System1 (SST) AI Stock Analysis

• Market Cap: $56.41M
• Dividend Yield: N/A
• Average Volume (3M): 29.66K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.14
• Revenue Growth: -20.49%
• EPS Growth: 25.95%
• Country: US
• Employees: 300
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): -1.97
• Shares Outstanding: 8,045,545
• 10 Day Avg. Volume: 21,441
• 30 Day Avg. Volume: 29,656
• PEG Ratio: 0.15
• Price to Book (P/B): 7.78
• Price to Sales (P/S): 1.82
• P/FCF Ratio: -118.16
• Enterprise Value/Market Cap: 4.27
• Enterprise Value/Revenue: 0.83
• Enterprise Value/Gross Profit: 1.95
• Enterprise Value/Ebitda: 9.11
• 1Y Price Target: $8.00
• Price Target Upside: 111.64% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 40 Underperform
• Price Target: $4.00 ▲(5.82% Upside)

System1's overall stock score is primarily impacted by its weak financial performance and concerning valuation metrics, which reflect ongoing losses and financial instability. Technical analysis indicates bearish momentum, further weighing on the score. While the earnings call highlights some positive developments in product growth and AI integration, these are overshadowed by significant challenges in the marketing segment and overall financial health.

Positive Factors

Product Segment Growth

The growth in the Product segment, driven by higher-margin products, indicates a robust area of the business that can offset challenges in other segments.

AI Integration and New Product Launches

AI integration and new product launches position System1 to capitalize on technological advancements, potentially enhancing operational efficiency and market competitiveness.

International Expansion

International expansion efforts, such as launching in new markets, can drive revenue growth and diversify System1's income streams, reducing reliance on any single market.

Negative Factors

Marketing Revenue Decline

The significant decline in marketing revenue indicates vulnerability in System1's core business model, potentially impacting overall financial performance.

Loss of Google AFD Product

The discontinuation of a key Google product has disrupted System1's marketing revenue, highlighting dependency on external platforms and the need for diversification.

Traffic Quality Issues

Issues with traffic quality and potential legal disputes could harm System1's reputation and financial health, necessitating improvements in traffic validation processes.

System1 Business Overview & Revenue Model

Company Description

System1 (SST) is a data-driven marketing company that specializes in performance-based advertising and customer acquisition. Operating primarily in the digital marketing sector, System1 leverages proprietary technology and data analytics to optimize online advertising campaigns across various platforms. The company focuses on generating high-quality leads for its clients through its advanced algorithms and extensive network of web properties, delivering measurable results in a cost-effective manner.

How the Company Makes Money

System1 generates revenue primarily through its performance marketing model, where it earns money by driving traffic and leads to its partners on a pay-per-action basis. This means the company is compensated when users take specific actions, such as signing up for services or making purchases, as a direct result of their advertising efforts. Key revenue streams include lead generation, affiliate marketing, and partnerships with various brands looking to enhance their customer acquisition strategies. Additionally, System1 may monetize its owned web properties through display advertising and affiliate commissions, further diversifying its income sources.

System1 Financial Statement Overview

Summary

System1 faces significant financial challenges across its income statement, balance sheet, and cash flow. The company is experiencing declining revenues and profitability, with negative margins and growth rates. While leverage has improved, the overall financial health remains weak, with negative returns on equity and declining cash flows. The company needs to address operational inefficiencies and improve cash generation to stabilize its financial position.

Income Statement

System1's income statement reveals significant challenges. The company has experienced declining revenue over the past few years, with a negative revenue growth rate of -8.6% in the TTM period. Gross profit margins have decreased from 44.3% in 2024 to 43.7% in the TTM period, indicating pressure on profitability. The net profit margin is negative, reflecting ongoing losses. The EBIT and EBITDA margins are also negative, highlighting operational inefficiencies.

Balance Sheet

The balance sheet shows a mixed picture. The debt-to-equity ratio has improved significantly in the TTM period to 0.44 from 3.43 in 2024, indicating reduced leverage. However, the return on equity remains negative, suggesting that the company is not generating sufficient returns on shareholders' equity. The equity ratio is relatively low, indicating potential financial vulnerability.

Cash Flow

Cash flow analysis reveals concerning trends. The free cash flow growth rate is negative at -32.9% in the TTM period, indicating declining cash generation. The operating cash flow to net income ratio is low, suggesting challenges in converting earnings into cash. Although the free cash flow to net income ratio is above 1, it is primarily due to negative net income, which is not a sustainable situation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	289.78M	343.93M	401.97M	664.94M	688.39M	475.98M
Gross Profit	123.78M	152.36M	46.72M	15.37M	86.64M	134.98M
EBITDA	26.45M	14.00M	-4.48M	-51.95M	64.72M	52.92M
Net Income	-66.02M	-74.67M	-227.22M	-367.45M	33.00M	63.76M
Balance Sheet
Total Assets	385.16M	459.13M	605.47M	1.16B	256.91M	518.55M
Cash, Cash Equivalents and Short-Term Investments	54.59M	63.61M	135.34M	8.90M	47.90M	843.64K
Total Debt	27.59M	274.98M	355.42M	422.55M	170.45M	179.97M
Total Liabilities	350.90M	374.13M	436.15M	689.78M	285.31M	82.39M
Stockholders Equity	42.68M	80.26M	135.28M	392.02M	-28.40M	436.17M
Cash Flow
Free Cash Flow	2.43M	-5.29M	-32.70M	-17.66M	54.17M	40.42M
Operating Cash Flow	7.26M	-5.25M	-24.74M	-7.29M	60.70M	46.55M
Investing Cash Flow	-6.39M	-6.25M	203.18M	-454.45M	-6.54M	68.17M
Financing Cash Flow	-18.12M	-63.96M	-74.07M	-27.73M	-34.59M	-128.07M

System1 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.78
• 50DMA: Negative
• 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 SST, the sentiment is Negative. The current price of 3.78 is below the 20-day moving average (MA) of 3.99, below the 50-day MA of 5.80, and below the 200-day MA of 5.57, indicating a bearish trend. The MACD of -0.63 indicates Negative momentum. The RSI at 32.86 is Neutral, neither overbought nor oversold. The STOCH value of 51.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SST.

System1 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LZ	66 Neutral	$1.62B	73.47	16.96%	―	7.17%	-5.86%
DLHC	66 Neutral	$88.05M	19.31	4.12%	―	-10.30%	86.44%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
ACTG	63 Neutral	$316.34M	―	0.90%	―	71.28%	-89.20%
SPIR	49 Neutral	$269.75M	13.88	39.87%	―	-16.52%	―
SST	40 Underperform	$56.41M	-0.59	-99.29%	―	-20.49%	25.95%
TISI	38 Underperform	$73.87M	-1.40	-210.92%	―	3.73%	3.56%

System1 Corporate Events

System1 Inc. Navigates Challenges with Product Growth

System1 Inc.’s recent earnings call painted a picture of mixed fortunes, highlighting significant challenges in its Marketing segment while expressing optimism about the growth and innovation within its Product segment. The company is navigating through the turbulence caused by Google’s product changes and traffic quality issues, yet remains hopeful about its future prospects with AI integration and new product launches.

System1 Inc. Reports Mixed Q3 2025 Results

System1 Inc., a leading omnichannel customer acquisition marketing platform, operates across various consumer verticals such as shopping, travel, and search, leveraging AI and machine learning to enhance its services. In its third quarter of 2025, System1 reported a significant 31% decline in revenue year-over-year, totaling $61.6 million, while GAAP gross profit decreased by 8% to $22.8 million. Despite these declines, the company saw an improvement in its adjusted gross profit margin, which rose to 59% from 42% the previous year, indicating a strategic shift towards higher-margin products.

System1 Reports Q3 2025 Financial Challenges

On November 5, 2025, System1, Inc. released its supplemental financial information for the quarter ended September 30, 2025. The report highlights a decline in revenue and an increase in operating losses compared to previous quarters, reflecting ongoing financial challenges. The company’s marketing platform revenue and traffic acquisition costs were also detailed, indicating a focus on maintaining return on investment despite the financial setbacks.

The most recent analyst rating on (SST) stock is a Sell with a $5.00 price target. To see the full list of analyst forecasts on System1 stock, see the SST Stock Forecast page.

System1 Inc. Earnings Call: Strong Products, Marketing Challenges

System1 Inc. Navigates Strong Product Performance Amidst Marketing Challenges