System1 (SST) Fiscal Q2 Revenue Tops 6%

System1 (SST 12.40%), a digital marketing and technology company focused on privacy-centric search, couponing, and online mapping products, released its earnings for the second quarter of fiscal 2025 on August 7, 2025. The standout news was GAAP revenue of $78.1 million, exceeding analyst expectations of $73.3 million, while adjusted profitability metrics improved meaningfully. Adjusted EBITDA rose to $11.7 million. Management again withheld guidance for future quarters, highlighting continued uncertainty from advertising partner volatility and broader advertising demand risks. Overall, the quarter showed resilience in core products and ongoing cost discipline, even as revenue from marketing-driven segments lagged prior-year levels.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Strategic Focus

System1 uses proprietary data and technology, most notably its Responsive Acquisition Marketing Platform (RAMP), to connect consumers and advertisers across various digital channels. Its portfolio includes owned-and-operated product lines such as Startpage (a privacy-focused search engine), MapQuest (an online mapping service), and CouponFollow (a coupon and shopping platform). The company’s core business is to acquire engaged users through these sites or partner channels, generating revenue primarily via search and display advertising.

Recently, System1 has been focused on expanding its owned-and-operated (O&O) products segment, using artificial intelligence (AI) and first-party data to boost growth and profitability. It has prioritized operational efficiency, cost reduction, and integration of prior acquisitions. The company’s ability to navigate changes in the digital advertising ecosystem—especially evolving privacy standards and the shift away from third-party tracking—remains a key driver of its long-term competitiveness.

Quarterly Highlights: Revenue, Profitability, and Product Developments

The most notable result for the period was System1’s GAAP revenue of $78.1 million, which exceeded consensus estimates by approximately 6.48%. Despite this positive surprise, GAAP revenue was still down 17% year-over-year compared to the prior-year quarter, showing continued headwinds for the company’s marketing-driven business.

Adjusted gross profit rose 6.0% to $41.0 million, and adjusted EBITDA climbed 18.0% year over year. The GAAP net loss narrowed to $21.5 million, improving by 38% from the prior-year figure. These gains came largely through cost discipline, with salaries and overall operating expenses each falling more than 18% year-over-year.

The owned-and-operated products segment was a particularly bright spot. Revenue from these in-house brands reached $24.0 million, up 34% year over year. Adjusted gross profit in the segment increased 32% year-over-year. Startpage, the privacy-focused search engine, posted more than a 25% rise in daily active users in June 2025 compared to the prior year. CouponFollow, System1’s primary digital coupon platform, reported a 44% jump in organic sessions.

System1 also launched new product initiatives, including 1.org, a search engine dedicated to nonprofit support. Additionally, Startpage and MapQuest began offering a white-label mapping solution for third parties, broadening their commercial reach. This focus on product innovation and user experience is central to the company's strategy of leveraging first-party data and privacy-centric services.

Investment in artificial intelligence featured prominently in management’s commentary. The company continued integrating AI-powered “Agentic coding” solutions to boost internal productivity and accelerate the rollout of new features. System1 claims this approach has dramatically increased its development speed, allowing it to test and refine new initiatives with fewer resources. The RAMP platform remains a central engine for campaign optimization, particularly as regulatory changes make privacy-compliant first-party data more valuable.

In the marketing-driven business, the company continued to face revenue declines tied to shifts in digital ad demand and ongoing volatility with partner advertising networks, especially Google. The deliberate decision to hold back on issuing financial guidance for the next quarter stems from uncertainty regarding its largest partner’s advertising marketplace and wider changes in online advertising demand.

From a financial standpoint, System1 ended the quarter with $63.6 million in cash and equivalents, with debt totaling $263.3 million. Book value for equity declined, due mainly to ongoing intangible asset amortization.

System1 does not currently pay a dividend.

Looking Ahead: Management Commentary and Future Watch Points

Management did not provide forward financial guidance for the next quarter or the remainder of fiscal 2025. The decision is directly tied to uncertainty about digital advertising market conditions, possible effects of ongoing shifts in Google’s partner network policies, and broader macroeconomic risks such as advertising demand volatility and tariffs. This marks the second consecutive quarter (Q1 and Q2 2025) without explicit guidance, reflecting ongoing caution from the leadership team regarding the predictability of near-term results.

For the next several quarters, key areas to watch will include the health and growth rate of the owned-and-operated products segment, System1's ongoing ability to control costs, and any updates regarding its main advertising partners—particularly changes in Google’s policies or the wider regulatory environment affecting online data and advertising. Another potential area for further scrutiny is the company's leverage. Debt remains high in relation to cash and book equity. Investors and analysts will also likely focus on user and engagement growth for Startpage, MapQuest, and CouponFollow, as these metrics signal the underlying health and scalability of the company’s proprietary product lines.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.