System1 (SST) AI Stock Analysis

• Market Cap: $70.59M
• Dividend Yield: N/A
• Average Volume (3M): 54.96K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.22
• Revenue Growth: -12.76%
• EPS Growth: 56.53%
• Country: US
• Employees: 300
• Sector: Industrials
• Sector Strength: 78
• Industry: Specialty Business Services
• EPS (TTM): -1.86
• Shares Outstanding: 8,045,545
• 10 Day Avg. Volume: 64,200
• 30 Day Avg. Volume: 54,958
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 3.41
• Enterprise Value/Revenue: 0.72
• Enterprise Value/Gross Profit: 2.52
• Enterprise Value/Ebitda: 32.63
• 1Y Price Target: $8.25
• Price Target Upside: 15.87% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 47 Neutral
• Price Target: $6.50 ▼(-8.71% Downside)

System1's overall stock score is primarily impacted by its poor financial performance, characterized by declining revenues, high leverage, and negative cash flows. Technical analysis and valuation also reflect challenges, with mixed signals and a negative P/E ratio. The earnings call provided some positive insights, particularly in product growth and AI investments, but these are overshadowed by significant marketing challenges and lack of guidance.

Positive Factors

Financial Performance

System1 produced another solid result, beating consensus revenue and EBITDA by $3 million and $2 million, respectively.

Innovation

System1 is at the cutting edge of agentic coding, which could add an entirely new layer of revenue to the story.

Management Confidence

The CEO demonstrated confidence in the company's prospects by purchasing 4.5 million shares through his family foundation.

Negative Factors

Guidance

Management decided not to provide guidance due to macroeconomic uncertainties, reflecting a cautious outlook.

Market Uncertainty

There are a lot of variables that could impact results, including potential uncertainty in the advertising market and disruption from the Google partner network migration.

System1 Business Overview & Revenue Model

Company Description

System1, Inc. develops technology and data science to operate responsive acquisition marketing platform. The company also operates a real-time coupon code search engine and directory that offers coupon destinations for online shoppers. It serves customers in the areas of health, subscription, finance, insurance, business and technology, travel, auto, and other direct-to-consumer businesses. The company was founded in 2013 and is based in Los Angeles, California.

How the Company Makes Money

System1 makes money through its advanced digital marketing and customer acquisition services, which are powered by the RAMP platform. The platform utilizes artificial intelligence and machine learning algorithms to effectively target and acquire high-intent customers for its clients. Key revenue streams include performance-based marketing services, where the company earns revenue based on the success of customer acquisition campaigns it manages. Additionally, System1 partners with various advertisers and publishers to enhance its reach and optimize the performance of its marketing efforts. These partnerships, along with its data-driven approach, are significant contributors to the company's earnings.

System1 Financial Statement Overview

Summary

System1 faces several financial challenges, characterized by declining revenues, profitability issues, high leverage, and negative cash flows. Despite minor improvements in certain areas, the overall financial health of the company is concerning, with significant risks in terms of liquidity and operational sustainability.

Income Statement

System1 has experienced declining revenues and profitability over recent periods, with a negative net profit margin and EBIT margin in TTM (Trailing-Twelve-Months). This reflects challenges in generating profit from its operations, despite a slight improvement in EBITDA margin. Revenue growth has been negative, indicating a downward trajectory.

Balance Sheet

The balance sheet shows high leverage with a substantial debt-to-equity ratio, which poses a risk in volatile market conditions. The return on equity is negative due to consistent net losses, and the equity ratio has been decreasing, indicating a weakening equity position. However, the company maintains some liquidity with cash equivalents available.

Cash Flow

Cash flow metrics indicate significant challenges, with negative free cash flow and operating cash flow to net income ratio suggesting inefficiencies in converting revenue to cash. Free cash flow has been decreasing, highlighting potential liquidity issues and limitations in funding operations without external financing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	333.52M	343.93M	401.97M	664.94M	688.39M	475.98M
Gross Profit	95.70M	152.36M	46.72M	15.37M	86.64M	134.98M
EBITDA	7.38M	14.00M	-4.48M	-427.61M	64.72M	52.92M
Net Income	-80.02M	-74.67M	-227.22M	33.00M	33.00M	63.76M
Balance Sheet
Total Assets	419.15M	459.13M	605.47M	1.16B	517.62M	218.68M
Cash, Cash Equivalents and Short-Term Investments	43.91M	63.61M	135.34M	8.90M	47.90M	29.01M
Total Debt	270.28M	274.98M	355.42M	422.55M	170.45M	179.97M
Total Liabilities	351.50M	374.13M	436.15M	687.67M	60.43M	266.91M
Stockholders Equity	67.19M	80.26M	135.28M	383.98M	457.19M	436.17M
Cash Flow
Free Cash Flow	-6.47M	-5.29M	-32.70M	-17.66M	-7.78M	40.42M
Operating Cash Flow	-5.22M	-5.25M	-24.74M	-7.29M	-1.24M	46.55M
Investing Cash Flow	-6.18M	-6.25M	203.18M	-454.45M	-6.54M	68.17M
Financing Cash Flow	-21.11M	-63.96M	-74.07M	-27.73M	-34.59M	-128.07M

System1 Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.12
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SST, the sentiment is Positive. The current price of 7.12 is above the 20-day moving average (MA) of 6.40, above the 50-day MA of 6.65, and above the 200-day MA of 6.27, indicating a bullish trend. The MACD of 0.34 indicates Negative momentum. The RSI at 54.98 is Neutral, neither overbought nor oversold. The STOCH value of 62.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SST.

System1 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$2.64B	13.96	15.18%	3.63%	2.94%	43.39%
NTIP	57 Neutral	$33.96M	―	-5.10%	6.69%	-92.03%	-20.56%
OMEX	54 Neutral	$88.57M	―		―	-18.53%	―
SGRP	52 Neutral	$28.18M	2.10	-47.70%	―	-44.47%	-203.41%
SST	47 Neutral	$70.59M	―	-84.85%	―	-12.76%	56.53%
SMX	―	$2.56M	―	-352.74%	―	―	―
LICN	―	$3.19M	―		―	―	―

System1 Corporate Events

System1 Reports Q2 2025 Financial Results

On August 7, 2025, System1, Inc. released its supplemental financial information for the quarter ending June 30, 2025, revealing a net loss from continuing operations of $21.54 million. Despite the loss, the company’s marketing platform revenue showed resilience, with a return on traffic acquisition costs remaining stable, indicating ongoing efforts to manage operational expenses and optimize revenue generation.

System1 Announces Reverse Stock Split Implementation

On June 11, 2025, System1, Inc. announced the implementation of a reverse stock split for its Class A and Class C Common Stock at a ratio of one post-split share for every ten shares, effective at 5:00 p.m. Eastern Time. This move, aimed at regaining compliance with NYSE listing standards, will see the company’s Class A Common Stock begin trading on a split-adjusted basis on June 12, 2025, under the existing symbol ‘SST’ with a new CUSIP number. The reverse stock split reduces the number of issued and outstanding shares and proportionally adjusts the number of shares issuable under equity incentive plans, without affecting the par value or authorized shares. Stockholders will receive cash in lieu of fractional shares, and the split does not alter any stockholder’s percentage interest in the company’s equity.

System1 Announces Reverse Stock Split Effective June 11

On June 10, 2025, System1, Inc. held its Annual Meeting of Stockholders, where several key proposals were approved, including amendments to its 2022 Incentive Award Plan and 2024 Stock Appreciation Rights Plan. The company also announced a reverse stock split at a 1-for-10 ratio, effective June 11, 2025, to increase the trading price of its Class A Common Stock and maintain its NYSE listing. These changes aim to enhance System1’s market positioning and operational flexibility.