System1 (SST) Q1 2026 revenue drops to $37.2M as net loss deepens
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
System1, Inc. reported first quarter 2026 results with revenue of $37.2 million, down from $74.5 million a year earlier. GAAP gross profit was $23.3 million with a 63% margin, and adjusted gross profit was $28.2 million with a 76% margin.
The company recorded a GAAP net loss of $57.6 million, compared with a $19.9 million net loss in the prior-year quarter, largely reflecting a $36.8 million impairment of long-lived assets. Adjusted EBITDA was $2.7 million, down from $12.1 million, as management emphasized cost actions and capital structure changes aimed at improving the financial profile.
Positive
- None.
Negative
- Revenue and profitability weakened materially, with Q1 2026 revenue falling to $37.2 million from $74.5 million and GAAP net loss widening to $57.6 million, including a $36.8 million impairment of long-lived assets and a decline in Adjusted EBITDA to $2.7 million from $12.1 million.
Insights
System1’s Q1 shows sharply lower revenue and higher losses despite positive adjusted EBITDA.
System1 generated Q1 2026 revenue of $37.2 million versus $74.5 million a year earlier, indicating a large top-line contraction. GAAP net loss widened to $57.6 million, driven in part by a substantial $36.8 million impairment of long-lived assets.
On an adjusted basis, the company reported Adjusted EBITDA of $2.7 million, down from $12.1 million. Management highlighted cost-saving initiatives and efforts to right-size the capital structure, suggesting a focus on efficiency and balance sheet flexibility alongside a strategic pivot toward AI and consumer-intent opportunities.
Subsequent company communications may clarify how revenue trends, impairment impacts, and the cost actions taken in Q1 2026 influence future quarters and the trajectory of Adjusted EBITDA and GAAP profitability.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Revenue: $37.2 million
GAAP Gross Profit: $23.3 million
Adjusted Gross Profit: $28.2 million
+5 more
8 metrics
Revenue
$37.2 million
Three months ended March 31, 2026; down from $74.5 million in 2025
GAAP Gross Profit
$23.3 million
Q1 2026, with 63% gross margin
Adjusted Gross Profit
$28.2 million
Q1 2026, with 76% margin after amortization adjustment
GAAP Net Loss
$57.6 million
Three months ended March 31, 2026; versus $19.9 million in 2025
Adjusted EBITDA
$2.7 million
Q1 2026; compared with $12.1 million in prior-year quarter
Impairment of long-lived assets
$36.8 million
Non-cash impairment charge in Q1 2026
Depreciation and amortization
$12.1 million
Adjustment in Q1 2026 Adjusted EBITDA reconciliation
Acquisition and restructuring costs
$3.7 million
Q1 2026 Adjusted EBITDA reconciliation
Key Terms
Adjusted EBITDA, non-GAAP financial measures, impairment of long-lived assets, Adjusted Gross Profit, +2 more
6 terms
Adjusted EBITDA financial
"The following table reconciles net loss to Adjusted EBITDA for the periods presented"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
non-GAAP financial measures financial
"The Company makes reference to certain non-GAAP financial measures in the press release."
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
impairment of long-lived assets financial
"Impairment of long-lived assets | 36.8 | | | —"
An impairment of long-lived assets occurs when a company concludes that a physical or intangible asset—like a building, equipment, or a patent—is worth less than its recorded value on the books, so the company writes down that asset to its recoverable amount. For investors this matters because such write-downs reduce reported profits and company net worth, signaling potential problems with future cash flow or that management overpaid for assets; think of it like recognizing that a car you bought has lost more value than you expected.
Adjusted Gross Profit financial
"Adjusted Gross Profit | $ | 28.2 | | | $ | 41.5"
Adjusted gross profit is a company’s revenue from selling goods or services minus the direct costs of producing them, with one-time or unusual items added back or removed to show the core margin. Investors use it like a cleaned-up snapshot of how much a business actually earns on its products, similar to measuring body weight after removing heavy clothes, because it helps compare performance across periods and companies without noise from rare events.
cost of revenue financial
"Less: Cost of revenue | (13.9) | | | (46.1)"
Stock-based compensation financial
"Stock-based compensation & distributions to members | 1.3 | | | 2.7"
Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.
Earnings Snapshot
Revenue: $37.2 million
Q1 2026
Revenue
$37.2 million
GAAP Net Loss
$57.6 million
Adjusted EBITDA
$2.7 million
GAAP Gross Profit
$23.3 million
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 2026
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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1
Section 2 - Financial Information
Item 2.02 - Results of Operations and Financial Condition
On May 12, 2026, System1, Inc. (the “Company”) issued a press release announcing financial results for its quarter ended March 31, 2026. The full text of the Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as expressly set forth by specific reference in such a filing.
The Company makes reference to certain non-GAAP financial measures in the press release. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and reasons for why the Company believes these non-GAAP financial measures are useful are contained in the attached press release.
Section 9 - Financial Statements and Exhibits
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. | Description | ||||
99.1 | Press Release dated May 12, 2026 | ||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
System1, Inc. | |||||||||||
Date: | May 12, 2026 | By: | /s/ Tridivesh Kidambi | ||||||||
Name: | Tridivesh Kidambi | ||||||||||
Title: | Chief Financial Officer | ||||||||||
3
Exhibit 99.1
System1 Announces First Quarter 2026 Financial Results
•Revenue of $37.2 million
•GAAP Gross Profit of $23.3 million, Margin of 63%
•Adjusted Gross Profit of $28.2 million, Margin of 76%
•GAAP Net Loss of $57.6 million
•Adjusted EBITDA of $2.7 million
LOS ANGELES, CA – May 12, 2026 – System1, Inc. (NYSE: SST) ("System1" or the "Company"), which operates flagship internet utilities including CouponFollow, MapQuest, and Startpage.com, and a best-in-class customer acquisition and marketing platform powered by artificial intelligence, today announced its financial results for the first quarter of 2026.
"This quarter marked an important reset for System1 as we narrowed our focus to where we see the greatest opportunities to win: the intersection of AI and consumer intent," commented Michael Blend, System1’s Co-Founder & Chief Executive Officer. "With our best-in-class marketing platform and category-leading offerings, System1 is uniquely equipped to thrive as AI agents become a primary interface for shopping, search and travel. We are agile, focused, and ready to lead in the AI-driven future."
Tridivesh Kidambi, Chief Financial Officer of System1, added, "The actions we took this quarter are expected to deliver meaningful cost savings, while also improving our financial profile going forward. We also continue to make meaningful progress on right-sizing our capital structure, which we believe will give us greater flexibility to invest across our highest-return opportunities. We view this past quarter as a clear inflection point for both the year ahead and the future for our businesses, and we are well-positioned to drive stronger operating performance and long-term shareholder value."
Note: Adjusted Gross Profit and Adjusted EBITDA are non-GAAP metrics that are defined and reconciled at the end of this release.
First Quarter 2026 Highlights
•Significantly reduced our marketing activities for search monetization during the quarter to enable the Company to operate with greater focus, improved execution and adopt a lower go-forward cost structure.
•CouponFollow.com further enhanced its Content Management System with AI-powered tools, delivering fresher content, smarter code testing, and higher-quality coupons to help users save more time and money.
•Startpage.com continued to add key features to its core consumer experience, including sports updates as well as flight status and booking functionality.
•MapQuest.com delivered year-over-year organic traffic growth of 14%, and site-wide revenue growth of 23%, driven by several product releases focused on optimizing the consumer experience.
About System1, Inc.
System1 operates flagship internet utilities including CouponFollow, MapQuest, and Startpage.com, and a best-in-class marketing platform powered by artificial intelligence, enabling third party publishers to monetize and maximize the value of user traffic across a wide range of advertising category verticals. For more information, visit www.system1.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995, particularly any statements or materials regarding System1’s future results. Forward-looking statements include, but are not limited to, statements regarding System1 or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause System1’s actual financial results or operating performance to be materially different from those expressed or implied by these forward-looking statements. Readers or users of this press release should evaluate the risk factors summarized below, which summary list is not exclusive. Readers or users of this press release should also carefully review the "Risk Factors" and other information included in our Annual Report on Form 10-K for the fiscal year ending December 31, 2025, as well as our Form 10-Qs, Form 8-Ks and other reports filed with the Securities and Exchange Commission (the "SEC") from time to time. Please refer to these SEC filings for additional information regarding the risks and other factors that may impact System1’s business, prospects, financial results and operating performance.
Such risks, uncertainties and assumptions include, but are not limited to: (1) our ability to maintain our key relationships with network partners and advertisers, including our monetization arrangements; (2) our ability to collect, process, effectively utilize and safely store the first party data that we obtain through our services; (3) the performance of our marketing platform; (4) changes in customer demand for our services and our ability to quickly adapt to such changes; (5) our ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (6) our ability to improve and maintain adequate internal control over financial reporting and remediate identified material weaknesses; (7) our ability to successfully source and complete acquisitions and to integrate the operations of companies System1 acquires; (8) our ability to raise financing in the future as and when needed or on market terms; (9) our ability to compete with existing competitors and the entry of new competitors in the market; (10) changes in applicable laws or regulations impacting the business in which we operate and our ability to maintain compliance with the various laws that our business and operations are subject to; (11) our ability to protect our intellectual property rights; (12) our integration of new and developing technologies, including the adoption of AI and machine learning technologies; and (13) substantial doubt about our ability to continue as a going concern; and (14) other risks and uncertainties indicated from time to time in our filings with the SEC. The foregoing list of factors is not exclusive.
Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this press release. System1’s independent auditors have not audited, reviewed, compiled or performed any procedures with respect to the forward-looking statements for the purpose of their inclusion in this press release, and accordingly, do not express an opinion or provide any other form of assurance with respect thereto for the purpose of this press release. System1 will not undertake any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that such trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.
Non-GAAP Measures: Adjusted Gross Profit and Adjusted EBITDA
Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and represent key metrics used by System1's management and board of directors to measure the operational strength and performance of its core business, to establish budgets, and to develop operational goals for managing its business. Adjusted Gross Profit is defined as gross profit plus depreciation and amortization related to cost of revenues. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, impairment
expense, stock-based compensation expense, deferred compensation, gain (loss) on extinguishment of debt, non-cash revaluation of warrant liability and acquisition and restructuring costs.
System1 believes Adjusted Gross Profit and Adjusted EBITDA are relevant and useful metrics for investors because it allows investors to view performance in a manner similar to the method used by management. There are limitations on the use of Adjusted Gross Profit and Adjusted EBITDA and it may not be comparable to similarly titled measures of other companies. Other companies, including companies in System1's industry, may calculate non-GAAP financial measures differently than System1 does, limiting the usefulness of those measures for comparative purposes.
Adjusted Gross Profit should not be considered a substitute for gross profit. Adjusted EBITDA should not be considered a substitute for income (loss) from operations, net income (loss), or net income (loss) attributable to System1 on a consolidated basis that System1 reports in accordance with GAAP. Although System1 uses Adjusted Gross Profit and Adjusted EBITDA as financial measures to assess the performance of its business, such use is limited because it does not include certain costs necessary to operate System1's business. System1's presentation of Adjusted Gross Profit and Adjusted EBITDA should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items.
Exhibit 99.1
Unaudited Condensed Consolidated Statements of Operations
(In thousands)
Three Months Ended March 31, | |||||||||||
2026 | 2025 | ||||||||||
Revenue | $ | 37,234 | $ | 74,513 | |||||||
Operating expenses: | |||||||||||
Cost of revenue | 13,860 | 46,077 | |||||||||
Salaries and benefits | 20,800 | 24,988 | |||||||||
Selling, general, and administrative | 16,789 | 16,574 | |||||||||
Impairment of long-lived assets | 36,822 | — | |||||||||
Total operating expenses | 88,271 | 87,639 | |||||||||
Operating loss | (51,037) | (13,126) | |||||||||
Other expense: | |||||||||||
Interest expense, net | 6,629 | 7,085 | |||||||||
Change in fair value of warrant liabilities | — | 32 | |||||||||
Total other expense, net | 6,629 | 7,117 | |||||||||
Loss before income tax | (57,666) | (20,243) | |||||||||
Income tax benefit | (75) | (387) | |||||||||
Net loss | (57,591) | (19,856) | |||||||||
Less: Net loss attributable to non-controlling interest | (10,524) | (3,973) | |||||||||
Net loss attributable to System1, Inc. | $ | (47,067) | $ | (15,883) | |||||||
Exhibit 99.1
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except for par values)
March 31, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 51,514 | $ | 86,887 | |||||||
Restricted cash, current | 500 | 1,243 | |||||||||
Accounts receivable, net | 53,257 | 57,289 | |||||||||
Prepaid expenses and other current assets | 6,468 | 4,061 | |||||||||
Total current assets | 111,739 | 149,480 | |||||||||
Restricted cash, non-current | 379 | 379 | |||||||||
Property and equipment, net | 1,459 | 1,562 | |||||||||
Internal-use software development costs, net | 13,897 | 13,672 | |||||||||
Intangible assets, net | 101,358 | 148,089 | |||||||||
Goodwill | 82,407 | 82,407 | |||||||||
Operating lease right-of-use assets | 8,722 | 9,120 | |||||||||
Other non-current assets | 364 | 263 | |||||||||
Total assets | $ | 320,325 | $ | 404,972 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 14,290 | $ | 22,016 | |||||||
Accrued expenses and other current liabilities | 33,278 | 46,277 | |||||||||
Operating lease liabilities, current | 1,467 | 1,427 | |||||||||
Debt, net | 76,816 | 76,718 | |||||||||
Total current liabilities | 125,851 | 146,438 | |||||||||
Operating lease liabilities, non-current | 7,753 | 8,183 | |||||||||
Long-term debt, net | 221,648 | 228,399 | |||||||||
Deferred tax liability | 3,549 | 4,013 | |||||||||
Other non-current liabilities | 548 | 520 | |||||||||
Total liabilities | 359,349 | 387,553 | |||||||||
Stockholders' equity: | |||||||||||
Class A common stock - $0.0001 par value; 500,000 shares authorized, 8,302 and 8,225 Class A shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | 1 | 1 | |||||||||
Class C common stock - $0.0001 par value; 25,000 shares authorized, 1,813 and 1,813 Class C shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | — | — | |||||||||
Additional paid-in capital | 880,302 | 878,859 | |||||||||
Accumulated deficit | (894,746) | (847,679) | |||||||||
Accumulated other comprehensive loss | (222) | (157) | |||||||||
Treasury stock, at cost - 190 and 137 shares as of March 31, 2026 and December 31, 2025, respectively | (759) | (557) | |||||||||
Total stockholders' equity attributable to System1, Inc. | (15,424) | 30,467 | |||||||||
Non-controlling interest | (23,600) | (13,048) | |||||||||
Total stockholders' equity | (39,024) | 17,419 | |||||||||
Total liabilities and stockholders' equity | $ | 320,325 | $ | 404,972 | |||||||
Exhibit 99.1
The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented (in millions):
Three Months Ended March 31, | |||||||||||
2026 | 2025 | ||||||||||
Revenue | $ | 37.2 | $ | 74.5 | |||||||
Less: Cost of revenue | (13.9) | (46.1) | |||||||||
Gross profit | 23.3 | 28.4 | |||||||||
Add: amortization included in cost of revenue | 4.9 | 13.1 | |||||||||
Adjusted Gross Profit | $ | 28.2 | $ | 41.5 | |||||||
Exhibit 99.1
The following table reconciles net loss to Adjusted EBITDA for the periods presented (in millions):
Three Months Ended March 31, | |||||||||||
2026 | 2025 | ||||||||||
Net loss | $ | (57.6) | $ | (19.9) | |||||||
Adjustments: | |||||||||||
Income tax benefit | (0.1) | (0.4) | |||||||||
Interest expense | 6.6 | 7.1 | |||||||||
Depreciation and amortization | 12.1 | 20.5 | |||||||||
Impairment of long-lived assets | 36.8 | — | |||||||||
Other expense | (0.1) | — | |||||||||
Stock-based compensation & distributions to members | 1.3 | 2.7 | |||||||||
Acquisition and restructuring costs | 3.7 | 2.1 | |||||||||
Adjusted EBITDA | $ | 2.7 | $ | 12.1 | |||||||
Investors:
System1 Investor Relations
ir@system1.com
FAQ
How much revenue did System1 (SST) generate in Q1 2026?
System1 reported Q1 2026 revenue of $37.2 million. This compares with $74.5 million in the prior-year quarter, reflecting a significant decline in sales for the period as the company refocuses on AI-driven consumer intent opportunities.
What was System1’s (SST) net income or loss for Q1 2026?
System1 recorded a GAAP net loss of $57.6 million in Q1 2026. This was substantially larger than the $19.9 million net loss a year earlier, influenced by a $36.8 million impairment of long-lived assets and other operating factors.
What Adjusted EBITDA did System1 (SST) report for Q1 2026?
System1 reported Adjusted EBITDA of $2.7 million for Q1 2026. This was lower than the $12.1 million Adjusted EBITDA in the prior-year quarter, after adjustments including interest, taxes, depreciation, amortization, impairment, stock-based compensation, and acquisition and restructuring costs.
How did System1’s (SST) gross profit and margins perform in Q1 2026?
System1 posted GAAP gross profit of $23.3 million with a 63% margin in Q1 2026. Adjusted gross profit was $28.2 million with a 76% margin, reflecting the impact of amortization adjustments on reported gross profitability for the quarter.
What major non-cash charges affected System1’s (SST) Q1 2026 results?
Q1 2026 results included a $36.8 million impairment of long-lived assets. This non-cash charge significantly contributed to the $57.6 million GAAP net loss, alongside depreciation, amortization, and other standard Adjusted EBITDA reconciliation items such as stock-based compensation and restructuring costs.
Did System1 (SST) discuss strategic or financial actions in Q1 2026?
Management highlighted cost-saving actions and capital structure right-sizing taken during Q1 2026. They indicated these steps are expected to improve the company’s financial profile and flexibility as System1 focuses on AI-driven consumer intent and its core internet utility brands.