System1, Inc.SST

System1, Inc. Goodwill & Intangibles Disclosure

10-KFiled Mar 11, 20263 min read
Goodwill, Internal-Use Software Development Costs, Net, and Intangible Assets, Net
Goodwill

In the second quarter of 2025, as a result of organizational restructuring, we changed our identified segments and determined there are now two operating and reportable segments, Marketing and Products. There was no change to the Partner Network reporting unit. See Note 11, Segment Reporting, for further discussion of our operating and reportable segments. Goodwill was $82.4 million as of December 31, 2025 and 2024, all of which was attributable to the Partner Network reporting unit.

During the fourth quarter of 2025, we performed our annual impairment test and determined each reporting unit's fair value exceeded its carrying amount. No impairment of goodwill was identified for any of the periods presented. There were no events or changes in circumstances subsequent to our annual impairment test which indicate that the carrying amount of a reporting unit may exceed its fair value as of December 31, 2025. If revenue and gross profit performance deteriorate further, it is possible that there could be impairment of Goodwill at our Partner Network reporting unit and Intangible Assets Groups in future periods.

Internal-use software development costs, net and intangible assets, net

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

December 31, 2025
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Internal-use software development costs
$
28,325 
$
(14,653)
$
13,672 
Intangible assets:
Developed technology
$
196,403 
$
(192,670)
$
3,733 
Trademarks and trade names
236,053 
(92,250)
143,803 
Software
5,100 
(4,891)
209 
Customer relationships
2,900 
(2,556)
344 
Total
$
440,456 
$
(292,367)
$
148,089 
December 31, 2024
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Internal-use software development costs
$
21,393 
$
(6,957)
$
14,436 
Intangible assets:
Developed technology
$
196,128 
$
(143,386)
$
52,742 
Trademarks and trade names
236,053 
(68,650)
167,403 
Software
5,100 
(3,616)
1,484 
Customer relationships
2,900 
(2,188)
712 
Total
$
440,181 
$
(217,840)
$
222,341 

The internal-use software development costs includes construction in progress which is not being amortized of $2.9 million and $5.0 million as of December 31, 2025 and 2024, respectively.

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

For the Year Ended
December 31, 2025
December 31, 2024
Amortization expense for internal-use software development
$
7,696 
$
4,594 
Amortization expense for intangible assets
$
74,527 
$
74,660 

Amortization expense was presented as follows in the Statements of Operations (in thousands):

For the Year Ended
December 31, 2025
December 31, 2024
Cost of revenue
$
53,042 
$
51,041 
Selling, general, and administrative
$
29,181 
$
28,213 

We test our amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Our amortizable intangible assets primarily consist of trademarks and trade names and developed technology. During 2025 and 2024, no impairment of our amortizable intangible assets was identified. However, due to strategic operational decisions, it is reasonably possible that our estimate that we will recover the carrying amount of these assets from future operations could change in the near term.
As of December 31, 2025, the expected amortization expense associated with our intangible assets and internal-use software development costs was as follows (in thousands):

2026
$
36,185
2027
26,757
2028
25,080
2029
24,336
2030
23,600
Thereafter
25,803
Total amortization expense
$161,761

Historical Timeline

Fiscal YearFiled
2025Mar 11, 2026Showing above
2024Mar 10, 2025
2023Mar 15, 2024
2022Jun 6, 2023

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareFair ValuePP&ELeasesSegmentsDebtCommitmentsStock CompensationNew StandardsPay vs Performance