System1, Inc.SST
System1, Inc. Segments Disclosure
Segment Reporting
We previously managed our business across two operating and reportable segments: the monetization of end-users acquired directly by us to our websites and products ("Owned & Operated Advertising"), and the monetization of end-users acquired by our Network Partners ("Partner Network"). In the second quarter of 2025, we had an internal organizational change that resulted in a change in how we manage our businesses. We combined the management of our Partner Network business with the portion of our Owned and Operated Advertising activities related to paid traffic acquisition via advertising costs and direct agency fees ("Marketing") and separately manage our CouponFollow, Startpage and MapQuest businesses which primarily acquire end-users organically ("Products"). This resulted in a change to our operating and reportable segments. We now have two operating and reportable segments: Marketing and Products. All prior year information in the tables below have been revised retrospectively to reflect the change to our reportable segments.
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 adjusted gross profit. The CODM evaluates both potential future, as well as historical budget to actual variances, adjusted gross profit by segment on a quarterly basis to determine the allocation of capital for acquisition marketing, as well as technical and personnel resources. Adjusted gross profit is also used to determine variable compensation expense for certain employees. We have not presented segment assets as our CODM does not regularly use segment assets to evaluate or measure segment performance or allocate resources.
The tables below include the following operating expenses that are not allocated to the reportable segments presented to our CODM, such as other cost of revenue (total cost of revenue excluding traffic acquisition cost and agency fees), salaries and benefits, selling, general and administrative expenses 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 assess segment performance, however these costs are included in reported consolidated net loss before income tax and are included in the reconciliation that follows.
The following table summarizes revenue, segment cost of revenue and segment adjusted gross profit by reportable segments (in thousands):
For The Year Ended December 31, 2025 | |||||||||||||||||
Marketing | Products | Total | |||||||||||||||
Revenue | $ | 172,889 | $ | 93,240 | $ | 266,129 | |||||||||||
Less: segment cost of revenue | 101,403 | 5,537 | 106,940 | ||||||||||||||
Segment adjusted gross profit | $ | 71,486 | $ | 87,703 | $ | 159,189 | |||||||||||
Other cost of revenue | 58,794 | ||||||||||||||||
Salaries and benefits | 92,747 | ||||||||||||||||
Selling, general, and administrative | 69,688 | ||||||||||||||||
Interest expense, net | 27,556 | ||||||||||||||||
Gain on extinguishment of tax receivable agreement liability | (5,253) | ||||||||||||||||
Gain on extinguishment of debt | — | ||||||||||||||||
Change in fair value of warrant liabilities | (275) | ||||||||||||||||
Loss before income tax | $ | (84,068) | |||||||||||||||
For The Year Ended December 31, 2024 | |||||||||||||||||
Marketing | Products | Total | |||||||||||||||
Revenue | $ | 263,388 | $ | 80,537 | $ | 343,925 | |||||||||||
Less: segment cost of revenue | 179,918 | 3,939 | 183,857 | ||||||||||||||
Segment adjusted gross profit: | $ | 83,470 | $ | 76,598 | $ | 160,068 | |||||||||||
Other cost of revenue | 58,745 | ||||||||||||||||
Salaries and benefits | 113,512 | ||||||||||||||||
Selling, general, and administrative | 76,412 | ||||||||||||||||
Interest expense, net | 31,562 | ||||||||||||||||
Gain on extinguishment of debt | (20,109) | ||||||||||||||||
Change in fair value of warrant liabilities | (2,386) | ||||||||||||||||
Loss before income tax | $ | (97,668) | |||||||||||||||
The following table summarizes revenue by geographic region (in thousands):
For the Year Ended | |||||||||||
December 31, 2025 | December 31, 2024 | ||||||||||
United States | $ | 262,959 | $ | 333,069 | |||||||
Other countries | 3,170 | 10,856 | |||||||||
Total revenue | $ | 266,129 | $ | 343,925 | |||||||
Concentrations
The following tables illustrate the concentrations as a percentage of total revenue and total accounts receivable for our key Advertising Partners:
Concentration of revenue from key Advertising Partners
For the Year Ended | |||||||||||
December 31, 2025 | December 31, 2024 | ||||||||||
Google | 67 | % | 78 | % | |||||||
Concentration of accounts receivable from key Advertising Partners | |||||||||||
December 31, 2025 | December 31, 2024 | ||||||||||
Google | 38 | % | 56 | % | |||||||
Microsoft | 7 | % | 8 | % | |||||||
Yahoo | 10 | % | 7 | % | |||||||
As of December 31, 2025, we had two paid search advertising partnership agreements with Google, and one paid search advertising partnership agreement with Microsoft. One of the Google agreements is in effect through September 30, 2027, and the Google agreement that originally was scheduled to remain in effect through February 28, 2027 was terminated for convenience by Google effective as of February 10, 2026. The agreement with Microsoft (our next largest Advertising Partner by revenue) is in effect through December 31, 2026. Under certain circumstances, each of these agreements may be terminated by either us or the respective Advertising Partner immediately, or with minimal notice.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Jun 6, 2023 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.