System1 (SYS1) AI Stock Analysis

• Market Cap: £55.83M
• Dividend Yield: 1.14%
• Average Volume (3M): 23.48K
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.31
• Revenue Growth: 24.67%
• EPS Growth: 119.90%
• Country: UK
• Employees: 160
• Sector: Communication Services
• Sector Strength: 92
• Industry: Advertising Agencies
• EPS (TTM): 0.21
• Shares Outstanding: 12,689,073
• 10 Day Avg. Volume: 26,228
• 30 Day Avg. Volume: 23,482
• PEG Ratio: 0.15
• Price to Book (P/B): 5.47
• Price to Sales (P/S): 2.06
• P/FCF Ratio: 15.68
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £681.50
• Price Target Upside: 54.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 78 Outperform
• Price Target: 498.00p ▲(13.18% Upside)

System1's strong financial performance and positive corporate events are the most significant factors driving the stock's score. The company's robust revenue growth, high profitability, and strategic initiatives are complemented by a reasonable valuation. Technical analysis indicates moderate strength, with some resistance at higher levels.

System1 Business Overview & Revenue Model

Company Description

System1 Group PLC, together with its subsidiaries, provides marketing and market research consultancy services. The company offers a range of tools, such as predictive marketing tool that uses the wisdom of the crowd to identify winning concepts; and ad-testing tool that identifies the emotional impact of advertising. It operates in the Americas, the United Kingdom, rest of Europe, and the Asia Pacific. The company was formerly known as BrainJuicer Group PLC and changed its name to System1 Group PLC in March 2017. System1 Group PLC was founded in 1999 and is headquartered in London, the United Kingdom.

How the Company Makes Money

System1 generates revenue primarily through a cost-per-action (CPA) model, where clients pay for specific actions taken by users, such as clicks, leads, or conversions. The company also earns money through display advertising and search engine marketing services, where it charges clients based on impressions or clicks. Key revenue streams include partnerships with various online publishers and advertisers, enabling System1 to access a broad inventory of ad placements. The company further benefits from its proprietary technology that enhances targeting and performance optimization, driving higher engagement rates and, consequently, increased earnings.

System1 Financial Statement Overview

Summary

System1 demonstrates strong financial health with robust income growth, improved profitability, and solid cash flow generation. The company effectively manages its leverage with a low Debt-to-Equity Ratio, ensuring stability and growth. However, ongoing market fluctuations could impact future revenue growth.

Income Statement

The income statement shows a strong improvement in revenue and profit margins. The company achieved a Gross Profit Margin of 87.0% and a Net Profit Margin of 6.8% in the last annual period, indicating efficient cost management. Revenue growth of 28.2% year-over-year reflects a robust upward trend. EBIT Margin improved to 10.3%, and EBITDA Margin reached 14.7%, demonstrating increased operational efficiency. However, the company must remain cautious of market fluctuations impacting future revenue.

Balance Sheet

The balance sheet reflects a stable financial position with a Debt-to-Equity Ratio of 0.03, indicating low leverage and reduced financial risk. Return on Equity is solid at 19.2%, showcasing effective use of equity capital to generate profits. The Equity Ratio of 55.3% suggests a healthy capital structure. Nonetheless, maintaining equity growth while managing liabilities remains crucial for long-term stability.

Cash Flow

Cash flow analysis reveals significant improvements, with a Free Cash Flow Growth Rate of 370.7% year-over-year, highlighting strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio of 2.9 indicates effective cash management. The Free Cash Flow to Net Income Ratio of 2.5 further emphasizes strong liquidity and reinvestment potential. However, the company should focus on sustaining positive free cash flow over time.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	37.43M	37.43M	30.02M	23.41M	24.10M	22.84M
Gross Profit	31.48M	32.86M	26.12M	19.72M	20.20M	19.11M
EBITDA	6.71M	6.70M	4.40M	2.04M	1.10M	4.30M
Net Income	4.47M	4.47M	2.03M	404.00K	955.00K	1.69M
Balance Sheet
Total Assets	21.98M	21.98M	19.09M	14.98M	18.59M	17.41M
Cash, Cash Equivalents and Short-Term Investments	12.83M	12.83M	9.61M	5.72M	11.17M	9.01M
Total Debt	526.00K	526.00K	346.00K	1.46M	5.01M	5.08M
Total Liabilities	7.88M	7.88M	8.52M	6.37M	10.33M	10.17M
Stockholders Equity	14.10M	14.10M	10.57M	8.61M	8.26M	7.23M
Cash Flow
Free Cash Flow	5.42M	4.92M	5.10M	-1.88M	3.90M	3.71M
Operating Cash Flow	5.55M	5.51M	5.93M	-628.00K	4.04M	3.91M
Investing Cash Flow	-595.00K	-595.00K	-833.00K	-1.25M	-138.00K	-198.00K
Financing Cash Flow	-1.37M	-1.33M	-1.12M	-3.82M	-1.95M	-1.09M

System1 Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 440.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SYS1, the sentiment is Neutral. The current price of 440 is above the 20-day moving average (MA) of 434.60, above the 50-day MA of 426.92, and below the 200-day MA of 535.32, indicating a neutral trend. The MACD of 4.34 indicates Negative momentum. The RSI at 54.02 is Neutral, neither overbought nor oversold. The STOCH value of 45.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:SYS1.

System1 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SYS1	78 Outperform	£55.83M	12.48	36.26%	1.14%	24.67%	119.90%
PEBB	73 Outperform	£83.77M	14.75	7.08%	3.19%	0.88%	10.37%
SAA	70 Neutral	£207.27M	16.44	33.95%	0.84%	-12.89%	―
CAU	60 Neutral	£47.10M	9.61	-24.72%	5.07%	-5.93%	―
Sector *	60 Neutral	$44.04B	1.91	-11.99%	3.99%	2.50%	-38.33%
EBQ	52 Neutral	£28.49M	―	-9.50%	―	-4.28%	12.79%
SFOR	48 Neutral	£135.13M	99.88	-42.53%	4.67%	-16.14%	-5856.63%

System1 Corporate Events

System1 Founder Increases Stake with Significant Share Purchase

System1 Group PLC announced that its Founder and President, John Kearon, has purchased 101,558 ordinary shares at a price of £4.32 each, increasing his total shareholding to 23.01% of the company’s voting rights. This transaction, conducted on the London Stock Exchange, underscores Kearon’s confidence in the company’s future prospects and may influence investor perception positively, potentially impacting the company’s market position.

System1 Group Reports Q1 FY26 Revenue Decline Amidst Strong US Growth and Innovation Focus

System1 Group PLC reported a 7% decline in total revenue for Q1 FY26 compared to the previous year, primarily due to cautious client spending in Europe and currency fluctuations. Despite these challenges, the company saw a 19% increase in innovation revenue and strong new business performance, with over 80 new client wins contributing to growth. The US market showed robust performance, with platform revenue reaching a record high. System1 also launched a new product targeting digital advertising and maintained a healthy net cash position. The company remains optimistic about achieving a 15% revenue growth for FY26, driven by strong US and UK operations and continued investment in innovation.

System1 Group Reports Robust Financial Growth and Strategic Investments

System1 Group PLC reported a strong financial performance for the fiscal year ending March 31, 2025, with total revenue increasing by 25% to £37.4 million and profit before tax rising by 71% to £5.3 million. The company experienced significant growth in platform revenue, which rose by 39%, and added over 300 new clients, contributing to a 49% increase in US revenue. The board proposed an increased ordinary dividend and a special dividend, reflecting confidence in the company’s growth prospects. The company also plans to invest an additional £2 million in FY26 to accelerate growth and enhance its innovation proposition.

System1 Founder John Kearon Transitions to Non-Executive Role

System1 Group PLC announced that its founder, John Kearon, will transition from his role as Founder and President to a non-executive director position starting September 1, 2025. Kearon will also chair a new board committee, QualCo, to provide strategic guidance and maintain the company’s leadership in creative effectiveness. This move is expected to strengthen System1’s market position by leveraging Kearon’s expertise in behavioral science and emotion-driven market research.

System1 Group PLC Announces Change in Voting Rights

System1 Group PLC, a UK-based company, has announced a change in its voting rights structure due to an acquisition or disposal of shares by Ennismore Fund Management Limited. The notification reveals that Ennismore’s voting rights in System1 have decreased from 4.84% to 3.88%, indicating a reduction in their stake. This change could impact System1’s shareholder dynamics and influence within the company, potentially affecting its strategic decisions and market positioning.

Octopus Investments Increases Stake in System1 Group PLC

System1 Group PLC, a UK-based company, has announced a change in its shareholder structure. Octopus Investments Limited has increased its voting rights in System1 Group PLC from 5.04% to 6.06%, crossing a significant threshold. This change in holdings could impact the company’s decision-making process and influence its strategic direction.

System1 Group PLC Unveils 2025 Long-Term Incentive Plan

System1 Group PLC has announced the launch of its 2025 Long-Term Incentive Plan (LTIP), which aims to align executive incentives with shareholder value through long-term performance and sustainable growth. The plan includes nil-cost options over ordinary shares for executive team members, replacing the previous 2021 LTIP. The options vest over three dates, contingent on achieving specific revenue and profit targets, with a maximum of 10% of total share capital available under the plan. This initiative is expected to strengthen System1’s market position by motivating leadership to meet ambitious financial goals.