Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- System1 Inc (SST, Financial) exceeded the high end of guidance on EBITDA, achieving $10.3 million, representing a year-over-year growth of 28%.
- The company's owned and operated products, such as Startpage, MapQuest, and CouponFollow, showed strong performance with revenue up 16% sequentially.
- System1 Inc (SST) has successfully integrated AI into its RAMP platform, enhancing the speed and efficiency of launching new marketing campaigns.
- The company reported a significant increase in international revenue, which now represents 35% of owned and operated revenue, up from 24% in Q3 2023.
- System1 Inc (SST) has managed to reduce operating expenses by 5% sequentially, demonstrating effective cost management.
Negative Points
- The marketing-driven business lines continue to face challenges due to volatility in the Google Search Partner Network, impacting revenue.
- Revenue per session and cost per session both decreased sequentially, marking the third consecutive quarter of declines.
- The company experienced a 17% year-over-year decrease in partner network revenue, highlighting ongoing challenges in this segment.
- System1 Inc (SST) decided not to provide Q4 guidance due to ongoing volatility and uncertainty in the advertising marketplace.
- Despite improvements, the sell side of the business remains a root cause of issues, with fluctuations in what Google pays for traffic sent to the Search Partner Network.
Q & A Highlights
Q: What have you done to resurrect the MapQuest brand, and what gives you confidence in its future growth?
A: Michael Blend, Chief Financial Officer, explained that after acquiring MapQuest from Verizon, System1 invested in technology and added features to improve the user experience. This included enhancing mapping capabilities, adding points of interest, and improving mobile apps. The launch of a new private mapping app and plans for subscription products are expected to drive future growth.
Q: Does the end of the election season benefit System1 by shifting advertiser focus back to goods and services?
A: Michael Blend noted that the end of election-related advertising should reduce competition on the buy side, potentially lowering costs. However, the decision to withhold guidance is due to volatility in the Google search partner network, not the overall advertising market.
Q: Have there been improvements to the Ramp platform that make it more effective today?
A: Michael Blend highlighted that System1 has made significant improvements to Ramp, particularly in leveraging AI for content creation and advertising. These enhancements have increased the platform's scalability and automation, although the benefits are not yet fully reflected in financial results.
Q: How might changes in administration affect the digital advertising market and System1's business?
A: Michael Blend mentioned that changes in administration could impact antitrust trials and consumer spending, but it's too early to speculate. He noted that System1 thrives in disrupted markets and is prepared to capitalize on any changes.
Q: What is the impact of international markets on System1's business, particularly with TikTok?
A: Michael Blend and Tridivesh Kidambi, CFO, stated that international markets, including partnerships with TikTok, remain a bright spot for System1. International revenue has grown significantly, although at lower rates than domestic markets. TikTok has been responsive to System1's needs, contributing to continued strength abroad.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
