System1 — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $26.0 million, a decrease from $61.6 million in the same period of 2025.
• GAAP Gross Profit was $20.7 million with an 80% margin, compared to $22.8 million in Q3 2025.
• Adjusted Gross Profit was $21.9 million with an 84% margin, down from $36.1 million in Q3 2025.
• GAAP Net Loss was $61.5 million, an increase from a net loss of $22.0 million in Q3 2025.
• Adjusted EBITDA was $(0.7) million, a decline from $9.9 million in Q3 2025.
• Cash and cash equivalents decreased to $12.4 million as of September 30, 2026, from $86.9 million as of December 31, 2025.
• Total debt (current and long-term) was $220.0 million as of September 30, 2026, down from $305.1 million as of December 31, 2025.
• Goodwill decreased to $30.9 million from $82.4 million, reflecting a $51.5 million impairment charge recorded in the quarter.
• Impairment of long-lived assets totaled $12.1 million.
• A gain on troubled debt restructuring of $13.4 million was recorded.

Business Segments and Product Lines:

• The MapQuest app reached #1 on both the App Store and Android Play Store, driving over 3 million new app installs during the quarter.
• MapQuest launched new product offerings including surveillance camera coverage, an MCP server for agentic transactions, and a business listing solution for small and medium-sized businesses.
• Startpage was integrated into Mozilla's Firefox browser as an additional privacy choice.
• Traffic to the Startpage mobile browser app increased 47% year-over-year, reaching an all-time high of 712,000 daily searches.
• Cently, CouponFollow's shopping browser extension, introduced features to surface more coupon codes, highlight higher success rates, and automatically save and organize products.

Market and Competitive Landscape:

• Google's AI overviews continued to siphon traffic from publishers and reduce monetization for independent search engines.
• Google displaced organic links with AI overviews on search results pages, driving a loss of monetizable organic traffic to CouponFollow.
• The company faces pressure on Google monetization at Startpage.

Risks and Challenges:

• Substantial doubt exists regarding the company's ability to continue as a going concern.
• Risks include the ability to maintain key relationships with network partners and advertisers, and the ability to collect and utilize first-party data.
• Challenges involve the performance of the marketing platform, adapting to changing customer demand, and competing with existing or new competitors.
• The company faces risks related to internal control over financial reporting, raising future financing, and compliance with changing laws and regulations.
• Risks also include the integration of new technologies like AI and machine learning, and the ability to protect intellectual property rights.

Management Commentary and Tone:

• CEO Michael Blend described the third quarter as "challenging" due to Google's AI impact and stated the company responded with a comprehensive strategic review and reallocation of resources to AI tailwinds.
• CFO Tridivesh Kidambi noted that results reflect continued pressure on monetization and the priority is maximizing cash flow and preserving liquidity while investing selectively.
• Management indicated the decision to delist from the NYSE is intended to lower costs and free the team to focus on growth initiatives.

Other Key Points:

• The company announced its intention to voluntarily delist from the New York Exchange (NYSE) and move to the OTC Venture Market.
• The company recorded a $51.5 million impairment of goodwill and a $12.1 million impairment of long-lived assets.
• The company recognized a $13.4 million gain on troubled debt restructuring.
• Total assets decreased to $192.5 million from $405.0 million, primarily due to asset impairments and cash burn.
• Stockholders' equity turned negative to $(77.7) million from $30.5 million.