization expense increased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods, primarily related to increased amortization for our continued investment in internally developed software.

Interest expense, net

Interest expense, net decreased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods, primarily due to a lower debt outstanding balance in the current year as a result of paying down a significant portion of our principal balance.

Gain from debt extinguishment

Gain from debt extinguishment increased for the three and six months ended June 30, 2024 as compared to the prior year comparative periods due to the gain recognized as a result of our repurchase of debt through the Dutch auction and direct buy back that occurred in January and April of 2024, respectively.

Change in fair value of warrant liabilities

The decrease in fair value of our warrant liabilities for the three and six months ended June 30, 2024 as compared to the prior year comparative periods was due to the remeasurement of our warrant liability to its fair value at June 30, 2024 where the fluctuations are driven by the market value of our Class A common stock.

Income tax benefit

The difference between the effective tax rates for the periods presented and the federal statutory tax rate of 21% was primarily due to the exclusion of non-controlling income (loss), non-deductible expenses, valuation allowance and outside basis adjustments.

Net loss from discontinued operations, net of tax

Net loss from discontinued operations, net of tax is comprised of the net loss from discontinued operations, net of tax and only includes direct operating expenses incurred that: (1) are clearly identifiable as costs being disposed of upon completion of the sale, and (2) will not be continued by us on an ongoing basis.

Indirect expenses which supported our subscription business, and which remained as part of the continuing operations following the sale are not reflected in loss from discontinued operations, net of tax.

Liquidity and Capital Resources

We expect existing cash and cash equivalents, cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months. Our main sources of liquidity have historically been, and are expected to be from cash on hand, cash flows from operations and financing activities. Our ability to fund future operating expenses and capital expenditures, and our ability to meet our future debt service obligations, will depend on our ability to execute on our operational strategy and may be affected by our profitability, as well as general economic, financial and other factors which are beyond our control.

We continue to develop and implement plans to improve our liquidity. Our main focus is executing on our operational strategy, which includes continued focus on expanding the number of advertising partners that are utilizing or integrated with RAMP by continuing to attract and monetize users with commercial intent on our owned and operated web properties and on behalf of our network partners as well as optimizing bids and driving higher returns on advertising spend. Additionally, we are focused on our current cost structure by reducing our cash operating expenses and debt service obligations. Adverse macroeconomic conditions have affected, and may in the future affect, the demand for advertising, resulting in fluctuations in the amounts our advertisers spend on advertising, which could have a negative impact on our financial condition and operating results.

As of June 30, 2024, we had unrestricted cash and cash equivalents of $75.7 million and $50.0 million available to borrow on our 2022 Revolving Facility. For the six months ended June 30, 2024, the Company had cash outflows of $63.2 million. The principal drivers of our cash outflows were $48.6 million of net loss, offset by non-cash items, $51.8 million repayment of our Term Loan, offset by a $5.6 million working capital changes.

Our revenue is dependent on two key Advertising Partners, which are Google and Microsoft. Refer to our concentration with customers discussion at Item I, "Financial Statements - Note 2, Summary of Significant Accounting Policies" for additional information.

Credit Facilities

See Item 1, "Financial Statements - Note 5, Debt, Net" of this Quarterly Report on Form 10-Q.

Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):


	Six Months Ended June 30,
	2024		2023
Net cash (used in) provided by operating activities	$	(6,022)	$	1,352
Net cash used in investing activities	(3,218)		(5,068)
Net cash used in financing activities	(53,929)		(9,368)

Operating Activities

Our cash flows from operating activities are primarily impacted by growth in our operations, timing of collections from our partner and related payments to our suppliers for advertising inventory and data. We typically pay suppliers in advance of collections from our clients and our collection and payment cycles can vary from period to period. In addition, seasonality may impact cash flows from operating activities on a sequential quarterly basis during the year.

In the six months ended June 30, 2024, cash used in operating activities of $6.0 million resulted primarily from favorable changes in net income, excluding the impact of non-cash items offset by favorable changes in working capital balances. The favorable changes in working capital balances included an increase in accrued expenses and other current liabilities offset by an increase in account receivable balances.

In the six months ended June 30, 2023, cash provided by operating activities of $1.4 million resulted primarily from depreciation and amortization expense of $57.4 million, stock-based compensation of $31.9 million, and a decrease in accounts receivable of $16.2 million. This was partially offset by a net loss of $85.9 million and a payment of long-term earnout liabilities of $15.0 million.

Investing Activities

Our primary investing activities consisted of costs capitalized for internally developed software.

In the six months ended June 30, 2024, cash used in investing activities of $3.2 million resulted primarily from costs capitalized for internally developed software.

In the six months ended June 30, 2023, cash used in investing activities of $5.1 million resulted from costs capitalized for internally developed software and purchases of property and equipment.

Financing Activities

Our financing activities consisted primarily of repayments of our indebtedness under our credit facilities.

In the six months ended June 30, 2024, cash used in financing activities of $53.9 million was primarily related to the repayment of the 2022 Term Note in the amount of $51.8 million.

In the six months ended June 30, 2023, cash used in financing activities of $9.4 million resulted primarily from repayment of our related-party loan of $34.0 million, repayment of our existing term loan of $10.0 million,

taxes paid related to net settlement of stock awards of $3.1 million, and payment of acquisition holdback of $1.3 million. This was partially offset by proceeds from related-party loan of $39.0 million.

Off-Balance Sheet Arrangements

We do not have any relationships with entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We did not have any other off-balance sheet arrangements during the periods presented other than the indemnification agreements.

Contractual Obligations and Known Future Cash Requirements

Service Agreements

In June 2021, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million annually between July 2023 and June 2026. As of June 30, 2024, we remain contractually obligated to spend a remaining $10.0 million towards this commitment.

Contingencies

From time to time, we are subject to contingencies that arise in the ordinary course of business. We record an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We do not currently believe the resolution of any such contingencies will have a material adverse effect upon our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with GAAP. Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

The critical accounting estimates, assumptions, and judgments that we believe to have the most significant impact on our condensed consolidated financial statements are stock-based compensation, business combinations and valuation of goodwill and income taxes.

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report.

Recently Issued Accounting Pronouncements

For information regarding recent accounting pronouncements, refer to Item 1, "Financial Statements - Note 2, Summary of Significant Accounting Policies."

Item 3. Quantitative and Qualitative Disclosure about Market Risk

As a "smaller reporting company", as defined by Rule 10(f)(1) of Regulation S-K, we are not required to provide this information.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that, as of June 30, 2024, due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed in the reports required to be filed or submitted under the Securities Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Material Weaknesses in Internal Control Over Financial Reporting

We have identified material weaknesses in our internal control over financial reporting as of June 30, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified were as follows:

•We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. Additionally, the limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.

•We did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.

These material weaknesses contributed to the following additional material weaknesses:

•We did not design and maintain effective controls to timely analyze and record the financial statement effects from complex, non-routine transactions, including acquisitions, dispositions, and post-combination compensation arrangements. Specifically, we did not design and maintain effective controls over the application of US GAAP to such transactions, and, as it relates to acquisitions, did not design and maintain effective controls over (i) the review of the inputs and assumptions used in the measurement of assets acquired and liabilities assumed, including discounted cash flow analysis to value acquired intangible assets at an appropriate level of precision, (ii) the tax impacts of acquisitions to the financial statements, and (iii) conforming of US GAAP and accounting policies of acquired entities to that of the Company. In addition, we did not design and maintain effective controls relating to the oversight and ongoing recording of the financial statement results of the acquired businesses.

•We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over (i) the preparation and review of business performance reviews, account reconciliations, journal entries, and identification of asset groups and (ii) maintaining appropriate segregation of duties. Additionally, we did not design and maintain controls over the classification and presentation of accounts and disclosures in the consolidated financial statements, including the statement of cash flows.

•We did not design and maintain effective controls over accounting for accrued liabilities, stock-based compensation and equity transactions, including accounting for non-controlling interest.

•We did not design and maintain effective controls over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment.

These material weaknesses resulted in the revision to the consolidated financial statements for each of the three quarterly periods in the year ended December 31, 2023.

These material weaknesses also resulted in an immaterial misstatement within cash flows from operating activities of System1, Inc. as of and for the six months ended June 30, 2023 and within stockholders' equity of the consolidated financial statements of System1, Inc. as of December 31, 2023 and all quarterly periods during 2023.

•We did not design and maintain effective controls over the accounting for complex financial instruments, including the impact of these instruments on earnings per share.

This material weakness resulted in a material misstatement of the Trebia warrant liabilities, change in the fair value of the Trebia warrant liabilities, forward purchase agreement liabilities, change in the fair value of the forward purchase agreement liabilities, classification of redeemable shares of Class A common stock issued in connection with Trebia’s initial public offering, additional paid-in-capital, accumulated deficit, Earnings Per Share, and related financial disclosures of Trebia Acquisition Corp. in prior periods not presented in this Quarterly report on Form 10-Q.

Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

•We did not design and maintain effective controls over information technology ("IT") general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain:

i.program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;

ii.user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel;

iii.computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored; and

iv.testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements.

These IT deficiencies did not result in a material misstatement to the financial statements; however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, we have determined these IT deficiencies in the aggregate constitute a material weakness.

Remediation Plan for the Material Weaknesses

We are in the process of, and we are focused on, designing and implementing effective measures to improve our internal control over financial reporting and remediate the material weaknesses. Our remediation efforts to address the identified material weaknesses are ongoing. Our efforts include a number of actions:

•Assessing the need of additional senior level accounting personnel with applicable technical accounting knowledge, training, and experience in accounting matters, and hiring the appropriately skilled resources, supplemented by third-party resources;

•Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing controls ensuring segregation of duties;

•Engaged an accounting advisory firm to assist with the documentation, evaluation, remediation and testing of our internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission;

•Engaged third-party specialists to assist with the preparation of technical accounting analyses and valuations associated with business combinations, and ensuring adequate review by accounting personnel with applicable technical accounting knowledge, training, and experience in accounting for business combinations or dispositions;

•Designing and implementing controls to address the financial reporting risks over the accounting for dispositions, acquisitions and other complex, non-routine transactions, including controls over the preparation and review of accounting memoranda addressing these matters, valuations and key assumptions utilized in the valuations, tax impacts, and ongoing recording of the financial statement results of the acquired businesses;

•Designing and implementing formal accounting policies with periodic reviews, procedures and controls supporting our period-end financial reporting process, including controls over the preparation and review of account reconciliations and journal entries, business performance reviews, foreign exchange gains/losses for intercompany transactions, appropriate determination of asset groups for impairment consideration and classification and presentation of accounts and disclosures, including the statement of cash flows;

•Designing and implementing controls to address the financial reporting risks over accrued liabilities, stock-based compensation and equity transactions, including accounting for non-controlling interest;

•Designing and implementing controls to address the financial reporting risks over the accounting for complex financial instruments, including the earnings per share impacts;

•Designing and implementing controls to address the financial reporting risks over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment;

•Designing and implementing IT general controls, including controls over change management, the review and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing.

We believe the measures described above will facilitate the remediation of the material weaknesses we have identified and will strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control over financial reporting and will continue to review, optimize and enhance our processes, procedures and controls. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify, or in appropriate circumstances not complete, certain of the remediation measures described above. These material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Therefore, these material weaknesses have not been remediated as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There have been changes to our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended June 30, 2024 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

We are party to pending litigation and claims in connection with the ordinary course of our business. We make provisions for estimated losses to be incurred in such litigation and claims, including legal costs, and we believe such provisions are adequate. See Item I, "Financial Statements - Note 7, Commitments and Contingencies", within the notes to our unaudited condensed consolidated financial statements for a summary of material legal proceedings, in addition to Part I, Item 3, "Legal Proceedings" of our Annual Report on Form 10-K filed with the SEC on March 15, 2024.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in response to "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

In August 2022, the Board authorized up to $25.0 million for the repurchase of our Class A common stock and Public Warrants. During the quarter ended, no repurchases of our equity securities were made by us or by any of our affiliated purchasers. As of June 30, 2024, we had $23.9 million available under this authorization remaining.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Incorporated by Reference

Filed or Furnished Herewith

Exhibit No.

Description

Form

File No.

Exhibit

Filing Date

2.1(a)

Business Combination Agreement, dated as of June 28, 2021, by and among Trebia Acquisition Corp., S1 Holdco, LLC, System1 SS Protect Holdings, Inc., and the other parties that are signatory thereto.

8-K

001-39331

2.1

6/29/2021

2.1(b)

Amendment No. 1 to the Business Combination Agreement, dated as of November 30, 2021, by and among Trebia Acquisition Corp., S1 Holdco, LLC, System1 SS Protect Holdings, Inc., and the other parties that are signatory thereto.

S-4

333-260714

2.2

12/1/2021

2.1(c)

Amendment No. 2 to the Business Combination Agreement, dated January 10, 2022, by and among S1 Holdco, LLC, a Delaware limited liability company, System1 SS Protect Holdings, Inc., a Delaware corporation and the other parties signatory thereto.

8-K

001-39331

10.1

1/20/2022

2.1(d)

Amendment No. 3 to the Business Combination Agreement, dated January 25, 2022, by and among S1 Holdco, LLC, a Delaware limited liability company, System1 SS Protect Holdings, Inc., a Delaware corporation and the other parties signatory thereto.

8-K

001-39331

10.1

1/26/2022

2.2

Share Purchase Agreement, dated November 30, 2023, by and among System1, Inc., Orchid Merger Sub II, LLC, Sonic Newco, LLC, JDI Antarctica Limited and JDI Antarctica Sub II Limited

8-K

001-39331

2.1

12/4/2023

3.1

Certificate of Incorporation of System1, Inc.

8-K

001-39331

3.1

2/2/2022

3.2

Second Amended and Restated Bylaws of System1, Inc.

8-K

001-39331

3.1

3/1/2023

4.1

Warrant Agreement, dated June 19, 2020, by and between Trebia Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent.

8-K

001-39331

4.1

6/2/2020

4.2

Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10-K

001-39331

4.2

6/6/2023

10.1^

System1, Inc. 2022 Incentive Award Plan.

8-K

001-39331

10.2

2/2/2022

10.2^

System1, Inc. 2024 Stock Appreciation Rights Plan.

8-K

001-39331

10.1

6/14/2024

10.3*

First Amendment to System1, Inc. 2024 Stock Appreciation Rights Plan

10.4#

Credit and Guaranty Agreement, dated as of January 27, 2022, among Orchid Finco LLC, System1 Midco, LLC, Orchid Merger Sub II, LLC and the subsidiaries from time to time party thereto, S1 Holdco, LLC, Bank of America, N.A. and the lenders from time to time party thereto.

10-K

001-39331

10.7

6/6/2023

10.9

Registration Rights Agreement, dated January 27, 2022, by and among System1, Inc. and the other parties that are signatory thereto.

S-1

333-262608

10.3

2/9/2022

10.10

Registration Rights Agreement, dated June 19, 2020, among the Company, the Sponsors and certain other security holders named therein.

8-K

001-39331

10.2

6/22/2020

10.11

Form of Indemnification Agreement and Advancement Agreement

8-K

001-39331

10.4

3/2/2022

10.12^

Employment Agreement, dated as of June 15, 2023, between Tridivesh Kidambi and System1, LLC.

8-K

001-39331

10.1

6/22/2022

10.17

Form of Stockholders Agreement

S-4/A

333-260714

10.3

12/16/2021

10.26

Insider Trading Policy

10-K

001-39331

10.26

3/15/2024

31.1*

Certification of principal executive officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of principal financial and accounting officer pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of principal financial and accounting officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1*

Policy for Recovery of Erroneously Awarded Compensation.

10-K

001-39331

97.1*

3/15/2024

101.INS*

XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*

XBRL Taxonomy Extension Schema Document.

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*						Filed herewith.
**						This certification shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
^						Indicates management contract or compensatory plan.
#						Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant will furnish copies of any such schedules and exhibits to the SEC upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	System1 Inc.
Date: August 8, 2024
	By:	/s/ Michael Blend
		Michael Blend
		Chief Executive Officer

Date: August 8, 2024	By:	/s/ Tridivesh Kidambi
		Tridivesh Kidambi
		Chief Financial Officer

US-DOCS151636974.2 FIRST AMENDMENT TO SYSTEM1, INC. 2024 STOCK APPRECIATION RIGHTS PLAN THIS FIRST AMENDMENT (this “First Amendment”) to the System1, Inc. 2024 Stock Appreciation Rights Plan is made and adopted by the Board of Directors (the “Board”) of System1, Inc., a Delaware corporation (the “Company”), effective as of June 28, 2024 (the “Effective Date”). All capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Plan (as defined below). RECITALS WHEREAS, the Company maintains the System1, Inc. 2024 Stock Appreciation Rights Plan (the “Plan”); WHEREAS, pursuant to Section 4(d) of the Plan, the Board has the authority to amend the Plan from time to time; and WHEREAS, the Board believes it is in the best interests of the Company and its stockholders to amend the Plan as set forth herein. NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as follows, effective as of the Effective Date: AMENDMENT 1. Section 3(e)(i) of the Plan is hereby deleted and replaced in its entirety with the following: “i. General. Each Award of Stock Appreciation Rights granted under the Plan shall vest and become exercisable as follows, subject to and conditioned upon the applicable Participant’s continued status as a Service Provider through the applicable Vesting Date (as defined below): 1. Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche I SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period concluding on or after the applicable date of grant equals or exceeds $50,000,000; 2. Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche II SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period concluding on or after the applicable date of grant equals or exceeds $60,000,000; 3. Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche III SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period concluding on or after the applicable date of grant equals or exceeds $70,000,000; and 4. The remaining twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche IV SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period

US-DOCS151636974.2 concluding on or after the applicable date of grant equals or exceeds $80,000,000.” 2. This First Amendment shall be and is hereby incorporated into and forms a part of the Plan. 3. Except as expressly provided herein, all terms and conditions of the Plan shall remain in full force and effect. [Signature page follows]

US-DOCS151636974.2 * * * I hereby certify that the foregoing First Amendment was duly adopted by the Board of Directors of System1, Inc. on June ___, 2024. Executed on this _____ day of _________, 2024. By: _____________________________ Name: ________________________ Title: _________________________ July15th 28 CFO Tridi Kidambi

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Michael Blend, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of System1, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael Blend

Michael Blend

Chief Executive Officer

(Principal Executive Officer)

Date: August 8, 2024

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Tridivesh Kidambi, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of System1, Inc.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Tridivesh Kidambi

Tridivesh Kidambi

Chief Financial Officer

(Principal Financial Officer)

Date: August 8, 2024

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024 of System1, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Blend, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Blend

Michael Blend

Chief Executive Officer

(Principal Executive Officer)

Date: August 8, 2024

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission (the “SEC”) or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024 of System1, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tridivesh Kidambi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Tridivesh Kidambi

Tridivesh Kidambi

Chief Financial Officer

(Principal Financial Officer)

Date: August 8, 2024

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2024	Aug. 05, 2024
Cover
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-39331
Entity Registrant Name	System1, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	92-3978051
Entity Address, Address Line One	4235 Redwood Avenue
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90066
City Area Code	310
Local Phone Number	924-6037
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001805833
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A Common Stock
Cover
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	SST
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		69,539,856
Redeemable warrants, each whole warrant exercisable for one Class A common stock at an exercise price of $11.50 per share
Cover
Title of 12(b) Security	Redeemable warrants, each whole warrant exercisable for one Class A common stock at an exercise price of $11.50 per share
Trading Symbol	SST.WS
Security Exchange Name	NYSE
Class C Common Stock
Cover
Entity Common Stock, Shares Outstanding		21,203,676

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 75,651	$ 135,343
Restricted cash, current	4,253	3,813
Accounts receivable, net	61,915	56,093
Prepaid expenses and other current assets	6,805	6,754
Total current assets	148,624	202,003
Restricted cash, non-current	371	4,294
Property and equipment, net	2,613	3,084
Internal-use software development costs, net	13,447	11,425
Intangible assets, net	259,671	297,001
Goodwill	82,407	82,407
Operating lease right-of-use assets	3,759	4,732
Other non-current assets	444	524
Total assets	511,336	605,470
Current liabilities:
Accounts payable	6,248	9,499
Accrued expenses and other current liabilities	76,817	59,314
Operating lease liabilities, current	2,385	2,333
Debt, net	16,272	15,271
Total current liabilities	101,722	86,417
Operating lease liabilities, non-current	2,339	3,582
Long-term debt, net	263,338	334,232
Warrant liability	936	2,688
Deferred tax liability	7,042	8,307
Other non-current liabilities	6,680	929
Total liabilities	382,057	436,155
Commitments and contingencies (Note 7)
Stockholders' equity:
Additional paid-in capital	854,270	843,112
Accumulated deficit	(744,572)	(707,662)
Accumulated other comprehensive loss	(295)	(181)
Total stockholders' equity attributable to System1, Inc.	109,412	135,278
Non-controlling interest	19,867	34,037
Total stockholders' equity	129,279	169,315
Total liabilities and stockholders' equity	511,336	605,470
Class A Common Stock
Stockholders' equity:
Common stock value	7	7
Class C Common Stock
Stockholders' equity:
Common stock value	$ 2	$ 2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2024	Dec. 31, 2023
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000	500,000
Common stock issued (in shares)	69,255	65,855
Common stock outstanding (in shares)	69,255	65,855
Class C Common Stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	25,000	25,000
Common stock issued (in shares)	21,204	21,513
Common stock outstanding (in shares)	21,204	21,513

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Revenue	$ 94,581	$ 96,914	$ 179,498	$ 218,032
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	55,798	56,657	109,496	139,610
Salaries and benefits	33,937	27,054	58,420	55,201
Selling, general, and administrative	13,989	15,340	26,717	30,195
Depreciation and amortization	19,943	19,688	39,747	39,080
Total operating expenses	123,667	118,739	234,380	264,086
Operating loss	(29,086)	(21,825)	(54,882)	(46,054)
Other expense (income):
Interest expense, net	7,871	12,334	15,841	23,736
Gain from debt extinguishment	(433)	0	(20,109)	0
Change in fair value of warrant liabilities	(1,501)	2,018	(1,752)	609
Total other expense (income), net	5,937	14,352	(6,020)	24,345
Loss before income tax	(35,023)	(36,177)	(48,862)	(70,399)
Income tax benefit	(178)	(6,670)	(226)	(10,499)
Net loss from continuing operations	(34,845)	(29,507)	(48,636)	(59,900)
Net loss from discontinued operations, net of tax	0	(13,484)	0	(26,017)
Net loss	(34,845)	(42,991)	(48,636)	(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,472)	(6,165)	(11,726)	(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	0	(2,525)	0	(4,892)
Net loss attributable to System1, Inc.	(26,373)	(34,301)	(36,910)	(68,103)
Net loss from continuing operations	(26,373)	(23,342)	(36,910)	(46,978)
Net loss from discontinued operations	$ 0	$ (10,959)	$ 0	$ (21,125)
Basic net loss per share, continuing operations (in dollars per share)	$ (0.38)	$ (0.25)	$ (0.54)	$ (0.50)
Diluted net loss per share, continuing operations (in dollars per share)	(0.38)	(0.25)	(0.54)	(0.50)
Basic net loss per share, discontinued operations (in dollars per share)	0	(0.12)	0	(0.23)
Diluted net loss per share, discontinued operations (in dollars per share)	0	(0.12)	0	(0.23)
Basic net loss per share (in dollars per share)	(0.38)	(0.37)	(0.54)	(0.73)
Diluted net loss per share (in dollars per share)	$ (0.38)	$ (0.37)	$ (0.54)	$ (0.73)
Weighted average number of shares outstanding - basic (in shares)	69,383	93,799	68,582	93,288
Weighted average number of shares outstanding - diluted (in shares)	69,383	93,799	68,582	93,288

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Net loss	$ (34,845)	$ (13,791)	$ (42,991)	$ (42,926)	$ (48,636)	$ (85,917)
Other comprehensive (loss) income:
Foreign currency translation (loss) income	(96)		186		(231)	78
Comprehensive loss	(34,941)		(42,805)		(48,867)	(85,839)
Comprehensive loss attributable to non-controlling interest	(8,544)		(8,640)		(11,843)	(17,780)
Comprehensive loss attributable to System1, Inc.	$ (26,397)		$ (34,165)		$ (37,024)	$ (68,059)

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock Class A Common Stock	Common Stock Class C Common Stock	Additional Paid-In-Capital	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss	Non-Controlling Interest
Beginning balance (in shares) at Dec. 31, 2022			91,674	21,747
Beginning balance at Dec. 31, 2022	$ 470,671	$ (326)	$ 9	$ 2	$ 831,566	$ (439,296)	$ (326)	$ (260)	$ 78,650
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(42,926)					(33,802)			(9,124)
Issuance of common stock in connection with settlement of incentive plan (in shares)			407
Issuance of common stock in connection with settlement of incentive plan	1,659				1,819				(160)
Conversion of Class C shares to Class A shares (in shares)			234	(234)
Conversion of Class C shares to Class A shares	0				1,047				(1,047)
Tax receivable agreement liability and deferred taxes arising from LLC interest ownership exchanges and the issuance of common stock from equity incentive plans	(441)				(441)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			832
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(1,730)				(1,449)				(281)
Other comprehensive loss	(109)							(62)	(47)
Stock-based compensation	7,161				6,203				958
Ending balance (in shares) at Mar. 31, 2023			93,147	21,513
Ending balance at Mar. 31, 2023	433,959		$ 9	$ 2	838,745	(473,424)		(322)	68,949
Beginning balance (in shares) at Dec. 31, 2022			91,674	21,747
Beginning balance at Dec. 31, 2022	470,671	$ (326)	$ 9	$ 2	831,566	(439,296)	$ (326)	(260)	78,650
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(85,917)
Ending balance (in shares) at Jun. 30, 2023			93,602	21,513
Ending balance at Jun. 30, 2023	396,411		$ 9	$ 2	843,568	(507,725)		(114)	60,671
Beginning balance (in shares) at Mar. 31, 2023			93,147	21,513
Beginning balance at Mar. 31, 2023	433,959		$ 9	$ 2	838,745	(473,424)		(322)	68,949
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(42,991)					(34,301)			(8,690)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			455
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(314)				(133)				(181)
Other comprehensive loss	186							208	(22)
Stock-based compensation	5,571				4,956				615
Ending balance (in shares) at Jun. 30, 2023			93,602	21,513
Ending balance at Jun. 30, 2023	396,411		$ 9	$ 2	843,568	(507,725)		(114)	60,671
Beginning balance (in shares) at Dec. 31, 2023			65,855	21,513
Beginning balance at Dec. 31, 2023	169,315		$ 7	$ 2	843,112	(707,662)		(181)	34,037
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(13,791)					(10,537)			(3,254)
Issuance of common stock in connection with settlement of incentive plan (in shares)			970
Issuance of common stock in connection with settlement of incentive plan	1,707				2,464				(757)
Conversion of Class C shares to Class A shares (in shares)			309	(309)
Conversion of Class C shares to Class A shares	0				241				(241)
Tax receivable agreement liability and deferred taxes arising from LLC interest ownership exchanges and the issuance of common stock from equity incentive plans	(110)				(110)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			1,498
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(991)				178				(1,169)
Other comprehensive loss	(135)							(90)	(45)
Stock-based compensation	4,405				4,317				88
Contributions from members, net of distributions	5								5
Ending balance (in shares) at Mar. 31, 2024			68,632	21,204
Ending balance at Mar. 31, 2024	160,405		$ 7	$ 2	850,202	(718,199)		(271)	28,664
Beginning balance (in shares) at Dec. 31, 2023			65,855	21,513
Beginning balance at Dec. 31, 2023	169,315		$ 7	$ 2	843,112	(707,662)		(181)	34,037
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(48,636)
Ending balance (in shares) at Jun. 30, 2024			69,255	21,204
Ending balance at Jun. 30, 2024	129,279		$ 7	$ 2	854,270	(744,572)		(295)	19,867
Beginning balance (in shares) at Mar. 31, 2024			68,632	21,204
Beginning balance at Mar. 31, 2024	160,405		$ 7	$ 2	850,202	(718,199)		(271)	28,664
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(34,845)					(26,373)			(8,472)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			623
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(24)				284				(308)
Other comprehensive loss	(96)							(24)	(72)
Stock-based compensation	3,871				3,784				87
Distributions to members	(32)								(32)
Ending balance (in shares) at Jun. 30, 2024			69,255	21,204
Ending balance at Jun. 30, 2024	$ 129,279		$ 7	$ 2	$ 854,270	$ (744,572)		$ (295)	$ 19,867

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows from Operating Activities
Net loss	$ (48,636)	$ (85,917)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	39,762	57,426
Stock-based compensation	7,412	31,852
Amortization of debt issuance costs	2,002	2,933
Noncash lease expense	931	878
Change in fair value of warrant liabilities	(1,752)	608
Deferred tax benefits	(1,262)	(14,285)
Gain from debt extinguishment	(20,109)	0
Share-based liabilities	10,253	0
Other, net	(192)	1,086
Changes in operating assets and liabilities:
Accounts receivable	(5,823)	16,158
Prepaid expenses and other current assets	26	(1,265)
Accounts payable	(3,251)	7,818
Accrued expenses and other current liabilities	15,747	(12,545)
Deferred revenue	16	10,297
Long-term earnout liabilities	0	(15,000)
Other non-current liabilities	(1,146)	1,308
Net cash (used in) provided by operating activities	(6,022)	1,352
Cash Flows from Investing Activities
Purchases of property and equipment	0	(1,581)
Capitalized software development costs	(3,218)	(3,487)
Net cash used in investing activities	(3,218)	(5,068)
Cash Flows from Financing Activities
Proceeds from related-party loan, net of lender fees	0	39,000
Repayments of related party loan, inclusive of lender fees	0	(34,000)
Repayment of Term Loan	(51,786)	(10,000)
Payment of acquisition holdback	0	(1,250)
Taxes paid related to net settlement of stock awards	(2,116)	(3,052)
Distributions to members, net of contributions	(27)	(66)
Net cash used in financing activities	(53,929)	(9,368)
Effect of exchange rate changes in cash, cash equivalents and restricted cash	(6)	199
Net decrease in cash, cash equivalents and restricted cash	(63,175)	(12,885)
Cash and cash equivalents and restricted cash, beginning of the period	143,450	39,075
Cash and cash equivalents and restricted cash, end of the period	80,275	26,190
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	75,651	15,451
Restricted cash	4,624	10,739
Total cash, cash equivalents and restricted cash	80,275	26,190
Supplemental cash flow information:
Capitalized assets financed by accounts payable	0	53
Stock-based compensation included in capitalized software development costs	814	1,124
Settlement of incentive plan through issuance of common stock	$ 1,707	$ 1,658

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Organization and Description of Business System1, Inc. and subsidiaries (the "Company", "we", "our" or "us") operates an omnichannel customer acquisition platform, delivering high-intent customers to brands, advertisers and publishers. We provide our omnichannel customer acquisition platform services through our proprietary responsive acquisition marketing platform ("RAMP"). Operating seamlessly across major advertising networks and advertising category verticals to acquire high-intent end-users, RAMP allows us to monetize these acquired end users through our relationships with third party advertisers and advertising networks ("Advertising Partners"). RAMP operates across our network of owned and operated websites, allowing us to monetize end-user traffic that we source from various acquisition marketing channels, including Google, Facebook, Outbrain, and TikTok. RAMP also allows third party advertising platforms and publishers ("Network Partners") to send end-user traffic to, and monetize end user traffic on, our owned and operated websites or through our monetization agreements. We have two reportable segments: Owned and Operated Advertising and Partner Network (see Note 10, Segment Reporting).

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Revision of Previously Issued Consolidated Financial Statements

During the fourth quarter of 2023, we identified certain errors related to our previously issued financial statements as of and for the three and six months ended June 30, 2023 as follows:

b.We did not appropriately account for changes in equity and earnings per share, specifically:

(i) the carrying amount of non-controlling interest was not updated as changes in ownership events occurred during each reporting period;

c.We made additional corrections for other immaterial errors.

d.We adjusted for the tax impacts of the revisions related to such errors described above.


	As Previously Reported		Revision Adjustment		As Revised			Impact of Reclassification of Discontinued Operations		As Currently Reported
Assets
Current assets:
Cash and cash equivalents	$	8,603	$	6,848	$	15,451	(e)	$	(11,149)	$	4,302
Restricted cash, current	11,762		(6,848)		4,914		(e)	(1,649)		3,265
Total current assets	95,130		—		95,130			—		95,130
Liabilities and Stockholders' Equity
Deferred tax liability	$	29,851	$	534	$	30,385	(d)	$	(11,956)	$	18,429
Total liabilities	681,268		534		681,802			—		681,802
Stockholders’ Equity / Members’ Deficit
Additional paid-in capital	$	842,350	$	1,218	$	843,568	(a) (b)	$	—	$	843,568
Accumulated deficit	(514,809)		7,084		(507,725)		(a) (b) (d)	—		(507,725)
Accumulated other comprehensive loss	(270)		156		(114)		(d)	—		(114)

Total stockholders' equity attributable to System1, Inc.	$	327,282	$	8,458	$	335,740		$	—	$	335,740
Non-controlling interest	69,663		(8,992)		60,671		(b)	—		60,671
Total stockholders' equity	$	396,945	$	(534)	$	396,411		$	—	$	396,411
Total liabilities and stockholders' equity	$	1,078,213	$	—	$	1,078,213		$	—	$	1,078,213


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	43,991	$	(890)	(a)	$	43,101	$	(16,047)	$	27,054



Total operating expenses	183,660		(890)			182,770		(64,031)		118,739
Operating loss	(36,422)		890			(35,532)		13,707		(21,825)






Loss before income tax	$	(50,782)	$	890		$	(49,892)	$	13,715	$	(36,177)
Income tax benefit	(6,605)		(296)		(d)	(6,901)		231		(6,670)
Net loss from continuing operations	(44,177)		1,186			(42,991)		13,484		(29,507)
Net loss from discontinued operations, net of tax	—		—			—		(13,484)		(13,484)
Net loss	(44,177)		1,186			(42,991)		—		(42,991)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,947)		257		(b)	(8,690)		2,525		(6,165)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(2,525)		(2,525)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(35,230)	$	929	(a) (b) (d)	$	(34,301)	$	10,959	$	(23,342)
Net loss from discontinued operations	—		—			—		(10,959)		(10,959)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Basic and diluted net loss per share:
Continuing operations	$	(0.38)	$	0.01	(b)	$	(0.37)	$	0.12	$	(0.25)
Discontinued operations	—		—			—		(0.12)		(0.12)
Basic and diluted net loss per share	$	(0.38)	$	0.01		$	(0.37)	$	—	$	(0.37)

Weighted average number of shares outstanding - basic and diluted	93,425		374		(b)	93,799				93,799


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	82,389	$	(594)	(a)	$	81,795	$	(26,594)	$	55,201



Total operating expenses	389,006		(594)			388,412		(124,326)		264,086
Operating loss	(73,914)		594			(73,320)		27,266		(46,054)






Loss before income tax	$	(98,316)	$	594		$	(97,722)	$	27,323	$	(70,399)
Income tax benefit	(11,013)		(792)		(d)	(11,805)		1,306		(10,499)
Net loss from continuing operations	(87,303)		1,386			(85,917)		26,017		(59,900)
Net loss from discontinued operations, net of tax	—		—			—		(26,017)		(26,017)
Net loss	(87,303)		1,386			(85,917)		—		(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(18,121)		307		(b)	(17,814)		4,892		(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(4,892)		(4,892)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(69,182)	$	1,079	(a) (b) (d)	$	(68,103)	$	21,125	$	(46,978)
Net loss from discontinued operations	—		—			—		(21,125)		(21,125)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Basic and diluted net loss per share:
Continuing operations	$	(0.74)	$	0.01	(b)	$	(0.73)	$	0.23	$	(0.50)
Discontinued operations	—		—			—		(0.23)		(0.23)
Basic and diluted net loss per share	$	(0.74)	$	0.01		$	(0.73)	$	—	$	(0.73)

Weighted average number of shares outstanding - basic and diluted	92,945		343		(b)	93,288				93,288

The following tables reflect the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three and six months ended June 30, 2023 (in thousands):


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(44,177)	$	1,186	(a) (d)	$	(42,991)
Other comprehensive income (loss)
Foreign currency translation income (loss)	187		(1)		(c)	186
Comprehensive loss	(43,990)		1,185			(42,805)
Comprehensive loss attributable to non-controlling interest	(8,897)		257		(b)	(8,640)
Comprehensive loss attributable to System1, Inc.	$	(35,093)	$	928		$	(34,165)


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Other comprehensive (loss) income:
Foreign currency translation (loss) income	79		(1)		(c)	78
Comprehensive loss	(87,224)		1,385			(85,839)
Comprehensive loss attributable to non-controlling interest	(18,087)		307		(b)	(17,780)
Comprehensive loss attributable to System1, Inc.	$	(69,137)	$	1,078		$	(68,059)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
As Previously Reported
Balance at December 31, 2022	91,674	$	9	21,747	$	2	$	831,566	$	(439,296)	$	(260)	$	78,650	$	470,671
Net loss	—	—		—	—		—		(33,952)		—		(9,174)		(43,126)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,730)		—		—		—		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,659		—		—		—		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		955		—		—		(955)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,963		—		—		—		6,963
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,972	$	(473,574)	$	(322)	$	68,474	$	433,561
Net loss	—	—		—	—		—		(35,230)		—		(8,947)		(44,177)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(314)		—		—		—		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		209		(22)		187


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Stock-based compensation	—	—		—	—		5,571		—		—		—		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	844,229	$	(508,804)	$	(113)	$	59,505	$	394,828

Revision Adjustments
Net loss	—	$	—	—	$	—	$	—	$	150	$	—	$	50	$	200	(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		281		—		—		(281)		—		(a) (b)
Issuance of common stock in connection with settlement of incentive plan	—	—		—	—		160		—		—		(160)		—		(b)

Conversion of Class C shares to Class A shares	—	—		—	—		92		—		—		(92)		—		(b)



Stock-based compensation	—	—		—	—		(760)		—		—		958		198		(a) (b)
Balance at March 31, 2023	—	$	—	—	$	—	$	(227)	$	150	$	—	$	475	$	398
Net loss	—	—		—	—		—		929		—		257		1,186		(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		181		—		—		(181)		—		(a) (b)





Other comprehensive loss	—	—		—	—		—		—		(1)		—		(1)		(c)
Stock-based compensation	—	—		—	—		(615)		—		—		615		—		(a) (b)
Balance at June 30, 2023	—	$	—	—	$	—	$	(661)	$	1,079	$	(1)	$	1,166	$	1,583

As Revised
Net loss	—	$	—	—	$	—	—		$	(33,802)	$	—	$	(9,124)	$	(42,926)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,449)		—		—		(281)		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,819		—		—		(160)		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		1,047		—		—		(1,047)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,203		—		—		958		7,161


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,745	$	(473,424)	$	(322)	$	68,949	$	433,959
Net loss	—	—		—	—		—		(34,301)		—		(8,690)		(42,991)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(133)		—		—		(181)		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		208		(22)		186
Stock-based compensation	—	—		—	—		4,956		—		—		615		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	843,568	$	(507,725)	$	(114)	$	60,671	$	396,411

The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the six months ended June 30, 2023 (in thousands):


	As Previously Reported		Revision Adjustment			As Currently Reported
Cash Flows from Operating Activities
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Stock-based compensation	31,656		196		(a)	31,852
Other, net 1	3,588		431		(c)	4,019
Deferred tax benefits	(13,493)		(792)		(d)	(14,285)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(834)		(431)		(c)	(1,265)
Accrued expenses and other current liabilities	(10,963)		(1,582)		(c)	(12,545)
Other non-current liabilities	516		792		(c)	1,308
Net cash provided by operating activities	1,352		—			1,352
_______________

Use of Estimates

Risks

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net

Goodwill

Internal-use Software Development Costs, Net and Intangible Assets, Net

Internal-use software development costs and intangible assets consisted of the following (in thousands):


	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	17,820	$	(4,373)	$	13,447
Intangible assets:
Developed technology	$	196,128	$	(118,870)	$	77,258
Trademarks and trade names	236,053		(56,850)		179,203
Software	5,100		(2,978)		2,122
Customer relationships	2,900		(1,812)		1,088
Total	$	440,181	$	(180,510)	$	259,671


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	13,788	$	(2,363)	$	11,425
Intangible assets:
Developed technology	$	196,128	$	(94,354)	$	101,774
Trademarks and trade names	236,053		(45,050)		191,003
Software	5,100		(2,341)		2,759
Customer relationships	2,900		(1,435)		1,465
Total	$	440,181	$	(143,180)	$	297,001

Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense for internal-use software development	$	1,076	$	839	$	2,010	$	1,396
Amortization expense for intangible assets	$	18,665	$	18,665	$	37,330	$	37,330

No impairment of internal-use software development cost or intangible assets was recognized for any of the periods presented.

As of June 30, 2024, the weighted average amortization period for all intangible assets was 7 years.

Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following items as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
Accrued revenue share	$	29,066	$	16,365
Accrued marketing expenses	12,744		19,737
Accrued payroll and related benefits	11,420		13,751



Accrued interest payable	5,175		311

Other current liabilities	18,412		9,150
Accrued expenses and other current liabilities	$	76,817	$	59,314

CouponFollow Incentive Plan

Debt, Net

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt, Net

The interest rate on the 2022 Revolving Facility is the adjusted SOFR plus 2.5% with an adjusted SOFR floor of 0%. As of June 30, 2024, we had $50.0 million available on the 2022 Revolving Facility.

under the Company's Term Loan and 2022 Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.

The carrying values of our debt, net of discounts, deferred financing and debt issuance costs were as follows (in thousands):


	June 30, 2024		December 31, 2023
Term Loan 1, 2	$	279,610	$	349,503
Total Debt, net	$	279,610	$	349,503
_______________
1 Includes unamortized discount of $9.9 million and $14.7 million and unamortized loan fees of $0.5 million and $0.8 million, as of June 30, 2024 and December 31, 2023, respectively, recorded as a reduction of the carrying amount of the debt and amortized to interest expense using the effective interest method.
2 Estimated fair value of the Term Loan was $177.0 million and $222.7 million as of June 30, 2024 and December 31, 2023, respectively.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes We are the sole managing member of S1 Holdco and, as a result, consolidate the financial results of S1 Holdco. S1 Holdco is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, S1 Holdco is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by S1 Holdco is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of S1 Holdco, as well as any stand-alone income or loss generated by us. We recorded a benefit for income taxes of $0.2 million and $0.2 million for the three and six months ended June 30, 2024 and a benefit from income taxes of $6.7 million and $10.5 million for the three and six months ended June 30, 2023, respectively. The effective tax rate was 0.5% and 0.4% for the three and six months ended June 30, 2024, respectively and 18.4% and 14.9% for the three and six months ended June 30, 2023, respectively. The provision for income taxes differs from the amount of income tax computed by applying the U.S. statutory federal tax rate of 21% to the loss before income taxes due to the exclusion of non-controlling loss, state taxes, foreign rate differential, non-deductible expenses, increase to the valuation allowance related to unrealizable deferred tax assets, and outside basis adjustments. As of June 30, 2024, we had a full valuation allowance on our U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets would not be realized. During the three and six months ended June 30, 2024 and 2023, inclusive of interest, no payments were made to the parties to the Tax Receivable Agreement. The total amount of Tax Receivable Agreement Payments due under the Tax Receivable Agreement was $0.9 million and $0.8 million as of June 30, 2024 and December 31, 2023, respectively. As discussed in Note 5, Debt, Net, on August 1, 2024, the Company undertook a corporate reorganization.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million in each annual period between July 2023 and June 2026. As of June 30, 2024, we remain contractually obligated to spend $10.0 million towards this commitment. As of June 30, 2024, we had various non-cancelable operating lease commitments for office space which have been recorded as Operating lease liabilities. Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. We believe the ultimate liability, if any, with respect to these actions will not materially affect the consolidated financial position, results of operations, or cash flows reflected in the condensed consolidated financial statements. There can be no assurance, however, that the ultimate resolution of such actions will not materially or adversely affect our consolidated financial position, results of operations, or cash flows. We accrued for losses when the loss is deemed probable and the liability can reasonably be estimated. In October 2023, a putative California class action complaint (the "Complaint") was filed against us and our Protected business regarding alleged violations of California’s Auto Renewal Law requirements related to the marketing and sale of its subscription service offerings for anti-virus and ad-blocking software (the "Protected Software") to consumers. The Complaint alleges claims under California’s false advertising and unfair competition laws and primarily alleges that the marketing and sales checkout flows for the Protected Software did not clearly and conspicuously disclose that the named plaintiffs set forth in the Complaint were purchasing the Protected Software for a promotional period which would auto-renew after the applicable promotional period. While we dispute the claims alleged, we have reached a tentative settlement during June 2024, which would include a release of such claims by the relevant class, which tentative settlement is still subject to court approval and finalizing other terms and conditions. The amount of such tentative settlement has been accrued accordingly in accrued expenses and other current liabilities in our condensed consolidated balance sheets as of June 30, 2024. Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments we could be required to make under these indemnification provisions may not be subject to claims related to these indemnifications. As a result, we believe the estimated fair value of these agreements was immaterial. Accordingly, we have no liabilities recorded for these agreements as of June 30, 2024.

Fair Value Measurement

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurement

Financial Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis (in thousands):


	June 30, 2024		December 31, 2023
	Level 1
Public Warrants	$	936	$	2,688

The fair value of the Public Warrants has been estimated using the Public Warrants’ quoted market price. There were no transfers in or out of levels during the periods presented.

Nonfinancial Assets Measured at Fair Value on a Nonrecurring Basis

For further information on the fair value assessment of goodwill, refer to Note 3, Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net.

Net Loss Per Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Net Loss Per Share


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Basic and diluted net loss per share
Net loss from continuing operations attributable to System1, Inc.	$	(0.38)	$	(0.25)	$	(0.54)	$	(0.50)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(0.12)		—		(0.23)
Basic and diluted net loss per share	$	(0.38)	$	(0.37)	$	(0.54)	$	(0.73)
Numerator:
Net loss from continuing operations attributable to System1, Inc.	$	(26,373)	$	(23,342)	$	(36,910)	$	(46,978)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(10,959)		—		(21,125)
Net loss attributable to System1, Inc.	$	(26,373)	$	(34,301)	$	(36,910)	$	(68,103)
Denominator:
Weighted-average common shares outstanding used in computing basic and diluted net loss per share	69,383		93,799		68,582		93,288

For the periods presented in the table above, a total of 16.8 million Public Warrants were excluded from the computation of net loss per share as the impact was anti-dilutive.

Segment Reporting

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segment Reporting

The following table summarizes revenue by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	77,396	$	77,300	$	146,426	$	183,325
Partner Network	17,185		19,614		33,072		34,707
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

The following table summarizes Adjusted gross profit by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	27,378	$	27,589	$	49,840	$	57,428
Partner Network	13,490		14,808		24,409		25,025
Adjusted gross profit	40,868		42,397		74,249		82,453
Other cost of revenue	2,085		2,140		4,247		4,031
Salaries and benefits	33,937		27,054		58,420		55,201
Selling, general, and administrative	13,989		15,340		26,717		30,195
Depreciation and amortization	19,943		19,688		39,747		39,080

Interest expense, net	7,871		12,334		15,841		23,736
Gain from debt extinguishment	(433)		—		(20,109)		—
Change in fair value of warrant liabilities	(1,501)		2,018		(1,752)		609
Loss before income tax	$	(35,023)	$	(36,177)	$	(48,862)	$	(70,399)

The following table summarizes revenue by geographic region (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	91,215	$	93,410	$	172,897	$	210,609
Other countries	3,366		3,504		6,601		7,423
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

We recorded the following total stock-based compensation expense (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock-based compensation expense	$	3,442	$	4,294	$	7,412	$	10,126

Stock Appreciation Rights Plan

In July 2024, we granted 3.1 million restricted stock unit awards in accordance with the 2022 Incentive Award Plan.

Discontinued Operations

6 Months Ended

Jun. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Sale of Protected


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Revenue	$	50,324	$	97,060
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	37,225		74,674
Salaries and benefits	16,047		26,594
Selling, general, and administrative	2,395		4,712
Depreciation and amortization	8,364		18,346


Total operating expenses	64,031		124,326
Operating loss	(13,707)		(27,266)
Other expense, net	8		57
Loss from discontinued operations before income taxes	(13,715)		(27,323)
Income tax benefit	(231)		(1,306)
Net loss from discontinued operations	$	(13,484)	$	(26,017)


	Six Months Ended June 30, 2023
Depreciation and amortization	$	18,346
Stock-based compensation	21,726
Capital expenditures	1,053

Transition Service Agreement

Discontinued Operations Related-Party Transactions

Payment Processing Agreement

Office Facilities

Protected Incentive Plan Installment Payments

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC") on March 15, 2024.
Principles of Consolidation	The accompanying unaudited condensed consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Our condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC") on March 15, 2024.
Use of Estimates	Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management’s estimates are based on historical information available as of the date of the condensed consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, valuation of goodwill, acquired intangible assets, assets held for sale and long-lived assets, valuation and recognition of stock-based compensation awards, income taxes, contingent consideration and determination of the fair value of the warrant liabilities. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Revision of Previously Issued Consolidated Financial Statements


	As Previously Reported		Revision Adjustment		As Revised			Impact of Reclassification of Discontinued Operations		As Currently Reported
Assets
Current assets:
Cash and cash equivalents	$	8,603	$	6,848	$	15,451	(e)	$	(11,149)	$	4,302
Restricted cash, current	11,762		(6,848)		4,914		(e)	(1,649)		3,265
Total current assets	95,130		—		95,130			—		95,130
Liabilities and Stockholders' Equity
Deferred tax liability	$	29,851	$	534	$	30,385	(d)	$	(11,956)	$	18,429
Total liabilities	681,268		534		681,802			—		681,802
Stockholders’ Equity / Members’ Deficit
Additional paid-in capital	$	842,350	$	1,218	$	843,568	(a) (b)	$	—	$	843,568
Accumulated deficit	(514,809)		7,084		(507,725)		(a) (b) (d)	—		(507,725)
Accumulated other comprehensive loss	(270)		156		(114)		(d)	—		(114)

Total stockholders' equity attributable to System1, Inc.	$	327,282	$	8,458	$	335,740		$	—	$	335,740
Non-controlling interest	69,663		(8,992)		60,671		(b)	—		60,671
Total stockholders' equity	$	396,945	$	(534)	$	396,411		$	—	$	396,411
Total liabilities and stockholders' equity	$	1,078,213	$	—	$	1,078,213		$	—	$	1,078,213


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	43,991	$	(890)	(a)	$	43,101	$	(16,047)	$	27,054



Total operating expenses	183,660		(890)			182,770		(64,031)		118,739
Operating loss	(36,422)		890			(35,532)		13,707		(21,825)






Loss before income tax	$	(50,782)	$	890		$	(49,892)	$	13,715	$	(36,177)
Income tax benefit	(6,605)		(296)		(d)	(6,901)		231		(6,670)
Net loss from continuing operations	(44,177)		1,186			(42,991)		13,484		(29,507)
Net loss from discontinued operations, net of tax	—		—			—		(13,484)		(13,484)
Net loss	(44,177)		1,186			(42,991)		—		(42,991)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,947)		257		(b)	(8,690)		2,525		(6,165)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(2,525)		(2,525)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(35,230)	$	929	(a) (b) (d)	$	(34,301)	$	10,959	$	(23,342)
Net loss from discontinued operations	—		—			—		(10,959)		(10,959)
Net loss attributable to System1, Inc.	$	(35,230)	$	929		$	(34,301)	$	—	$	(34,301)

Basic and diluted net loss per share:
Continuing operations	$	(0.38)	$	0.01	(b)	$	(0.37)	$	0.12	$	(0.25)
Discontinued operations	—		—			—		(0.12)		(0.12)
Basic and diluted net loss per share	$	(0.38)	$	0.01		$	(0.37)	$	—	$	(0.37)

Weighted average number of shares outstanding - basic and diluted	93,425		374		(b)	93,799				93,799


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Revised		Impact of Reclassification of Discontinued Operations		As Currently Reported



Salaries and benefits	$	82,389	$	(594)	(a)	$	81,795	$	(26,594)	$	55,201



Total operating expenses	389,006		(594)			388,412		(124,326)		264,086
Operating loss	(73,914)		594			(73,320)		27,266		(46,054)






Loss before income tax	$	(98,316)	$	594		$	(97,722)	$	27,323	$	(70,399)
Income tax benefit	(11,013)		(792)		(d)	(11,805)		1,306		(10,499)
Net loss from continuing operations	(87,303)		1,386			(85,917)		26,017		(59,900)
Net loss from discontinued operations, net of tax	—		—			—		(26,017)		(26,017)
Net loss	(87,303)		1,386			(85,917)		—		(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(18,121)		307		(b)	(17,814)		4,892		(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	—		—			—		(4,892)		(4,892)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Amounts attributable to System1, Inc.:
Net loss from continuing operations	$	(69,182)	$	1,079	(a) (b) (d)	$	(68,103)	$	21,125	$	(46,978)
Net loss from discontinued operations	—		—			—		(21,125)		(21,125)
Net loss attributable to System1, Inc.	$	(69,182)	$	1,079		$	(68,103)	$	—	$	(68,103)

Basic and diluted net loss per share:
Continuing operations	$	(0.74)	$	0.01	(b)	$	(0.73)	$	0.23	$	(0.50)
Discontinued operations	—		—			—		(0.23)		(0.23)
Basic and diluted net loss per share	$	(0.74)	$	0.01		$	(0.73)	$	—	$	(0.73)

Weighted average number of shares outstanding - basic and diluted	92,945		343		(b)	93,288				93,288

The following tables reflect the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three and six months ended June 30, 2023 (in thousands):


	Three Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(44,177)	$	1,186	(a) (d)	$	(42,991)
Other comprehensive income (loss)
Foreign currency translation income (loss)	187		(1)		(c)	186
Comprehensive loss	(43,990)		1,185			(42,805)
Comprehensive loss attributable to non-controlling interest	(8,897)		257		(b)	(8,640)
Comprehensive loss attributable to System1, Inc.	$	(35,093)	$	928		$	(34,165)


	Six Months Ended June 30, 2023
	As Previously Reported		Revision Adjustment			As Currently Reported
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Other comprehensive (loss) income:
Foreign currency translation (loss) income	79		(1)		(c)	78
Comprehensive loss	(87,224)		1,385			(85,839)
Comprehensive loss attributable to non-controlling interest	(18,087)		307		(b)	(17,780)
Comprehensive loss attributable to System1, Inc.	$	(69,137)	$	1,078		$	(68,059)


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
As Previously Reported
Balance at December 31, 2022	91,674	$	9	21,747	$	2	$	831,566	$	(439,296)	$	(260)	$	78,650	$	470,671
Net loss	—	—		—	—		—		(33,952)		—		(9,174)		(43,126)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,730)		—		—		—		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,659		—		—		—		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		955		—		—		(955)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,963		—		—		—		6,963
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,972	$	(473,574)	$	(322)	$	68,474	$	433,561
Net loss	—	—		—	—		—		(35,230)		—		(8,947)		(44,177)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(314)		—		—		—		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		209		(22)		187


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Stock-based compensation	—	—		—	—		5,571		—		—		—		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	844,229	$	(508,804)	$	(113)	$	59,505	$	394,828

Revision Adjustments
Net loss	—	$	—	—	$	—	$	—	$	150	$	—	$	50	$	200	(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		281		—		—		(281)		—		(a) (b)
Issuance of common stock in connection with settlement of incentive plan	—	—		—	—		160		—		—		(160)		—		(b)

Conversion of Class C shares to Class A shares	—	—		—	—		92		—		—		(92)		—		(b)



Stock-based compensation	—	—		—	—		(760)		—		—		958		198		(a) (b)
Balance at March 31, 2023	—	$	—	—	$	—	$	(227)	$	150	$	—	$	475	$	398
Net loss	—	—		—	—		—		929		—		257		1,186		(a) (b) (d)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	—	—		—	—		181		—		—		(181)		—		(a) (b)





Other comprehensive loss	—	—		—	—		—		—		(1)		—		(1)		(c)
Stock-based compensation	—	—		—	—		(615)		—		—		615		—		(a) (b)
Balance at June 30, 2023	—	$	—	—	$	—	$	(661)	$	1,079	$	(1)	$	1,166	$	1,583

As Revised
Net loss	—	$	—	—	$	—	—		$	(33,802)	$	—	$	(9,124)	$	(42,926)
Cumulative-effect of adoption of ASU 2016-13	—	—		—	—		—		(326)		—		—		(326)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	832	—		—	—		(1,449)		—		—		(281)		(1,730)
Issuance of common stock in connection with settlement of incentive plan	407	—		—	—		1,819		—		—		(160)		1,659

Conversion of Class C shares to Class A shares	234	—		(234)	—		1,047		—		—		(1,047)		—

Increase in tax receivable agreement liability	—	—		—	—		(441)		—		—		—		(441)
Other comprehensive loss	—	—		—	—		—		—		(62)		(47)		(109)
Stock-based compensation	—	—		—	—		6,203		—		—		958		7,161


	Class A Common Stock			Class C Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total Stockholders’ Equity
Balance at March 31, 2023	93,147	$	9	21,513	$	2	$	838,745	$	(473,424)	$	(322)	$	68,949	$	433,959
Net loss	—	—		—	—		—		(34,301)		—		(8,690)		(42,991)

Issuance of restricted stock, net of forfeitures and shares withheld for taxes	455	—		—	—		(133)		—		—		(181)		(314)





Other comprehensive income (loss)	—	—		—	—		—		—		208		(22)		186
Stock-based compensation	—	—		—	—		4,956		—		—		615		5,571
Balance at June 30, 2023	93,602	$	9	21,513	$	2	$	843,568	$	(507,725)	$	(114)	$	60,671	$	396,411

The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the six months ended June 30, 2023 (in thousands):


	As Previously Reported		Revision Adjustment			As Currently Reported
Cash Flows from Operating Activities
Net loss	$	(87,303)	$	1,386	(a) (d)	$	(85,917)
Stock-based compensation	31,656		196		(a)	31,852
Other, net 1	3,588		431		(c)	4,019
Deferred tax benefits	(13,493)		(792)		(d)	(14,285)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(834)		(431)		(c)	(1,265)
Accrued expenses and other current liabilities	(10,963)		(1,582)		(c)	(12,545)
Other non-current liabilities	516		792		(c)	1,308
Net cash provided by operating activities	1,352		—			1,352
_______________

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

Internal-use software development costs and intangible assets consisted of the following (in thousands):


	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	17,820	$	(4,373)	$	13,447
Intangible assets:
Developed technology	$	196,128	$	(118,870)	$	77,258
Trademarks and trade names	236,053		(56,850)		179,203
Software	5,100		(2,978)		2,122
Customer relationships	2,900		(1,812)		1,088
Total	$	440,181	$	(180,510)	$	259,671


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internal-use software development costs	$	13,788	$	(2,363)	$	11,425
Intangible assets:
Developed technology	$	196,128	$	(94,354)	$	101,774
Trademarks and trade names	236,053		(45,050)		191,003
Software	5,100		(2,341)		2,759
Customer relationships	2,900		(1,435)		1,465
Total	$	440,181	$	(143,180)	$	297,001

Amortization expense for internal-use software development costs and intangible assets were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense for internal-use software development	$	1,076	$	839	$	2,010	$	1,396
Amortization expense for intangible assets	$	18,665	$	18,665	$	37,330	$	37,330

Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Liabilities

Accrued expenses and other current liabilities consisted of the following items as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
Accrued revenue share	$	29,066	$	16,365
Accrued marketing expenses	12,744		19,737
Accrued payroll and related benefits	11,420		13,751



Accrued interest payable	5,175		311

Other current liabilities	18,412		9,150
Accrued expenses and other current liabilities	$	76,817	$	59,314

Debt, Net (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of Long-Term Debt Instruments

The carrying values of our debt, net of discounts, deferred financing and debt issuance costs were as follows (in thousands):


	June 30, 2024		December 31, 2023
Term Loan 1, 2	$	279,610	$	349,503
Total Debt, net	$	279,610	$	349,503
_______________
1 Includes unamortized discount of $9.9 million and $14.7 million and unamortized loan fees of $0.5 million and $0.8 million, as of June 30, 2024 and December 31, 2023, respectively, recorded as a reduction of the carrying amount of the debt and amortized to interest expense using the effective interest method.
2 Estimated fair value of the Term Loan was $177.0 million and $222.7 million as of June 30, 2024 and December 31, 2023, respectively.

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Liabilities Measured at Fair Value on Recurring Basis

The following tables present our fair value hierarchy for liabilities measured at fair value on a recurring basis (in thousands):


	June 30, 2024		December 31, 2023
	Level 1
Public Warrants	$	936	$	2,688

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Income (Loss) Per Share

Basic and diluted net loss per share was calculated as follows (in thousands, except per share):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Basic and diluted net loss per share
Net loss from continuing operations attributable to System1, Inc.	$	(0.38)	$	(0.25)	$	(0.54)	$	(0.50)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(0.12)		—		(0.23)
Basic and diluted net loss per share	$	(0.38)	$	(0.37)	$	(0.54)	$	(0.73)
Numerator:
Net loss from continuing operations attributable to System1, Inc.	$	(26,373)	$	(23,342)	$	(36,910)	$	(46,978)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	—		(10,959)		—		(21,125)
Net loss attributable to System1, Inc.	$	(26,373)	$	(34,301)	$	(36,910)	$	(68,103)
Denominator:
Weighted-average common shares outstanding used in computing basic and diluted net loss per share	69,383		93,799		68,582		93,288

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

The following table summarizes revenue by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	77,396	$	77,300	$	146,426	$	183,325
Partner Network	17,185		19,614		33,072		34,707
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

The following table summarizes Adjusted gross profit by reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Owned and Operated Advertising	$	27,378	$	27,589	$	49,840	$	57,428
Partner Network	13,490		14,808		24,409		25,025
Adjusted gross profit	40,868		42,397		74,249		82,453
Other cost of revenue	2,085		2,140		4,247		4,031
Salaries and benefits	33,937		27,054		58,420		55,201
Selling, general, and administrative	13,989		15,340		26,717		30,195
Depreciation and amortization	19,943		19,688		39,747		39,080

Interest expense, net	7,871		12,334		15,841		23,736
Gain from debt extinguishment	(433)		—		(20,109)		—
Change in fair value of warrant liabilities	(1,501)		2,018		(1,752)		609
Loss before income tax	$	(35,023)	$	(36,177)	$	(48,862)	$	(70,399)

Schedule of Revenues Disaggregated by Geographic Region

The following table summarizes revenue by geographic region (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	91,215	$	93,410	$	172,897	$	210,609
Other countries	3,366		3,504		6,601		7,423
Total revenue	$	94,581	$	96,914	$	179,498	$	218,032

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Total Stock-Based Compensation Expense

We recorded the following total stock-based compensation expense (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock-based compensation expense	$	3,442	$	4,294	$	7,412	$	10,126

Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations

The following table presents the summarized discontinued operations condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Revenue	$	50,324	$	97,060
Operating expenses:
Cost of revenue (excluding depreciation and amortization)	37,225		74,674
Salaries and benefits	16,047		26,594
Selling, general, and administrative	2,395		4,712
Depreciation and amortization	8,364		18,346


Total operating expenses	64,031		124,326
Operating loss	(13,707)		(27,266)
Other expense, net	8		57
Loss from discontinued operations before income taxes	(13,715)		(27,323)
Income tax benefit	(231)		(1,306)
Net loss from discontinued operations	$	(13,484)	$	(26,017)


	Six Months Ended June 30, 2023
Depreciation and amortization	$	18,346
Stock-based compensation	21,726
Capital expenditures	1,053

Organization and Description of Business (Details)	6 Months Ended
Organization and Description of Business (Details)	Jun. 30, 2024 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	2

Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Additional paid-in capital	$ (854,270)		$ (854,270)		$ (843,112)
Salaries and benefits	33,937	$ 27,054	58,420	$ 55,201
Net income (loss)	26,373	34,301	36,910	68,103
Cash and cash equivalents	$ 75,651	15,451	$ 75,651	15,451	$ 135,343
Revision Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Additional paid-in capital		(1,218)		(1,218)
Cash and cash equivalents		6,848		6,848
Restricted cash, current		6,848		6,848
Revision Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits		(890)		(594)
Net income (loss)		$ (929)		(1,079)
Revision of Prior Period, Error Correction, Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net income (loss)				1,400
Reduction of noncontrolling interest				1,200
Decrease in accumulated deficit				1,100
Decrease in additional paid-in-capital				$ 700

Summary of Significant Accounting Policies - Schedule of Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Dec. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 75,651		$ 135,343	$ 15,451
Total current assets	148,624		202,003
Current liabilities:
Deferred tax liability	7,042		8,307
Total liabilities	382,057		436,155
Stockholders' equity:
Additional paid-in capital	854,270		843,112
Accumulated deficit	(744,572)		(707,662)
Accumulated other comprehensive loss	(295)		(181)
Total stockholders' equity attributable to System1, Inc.	109,412		135,278
Non-controlling interest	19,867		34,037
Total stockholders' equity	129,279	$ 160,405	169,315	396,411	$ 433,959	$ 470,671
Total liabilities and stockholders' equity	$ 511,336		$ 605,470
As Previously Reported
Current assets:
Cash and cash equivalents				8,603
Restricted cash, current				11,762
Total current assets				95,130
Current liabilities:
Deferred tax liability				29,851
Total liabilities				681,268
Stockholders' equity:
Additional paid-in capital				842,350
Accumulated deficit				(514,809)
Accumulated other comprehensive loss				(270)
Total stockholders' equity attributable to System1, Inc.				327,282
Non-controlling interest				69,663
Total stockholders' equity				396,945
Total liabilities and stockholders' equity				1,078,213
Revision Adjustment
Current assets:
Cash and cash equivalents				6,848
Restricted cash, current				(6,848)
Total current assets				0
Current liabilities:
Deferred tax liability				534
Total liabilities				534
Stockholders' equity:
Additional paid-in capital				1,218
Accumulated deficit				7,084
Accumulated other comprehensive loss				156
Total stockholders' equity attributable to System1, Inc.				8,458
Non-controlling interest				(8,992)
Total stockholders' equity				(534)
Total liabilities and stockholders' equity				0
As Revised
Current assets:
Cash and cash equivalents				15,451
Restricted cash, current				4,914
Total current assets				95,130
Current liabilities:
Deferred tax liability				30,385
Total liabilities				681,802
Stockholders' equity:
Additional paid-in capital				843,568
Accumulated deficit				(507,725)
Accumulated other comprehensive loss				(114)
Total stockholders' equity attributable to System1, Inc.				335,740
Non-controlling interest				60,671
Total stockholders' equity				396,411
Total liabilities and stockholders' equity				1,078,213
Impact of Reclassification of Discontinued Operations
Current assets:
Cash and cash equivalents				(11,149)
Restricted cash, current				(1,649)
Total current assets				0
Current liabilities:
Deferred tax liability				(11,956)
Total liabilities				0
Stockholders' equity:
Additional paid-in capital				0
Accumulated deficit				0
Accumulated other comprehensive loss				0
Total stockholders' equity attributable to System1, Inc.				0
Non-controlling interest				0
Total stockholders' equity				0
Total liabilities and stockholders' equity				0
As Currently Reported
Current assets:
Cash and cash equivalents				4,302
Restricted cash, current				3,265
Total current assets				95,130
Current liabilities:
Deferred tax liability				18,429
Total liabilities				681,802
Stockholders' equity:
Additional paid-in capital				843,568
Accumulated deficit				(507,725)
Accumulated other comprehensive loss				(114)
Total stockholders' equity attributable to System1, Inc.				335,740
Non-controlling interest				60,671
Total stockholders' equity				396,411
Total liabilities and stockholders' equity				$ 1,078,213

Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits	$ 33,937		$ 27,054		$ 58,420	$ 55,201
Total operating expenses	123,667		118,739		234,380	264,086
Operating loss	(29,086)		(21,825)		(54,882)	(46,054)
Loss before income tax	(35,023)		(36,177)		(48,862)	(70,399)
Income tax benefit	(178)		(6,670)		(226)	(10,499)
Net loss from continuing operations	(34,845)		(29,507)		(48,636)	(59,900)
Net loss from discontinued operations, net of tax	0		(13,484)		0	(26,017)
Net loss	(34,845)	$ (13,791)	(42,991)	$ (42,926)	(48,636)	(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest	(8,472)		(6,165)		(11,726)	(12,922)
Less: Net loss from discontinued operations attributable to non-controlling interest	0		(2,525)		0	(4,892)
Net loss attributable to System1, Inc.	(26,373)		(34,301)		(36,910)	(68,103)
Net loss from continuing operations	(26,373)		(23,342)		(36,910)	(46,978)
Net loss from discontinued operations	$ 0		$ (10,959)		$ 0	$ (21,125)
Basic net loss per share, continuing operations (in dollars per share)	$ (0.38)		$ (0.25)		$ (0.54)	$ (0.50)
Diluted net loss per share, continuing operations (in dollars per share)	(0.38)		(0.25)		(0.54)	(0.50)
Basic net loss per share, discontinued operations (in dollars per share)	0		(0.12)		0	(0.23)
Diluted net loss per share, discontinued operations (in dollars per share)	0		(0.12)		0	(0.23)
Basic net loss per share (in dollars per share)	(0.38)		(0.37)		(0.54)	(0.73)
Diluted net loss per share (in dollars per share)	$ (0.38)		$ (0.37)		$ (0.54)	$ (0.73)
Weighted average number of shares outstanding - basic (in shares)	69,383		93,799		68,582	93,288
Weighted average number of shares outstanding - diluted (in shares)	69,383		93,799		68,582	93,288
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits			$ 43,991			$ 82,389
Total operating expenses			183,660			389,006
Operating loss			(36,422)			(73,914)
Loss before income tax			(50,782)			(98,316)
Income tax benefit			(6,605)			(11,013)
Net loss from continuing operations			(44,177)			(87,303)
Net loss from discontinued operations, net of tax			0			0
Net loss			(44,177)	(43,126)		(87,303)
Less: Net loss from continuing operations attributable to non-controlling interest			(8,947)			(18,121)
Less: Net loss from discontinued operations attributable to non-controlling interest			0			0
Net loss attributable to System1, Inc.			(35,230)			(69,182)
Net loss from continuing operations			(35,230)			(69,182)
Net loss from discontinued operations			$ 0			$ 0
Basic net loss per share, continuing operations (in dollars per share)			$ (0.38)			$ (0.74)
Diluted net loss per share, continuing operations (in dollars per share)			(0.38)			(0.74)
Basic net loss per share, discontinued operations (in dollars per share)			0			0
Diluted net loss per share, discontinued operations (in dollars per share)			0			0
Basic net loss per share (in dollars per share)			(0.38)			(0.74)
Diluted net loss per share (in dollars per share)			$ (0.38)			$ (0.74)
Weighted average number of shares outstanding - basic (in shares)			93,425			92,945
Weighted average number of shares outstanding - diluted (in shares)			93,425			92,945
Revision Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits			$ (890)			$ (594)
Total operating expenses			(890)			(594)
Operating loss			890			594
Loss before income tax			890			594
Income tax benefit			(296)			(792)
Net loss from continuing operations			1,186			1,386
Net loss from discontinued operations, net of tax			0			0
Net loss			1,186	200		1,386
Less: Net loss from continuing operations attributable to non-controlling interest			257			307
Less: Net loss from discontinued operations attributable to non-controlling interest			0			0
Net loss attributable to System1, Inc.			929			1,079
Net loss from continuing operations			929			1,079
Net loss from discontinued operations			$ 0			$ 0
Basic net loss per share, continuing operations (in dollars per share)			$ 0.01			$ 0.01
Diluted net loss per share, continuing operations (in dollars per share)			0.01			0.01
Basic net loss per share, discontinued operations (in dollars per share)			0			0
Diluted net loss per share, discontinued operations (in dollars per share)			0			0
Basic net loss per share (in dollars per share)			0.01			0.01
Diluted net loss per share (in dollars per share)			$ 0.01			$ 0.01
Weighted average number of shares outstanding - basic (in shares)			374			343
Weighted average number of shares outstanding - diluted (in shares)			374			343
As Revised
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits			$ 43,101			$ 81,795
Total operating expenses			182,770			388,412
Operating loss			(35,532)			(73,320)
Loss before income tax			(49,892)			(97,722)
Income tax benefit			(6,901)			(11,805)
Net loss from continuing operations			(42,991)			(85,917)
Net loss from discontinued operations, net of tax			0			0
Net loss			(42,991)	$ (42,926)		(85,917)
Less: Net loss from continuing operations attributable to non-controlling interest			(8,690)			(17,814)
Less: Net loss from discontinued operations attributable to non-controlling interest			0			0
Net loss attributable to System1, Inc.			(34,301)			(68,103)
Net loss from continuing operations			(34,301)			(68,103)
Net loss from discontinued operations			$ 0			$ 0
Basic net loss per share, continuing operations (in dollars per share)			$ (0.37)			$ (0.73)
Diluted net loss per share, continuing operations (in dollars per share)			(0.37)			(0.73)
Basic net loss per share, discontinued operations (in dollars per share)			0			0
Diluted net loss per share, discontinued operations (in dollars per share)			0			0
Basic net loss per share (in dollars per share)			(0.37)			(0.73)
Diluted net loss per share (in dollars per share)			$ (0.37)			$ (0.73)
Weighted average number of shares outstanding - basic (in shares)			93,799			93,288
Weighted average number of shares outstanding - diluted (in shares)			93,799			93,288
Impact of Reclassification of Discontinued Operations
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Salaries and benefits			$ (16,047)			$ (26,594)
Total operating expenses			(64,031)			(124,326)
Operating loss			13,707			27,266
Loss before income tax			13,715			27,323
Income tax benefit			231			1,306
Net loss from continuing operations			13,484			26,017
Net loss from discontinued operations, net of tax			(13,484)			(26,017)
Net loss			0			0
Less: Net loss from continuing operations attributable to non-controlling interest			2,525			4,892
Less: Net loss from discontinued operations attributable to non-controlling interest			(2,525)			(4,892)
Net loss attributable to System1, Inc.			0			0
Net loss from continuing operations			10,959			21,125
Net loss from discontinued operations			$ (10,959)			$ (21,125)
Basic net loss per share, continuing operations (in dollars per share)			$ 0.12			$ 0.23
Diluted net loss per share, continuing operations (in dollars per share)			0.12			0.23
Basic net loss per share, discontinued operations (in dollars per share)			(0.12)			(0.23)
Diluted net loss per share, discontinued operations (in dollars per share)			(0.12)			(0.23)
Basic net loss per share (in dollars per share)			0			0
Diluted net loss per share (in dollars per share)			$ 0			$ 0
Weighted average number of shares outstanding - basic (in shares)
Weighted average number of shares outstanding - diluted (in shares)

Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net loss	$ (34,845)	$ (13,791)	$ (42,991)	$ (42,926)	$ (48,636)	$ (85,917)
Foreign currency translation income (loss)	(96)		186		(231)	78
Comprehensive loss	(34,941)		(42,805)		(48,867)	(85,839)
Comprehensive loss attributable to non-controlling interest	(8,544)		(8,640)		(11,843)	(17,780)
Comprehensive loss attributable to System1, Inc.	$ (26,397)		(34,165)		$ (37,024)	(68,059)
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net loss			(44,177)	(43,126)		(87,303)
Foreign currency translation income (loss)			187			79
Comprehensive loss			(43,990)			(87,224)
Comprehensive loss attributable to non-controlling interest			(8,897)			(18,087)
Comprehensive loss attributable to System1, Inc.			(35,093)			(69,137)
Revision Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net loss			1,186	200		1,386
Foreign currency translation income (loss)			(1)			(1)
Comprehensive loss			1,185			1,385
Comprehensive loss attributable to non-controlling interest			257			307
Comprehensive loss attributable to System1, Inc.			928			1,078
As Revised
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net loss			(42,991)	$ (42,926)		(85,917)
Foreign currency translation income (loss)			186			78
Comprehensive loss			(42,805)			(85,839)
Comprehensive loss attributable to non-controlling interest			(8,640)			(17,780)
Comprehensive loss attributable to System1, Inc.			$ (34,165)			$ (68,059)

Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Changes in Stockholders' Equity (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2022
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounting Standards Update [Extensible Enumeration]							Accounting Standards Update 2016-13 [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	$ 160,405	$ 169,315	$ 433,959	$ 470,671	$ 169,315	$ 470,671
Net loss	(34,845)	(13,791)	(42,991)	(42,926)	(48,636)	(85,917)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(24)	(991)	(314)	(1,730)
Issuance of common stock in connection with settlement of incentive plan		1,707		1,659
Conversion of Class C shares to Class A shares		0		0
Increase in tax receivable agreement liability		(110)		(441)
Other comprehensive income (loss)	(96)	(135)	186	(109)
Stock-based compensation	3,871	4,405	5,571	7,161
Ending balance	129,279	160,405	396,411	433,959	129,279	396,411	$ 470,671
Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							(326)
Additional Paid-In-Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	850,202	843,112	838,745	831,566	843,112	831,566
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	284	178	(133)	(1,449)
Issuance of common stock in connection with settlement of incentive plan		2,464		1,819
Conversion of Class C shares to Class A shares		241		1,047
Increase in tax receivable agreement liability		(110)		(441)
Stock-based compensation	3,784	4,317	4,956	6,203
Ending balance	854,270	850,202	843,568	838,745	854,270	843,568	831,566
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(718,199)	(707,662)	(473,424)	(439,296)	(707,662)	(439,296)
Net loss	(26,373)	(10,537)	(34,301)	(33,802)
Ending balance	(744,572)	(718,199)	(507,725)	(473,424)	(744,572)	(507,725)	(439,296)
Accumulated Deficit \| Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							(326)
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(271)	(181)	(322)	(260)	(181)	(260)
Other comprehensive income (loss)	(24)	(90)	208	(62)
Ending balance	(295)	(271)	(114)	(322)	(295)	(114)	(260)
Non-Controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	28,664	34,037	68,949	78,650	34,037	78,650
Net loss	(8,472)	(3,254)	(8,690)	(9,124)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes	(308)	(1,169)	(181)	(281)
Issuance of common stock in connection with settlement of incentive plan		(757)		(160)
Conversion of Class C shares to Class A shares		(241)		(1,047)
Other comprehensive income (loss)	(72)	(45)	(22)	(47)
Stock-based compensation	87	88	615	958
Ending balance	$ 19,867	$ 28,664	$ 60,671	$ 68,949	$ 19,867	$ 60,671	$ 78,650
Class A Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	68,632	65,855	93,147	91,674	65,855	91,674
Beginning balance	$ 7	$ 7	$ 9	$ 9	$ 7	$ 9
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)	623	1,498	455	832
Issuance of common stock in connection with settlement of incentive plan (in shares)		970		407
Conversion of Class C shares to Class A shares (in shares)		309		234
Ending balance (in shares)	69,255	68,632	93,602	93,147	69,255	93,602	91,674
Ending balance	$ 7	$ 7	$ 9	$ 9	$ 7	$ 9	$ 9
Class C Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	21,204	21,513	21,513	21,747	21,513	21,747
Beginning balance	$ 2	$ 2	$ 2	$ 2	$ 2	$ 2
Conversion of Class C shares to Class A shares (in shares)		(309)		(234)
Ending balance (in shares)	21,204	21,204	21,513	21,513	21,204	21,513	21,747
Ending balance	$ 2	$ 2	$ 2	$ 2	$ 2	$ 2	$ 2
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounting Standards Update [Extensible Enumeration]							Accounting Standards Update 2016-13 [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			433,561
Net loss			(44,177)	(43,126)		(87,303)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(314)	(1,730)
Issuance of common stock in connection with settlement of incentive plan				1,659
Conversion of Class C shares to Class A shares				0
Increase in tax receivable agreement liability				(441)
Other comprehensive income (loss)			187	(109)
Stock-based compensation			5,571	6,963
Ending balance			394,828	433,561		394,828
As Previously Reported \| Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							$ (326)
As Previously Reported \| Additional Paid-In-Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			838,972	831,566		831,566
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(314)	(1,730)
Issuance of common stock in connection with settlement of incentive plan				1,659
Conversion of Class C shares to Class A shares				955
Increase in tax receivable agreement liability				(441)
Stock-based compensation			5,571	6,963
Ending balance			844,229	838,972		844,229	831,566
As Previously Reported \| Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(473,574)	(439,296)		(439,296)
Net loss			(35,230)	(33,952)
Ending balance			(508,804)	(473,574)		(508,804)	(439,296)
As Previously Reported \| Accumulated Deficit \| Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							(326)
As Previously Reported \| Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(322)	(260)		(260)
Other comprehensive income (loss)			209	(62)
Ending balance			(113)	(322)		(113)	(260)
As Previously Reported \| Non-Controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			68,474	78,650		78,650
Net loss			(8,947)	(9,174)
Conversion of Class C shares to Class A shares				(955)
Other comprehensive income (loss)			(22)	(47)
Ending balance			$ 59,505	$ 68,474		$ 59,505	$ 78,650
As Previously Reported \| Class A Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			93,147	91,674		91,674
Beginning balance			$ 9	$ 9		$ 9
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			455	832
Issuance of common stock in connection with settlement of incentive plan (in shares)				407
Conversion of Class C shares to Class A shares (in shares)				234
Ending balance (in shares)			93,602	93,147		93,602	91,674
Ending balance			$ 9	$ 9		$ 9	$ 9
As Previously Reported \| Class C Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			21,513	21,747		21,747
Beginning balance			$ 2	$ 2		$ 2
Conversion of Class C shares to Class A shares (in shares)				(234)
Ending balance (in shares)			21,513	21,513		21,513	21,747
Ending balance			$ 2	$ 2		$ 2	$ 2
Revision Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			398
Net loss			1,186	200		1,386
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			0	0
Issuance of common stock in connection with settlement of incentive plan				0
Conversion of Class C shares to Class A shares				0
Other comprehensive income (loss)			(1)
Stock-based compensation			0	198
Ending balance			1,583	398		1,583
Revision Adjustment \| Additional Paid-In-Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(227)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			181	281
Issuance of common stock in connection with settlement of incentive plan				160
Conversion of Class C shares to Class A shares				92
Stock-based compensation			(615)	(760)
Ending balance			(661)	(227)		(661)
Revision Adjustment \| Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			150
Net loss			929	150
Ending balance			1,079	150		1,079
Revision Adjustment \| Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			0
Other comprehensive income (loss)			(1)
Ending balance			(1)	0		(1)
Revision Adjustment \| Non-Controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			475
Net loss			257	50
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(181)	(281)
Issuance of common stock in connection with settlement of incentive plan				(160)
Conversion of Class C shares to Class A shares				(92)
Stock-based compensation			615	958
Ending balance			$ 1,166	$ 475		$ 1,166
Revision Adjustment \| Class A Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			0
Beginning balance			$ 0
Ending balance (in shares)			0	0		0
Ending balance			$ 0	$ 0		$ 0
Revision Adjustment \| Class C Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			0
Beginning balance			$ 0
Ending balance (in shares)			0	0		0
Ending balance			$ 0	$ 0		$ 0
As Revised
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounting Standards Update [Extensible Enumeration]							Accounting Standards Update 2016-13 [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			433,959
Net loss			(42,991)	(42,926)		(85,917)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(314)	(1,730)
Issuance of common stock in connection with settlement of incentive plan				1,659
Conversion of Class C shares to Class A shares				0
Increase in tax receivable agreement liability				(441)
Other comprehensive income (loss)			186	(109)
Stock-based compensation			5,571	7,161
Ending balance			396,411	433,959		396,411
As Revised \| Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							$ (326)
As Revised \| Additional Paid-In-Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			838,745
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(133)	(1,449)
Issuance of common stock in connection with settlement of incentive plan				1,819
Conversion of Class C shares to Class A shares				1,047
Increase in tax receivable agreement liability				(441)
Stock-based compensation			4,956	6,203
Ending balance			843,568	838,745		843,568
As Revised \| Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(473,424)
Net loss			(34,301)	(33,802)
Ending balance			(507,725)	(473,424)		(507,725)
As Revised \| Accumulated Deficit \| Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance				(326)		(326)
Ending balance							$ (326)
As Revised \| Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(322)
Other comprehensive income (loss)			208	(62)
Ending balance			(114)	(322)		(114)
As Revised \| Non-Controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			68,949
Net loss			(8,690)	(9,124)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes			(181)	(281)
Issuance of common stock in connection with settlement of incentive plan				(160)
Conversion of Class C shares to Class A shares				(1,047)
Other comprehensive income (loss)			(22)	(47)
Stock-based compensation			615	958
Ending balance			$ 60,671	$ 68,949		$ 60,671
As Revised \| Class A Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			93,147
Beginning balance			$ 9
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares)			455	832
Issuance of common stock in connection with settlement of incentive plan (in shares)				407
Conversion of Class C shares to Class A shares (in shares)				234
Ending balance (in shares)			93,602	93,147		93,602
Ending balance			$ 9	$ 9		$ 9
As Revised \| Class C Common Stock \| Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)			21,513
Beginning balance			$ 2
Conversion of Class C shares to Class A shares (in shares)				(234)
Ending balance (in shares)			21,513	21,513		21,513
Ending balance			$ 2	$ 2		$ 2

Summary of Significant Accounting Policies - Schedule of Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Cash Flows from Operating Activities
Net loss	$ (34,845)	$ (13,791)	$ (42,991)	$ (42,926)	$ (48,636)	$ (85,917)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation					7,412	31,852
Other, net						4,019
Deferred tax benefits					(1,262)	(14,285)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets					26	(1,265)
Accrued expenses and other current liabilities					15,747	(12,545)
Other non-current liabilities					(1,146)	1,308
Net cash (used in) provided by operating activities					$ (6,022)	1,352
As Previously Reported
Cash Flows from Operating Activities
Net loss			(44,177)	(43,126)		(87,303)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation						31,656
Other, net						3,588
Deferred tax benefits						(13,493)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets						(834)
Accrued expenses and other current liabilities						(10,963)
Other non-current liabilities						516
Net cash (used in) provided by operating activities						1,352
Revision Adjustment
Cash Flows from Operating Activities
Net loss			$ 1,186	$ 200		1,386
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation						196
Other, net						431
Deferred tax benefits						(792)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets						(431)
Accrued expenses and other current liabilities						(1,582)
Other non-current liabilities						792
Net cash (used in) provided by operating activities						$ 0

Summary of Significant Accounting Policies - Risks (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2024 USD ($) contract	Jun. 30, 2024 USD ($) contract
Product Information [Line Items]
Revenue from advertising \| $	$ 6.6
Proceeds from advertising traffic \| $		$ 5.9
Google
Product Information [Line Items]
Number of contract \| contract	2	2
Microsoft
Product Information [Line Items]
Number of contract \| contract	1	1

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 82,407		$ 82,407
Goodwill impairment loss	0	$ 0
Internal-use software development costs	4,200		$ 3,500
Impairment of intangible assets	0	0
Computer software impairments	$ 0	$ 0
Weighted Average
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period	7 years

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 17,820	$ 13,788
Accumulated Amortization	(4,373)	(2,363)
Net Carrying Amount	13,447	11,425
Gross Carrying Amount	440,181	440,181
Accumulated Amortization	(180,510)	(143,180)
Net Carrying Amount	259,671	297,001
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	196,128	196,128
Accumulated Amortization	(118,870)	(94,354)
Net Carrying Amount	77,258	101,774
Trademarks and trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	236,053	236,053
Accumulated Amortization	(56,850)	(45,050)
Net Carrying Amount	179,203	191,003
Software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	5,100	5,100
Accumulated Amortization	(2,978)	(2,341)
Net Carrying Amount	2,122	2,759
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,900	2,900
Accumulated Amortization	(1,812)	(1,435)
Net Carrying Amount	$ 1,088	$ 1,465

Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net - Amortization Expense for Internal-Use Software Development Costs and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense for internal-use software development	$ 1,076	$ 839	$ 2,010	$ 1,396
Amortization expense for intangible assets	$ 18,665	$ 18,665	$ 37,330	$ 37,330

Accrued Expenses and Other Current Liabilities - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued revenue share	$ 29,066	$ 16,365
Accrued marketing expenses	12,744	19,737
Accrued payroll and related benefits	11,420	13,751
Accrued interest payable	5,175	311
Other current liabilities	18,412	9,150
Accrued expenses and other current liabilities	$ 76,817	$ 59,314

Accrued Expenses and Other Current Liabilities - Narrative (Details) - CouponFollow Incentive Plan shares in Millions, $ in Millions	6 Months Ended
	Jun. 30, 2024 USD ($) shares
Other Commitments [Line Items]
Liabilities recognized	$ 4.7
Long-term liability	5.6
Cash EBITDA	3.3
Recognized fixed amount	$ 0.8
Class A Common Stock
Other Commitments [Line Items]
Issuance of common stock in connection with the acquisition of business (in shares) \| shares	1.0
Aggregate fair value	$ 1.7
Difference between fair value of common stock issued to settle the earnout liability and the carrying value of the earnout liability	$ 0.5

Debt, Net - Narrative (Details) - USD ($) $ in Millions				6 Months Ended	9 Months Ended	42 Months Ended
Debt, Net - Narrative (Details) - USD ($) $ in Millions	Apr. 30, 2024	Jan. 17, 2024	Jan. 27, 2022	Jun. 30, 2024	Dec. 31, 2026	Dec. 31, 2025	Aug. 01, 2024
Debt Instrument [Line Items]
Period of financial report distribution to lender				120 days
Additional remediate period				30 days
Subsequent event \| S1 Holdco, LLC
Debt Instrument [Line Items]
Ownership percentage							100.00%
Subsequent event \| S1 Media, LLC
Debt Instrument [Line Items]
Ownership percentage							100.00%
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term line of credit			$ 50.0	$ 0.0
Debt Instrument covenant percentage			35.00%
Credit agreement, leverage ratio			5.40
Revolving Credit Facility \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate				2.50%
Revolving Credit Facility \| Interest Rate Floor
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate				0.00%
Term Loan
Debt Instrument [Line Items]
Long-term debt				$ 290.1
Debt instrument,discount percentage	60.00%	64.20%
Term Loan \| Revolving Credit Facility
Debt Instrument [Line Items]
Principle amount	$ 1.2	$ 63.7
Debt instrument, repurchase amount	0.7	40.9
Debt outstanding amount	295.0	301.3
Estimated gain on the repurchase	$ 0.4	$ 19.7
Term Loan \| Revolving Credit Facility \| Forecast
Debt Instrument [Line Items]
Amortization quarterly payment					$ 7.5	$ 5.0
Term Loan \| Secured Debt
Debt Instrument [Line Items]
Term of loan			5 years 6 months
Principle amount			$ 400.0
Proceeds from term loan			$ 376.0
Term Loan and Revolving Facility
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate			4.75%

Debt, Net - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Total Debt, net	$ 279,610	$ 349,503
Unamortized discount	9,900	14,700
Loan fees	500	800
Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Long-term debt, fair value	177,000	222,700
Term Loan \| Secured Debt \| Line of Credit
Debt Instrument [Line Items]
Total Debt, net	$ 279,610	$ 349,503

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Income Tax Examination [Line Items]
Income tax expense (benefit)	$ (178)	$ (6,670)	$ (226)	$ (10,499)
Effective income tax rate reconciliation, (percent)	0.50%	18.40%	0.40%	14.90%
S1 Holdco, LLC
Income Tax Examination [Line Items]
TRA payment including interest amount	$ 0	$ 0	$ 0	$ 0
TRA payments due	$ 900		$ 900		$ 800

Commitments and Contingencies (Details) - USD ($) $ in Millions	Jun. 30, 2024	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Obligated to pay, year one		$ 5.0
Obligated to pay, year two		$ 5.0
Remaining contractual obligated to be pay	$ 10.0

Fair Value Measurement - Schedule of Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Public Warrants \| Level 1 \| Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Public Warrants	$ 936	$ 2,688

Net Loss Per Share - Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Earnings Per Share [Abstract]
Net loss from continuing operations attributable to System1, Inc., basic (in dollars per share)	$ (0.38)	$ (0.25)	$ (0.54)	$ (0.50)
Net loss from continuing operations attributable to System1, Inc., diluted (in dollars per share)	(0.38)	(0.25)	(0.54)	(0.50)
Net loss from discontinued operations, net of tax attributable to System1, Inc., basic (in dollars per share)	0	(0.12)	0	(0.23)
Net loss from discontinued operations, net of tax attributable to System1, Inc., diluted (in dollars per share)	0	(0.12)	0	(0.23)
Basic net loss per share (in dollars per share)	(0.38)	(0.37)	(0.54)	(0.73)
Diluted net loss per share (in dollars per share)	$ (0.38)	$ (0.37)	$ (0.54)	$ (0.73)
Numerator:
Net loss from continuing operations attributable to System1, Inc.	$ (26,373)	$ (23,342)	$ (36,910)	$ (46,978)
Net loss from discontinued operations, net of tax attributable to System1, Inc.	0	(10,959)	0	(21,125)
Net loss attributable to System1, Inc.	$ (26,373)	$ (34,301)	$ (36,910)	$ (68,103)
Denominator:
Weighted-average common shares outstanding used in computing basic net loss per share (in shares)	69,383	93,799	68,582	93,288
Weighted-average common shares outstanding used in computing diluted net loss per share (in shares)	69,383	93,799	68,582	93,288

Net Loss Per Share - Narrative (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Public Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares (in shares)	16.8	16.8	16.8	16.8

Segment Reporting - Narrative (Details)	6 Months Ended
Segment Reporting - Narrative (Details)	Jun. 30, 2024 segment
Segment Reporting [Abstract]
Number of operating segments	2
Number of reportable segments	2

Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment Reporting Information [Line Items]
Total revenue	$ 94,581	$ 96,914	$ 179,498	$ 218,032
Adjusted gross profit	40,868	42,397	74,249	82,453
Other cost of revenue	2,085	2,140	4,247	4,031
Salaries and benefits	33,937	27,054	58,420	55,201
Selling, general, and administrative	13,989	15,340	26,717	30,195
Depreciation and amortization	19,943	19,688	39,747	39,080
Interest expense, net	7,871	12,334	15,841	23,736
Gain from debt extinguishment	(433)	0	(20,109)	0
Change in fair value of warrant liabilities	(1,501)	2,018	(1,752)	609
Loss before income tax	(35,023)	(36,177)	(48,862)	(70,399)
Owned and Operated Advertising
Segment Reporting Information [Line Items]
Total revenue	77,396	77,300	146,426	183,325
Adjusted gross profit	27,378	27,589	49,840	57,428
Partner Network
Segment Reporting Information [Line Items]
Total revenue	17,185	19,614	33,072	34,707
Adjusted gross profit	$ 13,490	$ 14,808	$ 24,409	$ 25,025

Segment Reporting - Schedule of Revenues Disaggregated by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 94,581	$ 96,914	$ 179,498	$ 218,032
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	91,215	93,410	172,897	210,609
Other countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 3,366	$ 3,504	$ 6,601	$ 7,423

Stock-Based Compensation - Total Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Stock-based compensation expense	$ 3,442	$ 4,294	$ 7,412	$ 10,126

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	1 Months Ended
	Jul. 31, 2024	Jun. 30, 2024
Stock Appreciation Rights (SARs) \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock appreciation rights granted (in shares)	22,400,000
Vesting period	7 years
Stock Appreciation Rights (SARs) \| Tranche I SARs \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of award vesting rights (as a percent)	25.00%
Stock appreciation rights, outstanding	$ 50.0
Stock Appreciation Rights (SARs) \| Tranche II SARs \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of award vesting rights (as a percent)	25.00%
Stock appreciation rights, outstanding	$ 60.0
Stock Appreciation Rights (SARs) \| Tranche III SARs \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of award vesting rights (as a percent)	25.00%
Stock appreciation rights, outstanding	$ 70.0
Stock Appreciation Rights (SARs) \| Tranche IV SARs \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of award vesting rights (as a percent)	25.00%
Stock appreciation rights, outstanding	$ 80.0
Restricted Stock Units (RSUs) \| Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock appreciation rights granted (in shares)	3,100,000
Class A Common Stock \| Stock Appreciation Rights (SARs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant awards were reserved and authorized for issuance (in shares)		23,800,000

Discontinued Operations - Narrative (Details) $ / shares in Units, £ in Millions, $ in Millions		3 Months Ended	6 Months Ended
	Aug. 30, 2022 USD ($) shares	Jun. 30, 2023 USD ($)	Jun. 30, 2024 GBP (£)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares	Nov. 30, 2023 USD ($) $ / shares shares
Class A Common Stock
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Common stock outstanding (in shares) \| shares					69,255,000	65,855,000
Common stock, par value (in dollars per share) \| $ / shares					$ 0.0001	$ 0.0001
Paysafe \| Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Credit card processing fees		$ 1.0		$ 2.1
Just Develop It Limited \| Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Monthly payment for desk occupancy \| £			£ 0.1
Just Develop It Limited \| Related Party \| Waiver
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Quarterly payments	$ 10.0
Just Develop It Limited \| Related Party \| Waiver \| Class A Common Stock
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of shares in waiver agreement (in shares) \| shares	50,000,000.0
2023 Award Modification \| Protected Incentive Plan \| Class A Common Stock
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Incentive plan for eligible recipients total	$ 100.0
Cash rewards	$ 20.0
JDIL \| Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale							$ 240.0
Common stock outstanding (in shares) \| shares							29,100,000
JDIL \| Discontinued Operations, Held-for-sale \| Class A Common Stock
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Common stock, par value (in dollars per share) \| $ / shares							$ 0.0001

Discontinued Operations - Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net loss from discontinued operations	$ 0	$ (10,959)	$ 0	$ (21,125)
JDIL \| Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		50,324		97,060
Cost of revenue (excluding depreciation and amortization)		37,225		74,674
Salaries and benefits		16,047		26,594
Selling, general, and administrative		2,395		4,712
Depreciation and amortization		8,364		18,346
Total operating expenses		64,031		124,326
Operating loss		(13,707)		(27,266)
Other expense, net		8		57
Loss from discontinued operations before income taxes		(13,715)		(27,323)
Income tax benefit		(231)		(1,306)
Net loss from discontinued operations		$ (13,484)		$ (26,017)

Discontinued Operations - Depreciation, Amortization, Capital Expenditures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Stock-based compensation expense	$ 3,442	$ 4,294	$ 7,412	$ 10,126
Income Loss Ongoing Equity Method Investment In Discontinued Operation After Disposal Extensible Enumeration Not Disclosed Flag				Stock-based compensation
JDIL \| Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation and amortization		$ 8,364		$ 18,346
Stock-based compensation expense				21,726
Capital expenditures				$ 1,053

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