NYSE:SST System1 Q2 2025 Earnings Report $5.58 -0.31 (-5.18%) Closing price 08/8/2025 03:58 PM EasternExtended Trading$5.33 -0.26 (-4.64%) As of 08/8/2025 06:30 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast System1 EPS ResultsActual EPS-$2.23Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ASystem1 Revenue ResultsActual Revenue$78.11 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ASystem1 Announcement DetailsQuarterQ2 2025Date8/7/2025TimeAfter Market ClosesConference Call DateThursday, August 7, 2025Conference Call Time5:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by System1 Q2 2025 Earnings Call TranscriptProvided by QuartrAugust 7, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: SystemOne reported Q2 revenue of $78M and adjusted EBITDA of $11.7M, marking an 18% year-over-year increase in EBITDA. Positive Sentiment: The Products segment saw revenue grow 34% year-over-year (and 8% sequentially), driven by strong performances in Startpage, MapQuest, and Coupon Follow. Negative Sentiment: Volatility in Google's partner network continued to pressure the Owned & Operated marketing business, keeping overall marketing revenue down 29% year-over-year despite sequential gains. Positive Sentiment: Heavy investment in AI-powered agentic coding is rebuilding SystemOne’s legacy platform ahead of schedule and is expected to improve margins and enable future M&A services. Positive Sentiment: Management asserts the cash-generative Products segment alone is worth more than the company’s current enterprise value, implying significant upside if market revaluation occurs. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallSystem1 Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xThere are 6 speakers on the call. Operator00:00:00Thank you for standing by, and welcome to the second quarter twenty twenty five earnings conference call for SystemOne. Joining me today to discuss SystemOne's business and financial results are our Co Founder and Chief Executive Officer, Michael Blend and Chief Financial Officer, Tridavesh Gadabi. A recording of this conference call will be available on our Investor Relations website shortly after this call has ended. I'd like to take this opportunity to remind you that during the call, we will be making certain forward looking statements. This includes statements relating to the operating performance of our business, future financial results and guidance, strategy, long term growth and overall future prospects. Operator00:00:36We may also make statements regarding regulatory compliance matters. These statements are subject to known and unknown risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call, in particular, described in our risk factors included in our annual report on Form 10 ks for fiscal year twenty twenty four filed on March 10 as well as the current uncertainty and unpredictability in our business, the markets, and the global economy generally. You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on management's assumptions and beliefs as of date hereof, and System one disclaims any obligation to update any forward looking statements except as required by law. Our discussion today will include non GAAP financial measures, including adjusted EBITDA and adjusted gross profit. Operator00:01:26These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non GAAP financial measures, including a reconciliation of our non GAAP financial measures to our most comparable historical GAAP financial measures, may be found on our Investor Relations website. I would now like to turn the conference call over to System Co Founder and Chief Executive Officer, Michael Blend. Speaker 100:01:54Thanks, Kyle. Good afternoon, everyone, and thank you for joining SystemOne on our Q2 earnings call. I'm happy to report Q2 was a very solid quarter for SystemOne with solid execution driven by our company wide adoption of AgenTi coating. Our adjusted EBITDA came in at $11,700,000 up 18% year over year. Second quarter revenue was approximately $78,000,000 and adjusted gross profit was 41,000,000 representing a 6% year over year increase. Speaker 100:02:26Our owned and operated products continued to perform well and had a particularly strong Q2. Revenue increased 34% year over year and 8% sequentially. We saw great performance from each of our major products, which includes Startpage, our private search engine MapQuest, our mapping solution and Coupon Follow, our leading promo code service. We have strong momentum across the entire product portfolio. Our teams are rolling out regular product improvements, and in turn, consumers are responding very favorably. Speaker 100:03:01In our marketing business lines, we continue volatility at our largest revenue source, which is Google. While the overall Google advertising market is relatively stable, the Google partner network we work with is going through significant changes. And while our team is doing a nice job navigating the Google volatility, our marketing businesses are not yet back in growth mode. On the technology front, our heavy investment in AI powered agentic coding is paying off. We set an ambitious road map for product development and platform expansion in 2025, and we've been executing ahead of schedule on everything. Speaker 100:03:39We believe that our investments are going to drive revenue growth while at the same time improving margins. I want to talk briefly about the skill set we have developed around Agintiq coating. While many companies talk about engineering efficiencies gained from Agintiq coating, SystemOne is one of the few that is using it to rebuild a sophisticated legacy technology platform. Now this is a very complex project as we have to essentially keep our trains running while rebuilding the engine and tracks at the same time. Looking forward, I think there's a real opportunity to leverage our early adopter agentic coding skill set to help other companies in a similar way. Speaker 100:04:20There are literally thousands of legacy technology platforms that can benefit from this skill set, and there are several ways System One can participate in the upside of modernizing their platforms. We intend to pursue this opportunity pretty aggressively in the future. Now let's get into more details on our product segment, which as I mentioned is on a strong run. We feel it is really important for investors to understand our Products business as management believes this segment alone is worth significantly more than investors currently value our entire company. Products revenue was $24,000,000 up 34% year over year and 8% sequentially. Speaker 100:05:00Adjusted gross profit was $22,700,000 up 32% year over year and up 8% sequentially. This segment is performing very well and is well positioned to sustain its momentum going forward. I'd like to spend some time on each of our major product lines as I know many of our investors have been focused on our marketing segment and may not be as familiar with our product segment. Let's start first with Coupon Follow, our promo code and couponing service. Coupon Follow is comprised of three major product segments. Speaker 100:05:32First, we have our Coupon Follow website, which is a leading couponing and promo code service in Google's organic rankings. Consumers visit our Coupon Follow website when they're looking to find a promo code as they are completing online purchases. In addition to our website, we also have our Sently browser extension, which is a patent protected solution that automatically inserts promo codes at checkout when shoppers are on a shopping site. Sently operates under its own brand and also powers b to b promo code solutions for third party web browsers. And finally, Coupon Follow offers a nascent cashback shopping business that consumers use to obtain cash rebates when they shop online. Speaker 100:06:13Combined, all these businesses are on a roll, and Coupon user sessions are up over 40% year over year. Now let's talk about Startpage, our private search engine that competes with DuckDuckGo. Startpage offers a search solution that enables consumers to search the Internet while maintaining their privacy. Our our Startpage search technology is a sophisticated combination of search results from Google and Bing, proprietary search widgets like mapping, and a privacy solution that protects our users' online identity and search history. Similar to Coupon Follow, Startpage comprises several business lines. Speaker 100:06:52We have our core Startpage search engine, desktop browser extensions, and a suite of private mobile browsers that integrate our search engine and maintain user privacy while they're browsing the Internet. SharpPage is growing very quickly, and our users are up 30% year over year. In addition to our core search engine, we recently introduced two new products in the search and AI space. First, we just launched a new AI privacy product called Vanish Private AI by Startpage. Vanish is a mobile app that allows people to to maintain their user privacy while using a variety of popular AI chatbots like ChatGPT. Speaker 100:07:34We also recently leveraged our Startpage search engine technology to launch 1.org, our new charitable search engine. 1.org lets users support charitable causes like hunger relief and animal welfare just by searching the web. While we don't expect vanish to displace chat GPT or 1.org to overtake Google, the search market is so huge and profitable that a small market share translates into meaningful high margin revenue. We have shown that with Startpage, and we look to replicate our success with our newer offerings. Our last major product line is MapQuest, the OG of online mapping that I'm sure many of you have fond memories of. Speaker 100:08:15We acquired MapQuest several years ago from Verizon, and frankly, the brand was in significant decline when we acquired it. I'm really pleased that we enabled we've been able to turn around MapQuest and get it back into growth mode. MapQuest is made up of several complementary businesses. The most well known is our original MapQuest consumer facing service, which includes both our website and a suite of mobile apps. MapQuest also offers a B2B mapping service where we power mapping for other companies and get paid a usage based license fee. Speaker 100:08:47And finally, we operate a subscription based mobile app called Road Warrior, where we help delivery drivers more efficiently plan their driving routes. Like our other products, MapQuest usage is surging, and visits from Google are up over 40% annually. Overall, our products business is doing really well. If you're a current system one investor or considering investing in our company, it's very important that you understand this business segment. Our products business requires low CapEx and low OpEx, and as a result, it is highly cash generative. Speaker 100:09:19On a stand alone basis, and this is important, we believe our combined product businesses are worth significantly more than the current enterprise value of the entire company. As an investor in our current market price, you effectively are buying our product segment at a significant discount, while holding an option on the upside as our marketing business rebounds. You should also remember that as a result of a corporate reorganization we did last summer, our products business segment is not collateral securing our credit agreement. Overall, we think that the market does not appreciate the true value of our product segment, particularly when you understand our overall corporate and capital structure. Alright. Speaker 100:10:03Now let's go on into more detail on our marketing segment, which includes both our owned and operated and partner marketing businesses. As you know, marketing has been going through a rough patch but remains a significant profit generator. Overall revenue came in at $54,000,000 reflecting a 29% year over year decline, but we did see a 4% increase sequentially. The annual decline primarily was driven by a 36% decrease in our advertising spend. Adjusted gross profit was $20,000,000 down 17% year over year and down 10% sequentially. Speaker 100:10:38The sequential decline was driven by a lower return on TAC, our traffic acquisition costs, driven by volatility from the O and O businesses. Advertising spend was up 13% from Q1, but our return on spend decreased significantly. The decline in our marketing segment is solely related to issues in our O and O marketing business that we attribute to volatility in the Google Search partner network. O and O revenue has been a significant decline over the past couple of years with both revenue and gross profit down significantly year over year. While the decline in this business line has masked our success in our Products Group, we anticipate the recent declines in our Owner Marketing business will begin leveling off over the next couple of quarters, and we're going to have some positive comps going forward. Speaker 100:11:22On a positive note, our partner marketing business has been performing quite well throughout the volatility. In our partner business, we work with Google, Bing, and Yahoo, and that diversification has helped us weather the Google storm. The partner business continues to remain focused on moving partners to Google's new RSOC product, and we're seeing really good success with that migration effort. In q two, average revenue per partner increased 29% sequentially, and we had approximately two twenty active partners in Q2. While we wait for the Google volatility to stabilize, we've been busy using agentic coding to regard, protect and scale our proprietary marketing platform. Speaker 100:12:04These efforts are working. We have connected Ramp into more buy side networks, and we continue to make large strides on advertising campaign automation. In q two, we launched over 82,000 marketing campaigns, up a 100% from q one. This marketing campaign automation is going be a critical part of going forward when we look to start scaling our O and O marketing business again. We're well positioned to capitalize once the Google volatility stabilizes over the next couple of quarters. Speaker 100:12:35Looking ahead to the rest of 2025, we remain cautiously optimistic. Our owned and operated products continue to show strong fundamentals, and we've been making large strides with our argentic coating efforts. Our biggest challenge over the next core couple quarters is related to continued volatility with Google, which remains our largest revenue partner. That said, we're putting ourselves in a good position to capitalize on the marketing side as we see stability from Google. Overall, I believe System one is really well positioned for the medium and long term. Speaker 100:13:06As I mentioned earlier, our product segment is growing, high margin, and generates a lot of cash. As a result, we believe that segment alone is worth more than the value the market currently places on all of System one. And as the O and O marketing business stabilizes and starts growing again, I'm confident smart investors will realize how undervalued our business is. System one's leadership team remains fully aligned with our shareholders. And as a group, we remain one of the company's largest stakeholders. Speaker 100:13:35Last quarter, I significantly added to my family's ownership stake in System one, and I continue to believe our equity is significantly undervalued. As System One continues our transition back to growth mode, we appreciate your continued support and look forward to delivering long term value. With that, I'll hand it over to Tridi to go over our financials. Take it away, Tridi. Speaker 200:13:56Thanks, Michael. First off, I'd like to spend a little bit of time discussing the change in our segment reporting starting with this quarter. Going forward, we are reporting our business across two segments, marketing and products. Our marketing business segment consists of our paid acquisition business lines, where we either deploy advertising spend directly to buy side networks to acquire traffic to our owned and operated websites to monetize, or we have network partners who acquire the traffic in exchange for a revenue share. This is the business we previously called our partner network. Speaker 200:14:32Through our marketing platform, we manage our acquisition channels holistically between our direct buy side relationships as well as via the traffic sourced by our network partners. And so we believe it is more helpful to present these businesses on a combined basis. Our key drivers for this business are TAC or traffic acquisition costs, which we define as the combination of our direct advertising spend and the revenue share we pay to our partners. In essence, this is the total cost to acquire traffic to our platform. And the way we measure the efficiency of our TAC is our second driver, RTAC, or return on traffic acquisition spend. Speaker 200:15:10This is defined as marketing platform revenue divided by TAC. Marketing platform revenue is defined as marketing GAAP revenue plus partner revenue share and represents the total revenue that flows through our proprietary platform from our advertising partners. Our product segment consists of our flagship consumer products, Coupon Follow, MapQuest, and Startpage. These products generate traffic primarily through organic means, and our key metrics here will remain the same as before, total sessions to the site and RPS or revenue per session. Shortly after this call concludes, we will be posting an updated supplemental financial information file on our Investor Relations website, which will include these updated metrics for the current period as well as historical information back to 2024. Speaker 200:16:01Now let's move on to the financial results for the quarter. We had mixed results in the second quarter as volatility in the owned and operated portion of our marketing business offset some solid growth in the other business lines. Despite that volatility, we delivered good year over year growth in key financial metrics, including an increase of 18% on adjusted EBITDA. Unfortunately, owned and operated marketing volunteer volatility is impacting sequential trends and the overall progress we are making. Let's get into the details. Speaker 200:16:34Q two revenue was $78,100,000 representing a 17% year over year decrease, but a sequential increase of 5%. Marketing GAAP revenue is $54,100,000 down 29% year over year, but up 4% sequentially. Products revenue was $24,000,000 representing a 34% year over year increase and a sequential increase of 8%. This growth shows the tremendous progress we have made over the last year and the overall strength of the businesses within this segment. Adjusted gross profit was $41,000,000 up 6% year over year and down 1% sequentially. Speaker 200:17:13Marketing segment profit was $19,600,000 down 17% year over year and down 10% sequentially. The year over year decline was driven by a 4% year over year decrease in TAC as well as a slight year over year decrease in our return on TAC or RTAC from 120% to 117%. As a result, total platform revenue for the marketing business was down 6% year over year, all driven by increased volatility and declines in the owned and operated marketing businesses. Offsetting this O and O volatility, we've seen real momentum in our partner network business in driving the marketing segment sequentially. While return on TAC dropped eight bps from '25, total TAC increased 34% from the first quarter, driven primarily by increased volume from the partner businesses. Speaker 200:18:01Marketing platform revenue also grew 25% sequentially. Products segment profit was $22,700,000 up 34 year over year and up 8% sequentially. This is driven both by a year over year increase in sessions of 12% as well as a year over year increase in RPS from $04 to $05 Product segment profit represents 54% of total segment profit, up from 42% in the 2024. On to operating expenses and adjusted EBITDA. In Q2, operating expenses net of add backs were $29,300,000 up 1% year over year and in line with Q1. Speaker 200:18:42Reducing costs in order to create greater operating leverage continues to be a focus, and we expect OpEx to decline in the second half of the year by roughly 5% versus the 2025. Adjusted EBITDA was $11,700,000 in Q2, up 18 percent year over year and down 3% from last quarter. With respect to liquidity, we ended the quarter with $63,600,000 of unrestricted cash on our balance sheet, which is an increase of approximately $20,000,000 compared to Q1. Although the cash balance increased, working capital declined, largely driven by a buildup in short term liabilities. As of June 30, we had an outstanding balance of $270,000,000 of term loan debt under our credit agreement, and our net consolidated leverage at quarter end was approximately four times. Speaker 200:19:27We also have 50,000,000 of availability under our revolver as of the end of '25, which is currently undrawn. Based on the volatility we saw in q two in the marketing segment and the ongoing changes in the Google marketplace, we will not be providing guidance for '25 or for the full year. We believe it is prudent to continue to wait for greater clarity on these items before offering guidance. While we acknowledge the current volatility has created some near term challenges, particularly in driving sustainable growth within the marketing segment, we remain confident in the strength of our platform and the ability to leverage new technologies for our marketing initiatives. The product segment continues to perform well, and we are focused on driving operational efficiencies. Speaker 200:20:10All in all, we are confident in the fundamental resilience of our business and remain committed to executing our strategic priorities to position the company for long term growth. Thank you for joining us today. Speaker 300:20:21Thank you. We will now begin the question and answer session. Your first question comes from the line of Tom Forte with Maxim Group. Line is open. Please go ahead. Speaker 400:20:51Thank you. So Michael and Tridi, congrats on the quarter and the progress you're making in a challenging environment. I have three questions. I'll go one at a time. On the product side, I definitely think you have underappreciated, undervalued nice portfolio there. Speaker 400:21:08How should investors think about the KPIs we should focus on, such as for coupon follow and MapQuest? Is it traffic sales trends? What what are the KPIs we should focus on? Speaker 100:21:21Yeah. Thanks Tom for the question. Thanks for joining. Appreciate your, your compliments on the product side which we agree. We think we've got a great portfolio which is underappreciated. Speaker 100:21:31And really each of those big business segments is doing really well. Shreedy, maybe you can talk a little bit about the KPIs. Speaker 200:21:37Yeah. Thanks for the question, Tom. Good to hear from you. So yeah, I mean, nailed it and it's the KPIs you would traditionally think about for you know, these types of kind of flagship online brands. So specifically, you know, we think about traffic, and we think about the rate at which we monetize that traffic. Speaker 200:21:56And so both of those are the metrics that we we we will be disclosing going forward. So sessions in terms of measuring traffic and then revenue per session in terms of in terms of measuring that monetization rate. Speaker 400:22:11Excellent. And then for my second question, recognizing you're not providing guidance, can you at least provide high level comments in the following? To the extent you're able to talk about the second half of this year, should investors think about the comparison of lapping last year's presidential election? I would think to the extent that you're both a buyer and seller of digital advertising, lapping the election would be favorable for you. Speaker 100:22:36I think, yeah. No. I I think you're right there, Tom. So so as some of the political spending dies off, which has a tendency to drive pricing across all marketplaces, we should be able to step in and get a bit lower pricing than we would have seen last last year. I would say that on the o and o marketing side, as we mentioned, you know, lot of that is not our issues are not really related to what's going on in the overall advertising market. Speaker 100:23:06It's much more specific to volatility in the Google search partner network. So on in the O and O segment, on marketing specifically, we would expect as that volatility lessens and the Google product that we products that we work with there start maturing a bit more, that's really where we're gonna see really sustained growth. We do expect that to happen over the next couple quarters. Speaker 400:23:30Great. Thanks, Michael. Alright. So last one for me. Historically, you've been able to engage in strategic m and a to advance your efforts, often buying things just unbelievably great valuations. Speaker 400:23:42What are your thoughts on strategic m and a and your ability to access capital if necessary to take advantage of opportunities? Speaker 100:23:50Yeah. So we appreciate you asking. You're correct. We've done, I think, 12 or 13 deals in our in our history. The vast majority of those have been pretty good deals that we ended up buying at effective low multiples and we're able to put some substantial growth behind them. Speaker 100:24:08And I think you're seeing that with the three big products that we talked about, Startpage, MapQuest and Coupon Follow. Each of those good deals. We were able to layer market on top of them, rebuild their platforms, and and then kind of go forward. So we think there's a pretty big opportunity for us on the m and a front going forward. Not only do we have historical ability to buy companies, retool their platforms, and get them growing again. Speaker 100:24:36The stuff that we're doing with agentic coding, you know, I talked about it briefly in my remarks, but but I talk about a little bit more here. We were pretty much early adopters in terms of using agentic coding to rebuild our technology platform. And while I talked about it for a couple sentences in my prepared remarks, I'll riff a little bit here. It's really hard to take an existing technology platform and rebuild it on the fly. And I've been doing this for, I think, twenty five years, and we've tried to do it several times. Speaker 100:25:06And it's just always more challenging than you think and gonna take longer than you would expect. With our agenda coding skills, we've actually been able to do it really successfully already. We're doing it ahead of schedule. And I'd estimated about 25% of the time it would have taken us previously. And so specifically on the M and A front, what we're gonna be looking to do going going forward is really find those companies that have legacy platforms that could benefit from a real makeover of their platform, make those technology platforms more efficient, a lot more cost effective, reduce OpEx, a lot of the stuff we've been doing internally. Speaker 100:25:43And as I've said, there's thousands of legacy digital companies out there both on the digital publishing side, on the software side, everywhere. And so we think that within those thousands of companies, we're going to find some pretty good opportunities for us. As far as accessing capital, we do think on a go forward basis as our numbers are improving and we're starting to show the business going, getting some momentum behind it, we'll have fairly straightforward access to capital to do those deals. And, Trudy, you wanna follow-up on anything there? Speaker 200:26:15No. I I I think you I think you captured it. Know, again, I think for the for the right deal, you know, we're confident that, you know, we'll be able to access the capital we need to to execute on it. So to to Michael's point, we're being very judicious about how we're approaching it, but we do think opportunities will be out there. Speaker 400:26:32Great. Thanks, Michael. Thanks, Trudy, for taking my questions. Speaker 200:26:34Thanks, Tom. Speaker 100:26:35Thanks, Tom. Thanks, Tom. Speaker 300:26:39Your next question comes from the line of Dan Kurnos with Benchmark. Your line is open. Please go ahead. Speaker 500:26:45Yeah. Afternoon, guys. Nice, continued progress here. Let's, maybe I'll go a little bit in reverse. Michael, just in in terms of what you just mentioned on agentic coding, I mean, you kind of alluded to helping optimize others' coding platforms. Speaker 500:27:05I mean, are you gonna white label an agentic coding product? Are you planning on providing kind of back end services to help optimize, you know, maybe some of the I don't know. Pick pick your vertical SMB market, however you wanna attack it, Michael. It's just it's a super interesting opportunity since it's worked for you, and there's plenty of companies out there with all the vibe coders and everyone else that are, you know, trying to, to help, advance this marketplace. So maybe just give us your thoughts on that unless I'm off base. Speaker 100:27:40Sure, Anne. Thanks for dialing in, Dan. Good to chat with you. So I don't, right now, see us releasing a standalone agentic coding product to help people, you know, re redo their platforms. I I guess that's a possibility in the future. Speaker 100:27:54But right now, our current strategy that we'd be looking at would be to, you know, partner with companies that don't have as much experience as we have kind of going through this process and really work with them so that they could probably keep their core teams operating on maintaining their existing platform and then bring in kind of an think of it as an agentic coding SWAT team that can come in and and rebuild that entire platform. And at at the end of that process, you basically shift all of your business over to the new platform, which is essentially what we're doing here at SystemOne. And and so, you know, think of us almost as consultants coming in. But in the in the case of m and a, we're we're doing that on our own behalf. So so, you know, we acquire a company, kind of rebuild their their platform, rip out the old legacy platform and and kind of go on with with that business. Speaker 100:28:49We don't have to do it via M and A. So there's a few different models that we've been thinking about that don't require us putting our own capital to use. Instead, we participate in the upside that we bring to the companies. But in in general, general, it's bringing our team in to to help companies that don't have the experience that we have. Speaker 500:29:12Yeah. That makes sense, Michael. You throw a big help button up on MapQuest. They'll come to you. The the next question I have for you is look. Speaker 500:29:20Obviously, products has has been on a great trajectory right now, really good in q two. You know, the the SEO environment's a mess, as you well know. And given that, you know, given what Google is doing, and I'll get to partner network in a second, you know, discoverability is just getting a little bit harder. Like, how are you optimizing kind of your brand footprint, and how do you expect to continue optimizing it as kind of, you know, AI and agentic browsing starts, cropping up more and more? Speaker 100:29:54Yeah. We've been good good question. We've been pretty fortunate in that the main products that we have are not the type of how to or informational products that typically are getting displaced by by anything happening on the Google side. So, you know, for instance, Startpage, you know, has has no SEO exposure. So Startpage is our search engine, which people are just coming directly to use it. Speaker 100:30:18MapQuest, in large part of that business, you know, we've got an enterprise business in there, we've got a direct consumer base, which is using our apps and and websites. We do have some Google exposure, you know, where we do get placement in Google and same with coupon follow as well. Coupon follow has got a lot of Google placements. But the nice thing about those two particular categories, both mapping and promo codes, they're not the kind of categories where Google can just provide a single answer. So when you look at what what ChatGPT and obviously the Google competitive products are, What they're really good at is you ask a question to just give you an answer. Speaker 100:31:00Mapping really isn't that kind of question. So if you're looking, you know, driving directions to a place, you really need a mapping service behind that. And same with couponing. You know, in in in couponing and promo codes, users are looking for a wide variety of promo codes that are working. They're not just looking for a single one. Speaker 100:31:18It's a little bit harder to displace those products. So, know, you in some ways, we've been fortunate that the categories that we're in and that, you know, those products we acquired were all kind of search and browsing related. So we just don't have we we we don't see ourselves as having the big exposure that a lot of knowledge based companies have. Speaker 500:31:37Yeah. And I I I that resonates, Michael. I I guess, you know, maybe the flip side is to the extent that, you know, e comm and other kind of pairing start taking place. I mean, you guys are clearly savvy enough on the AI side to create whatever API is necessary or to work maybe with the agentic guys to sort of, help them learn, on how to maybe attach some products to you know, if they're sponsored results or things like that. I don't know if that's a crazy statement, Michael, since nothing's been developed yet, but just a thought. Speaker 100:32:09Yeah. No. We'd love I mean, we'd love to work with with any of the platforms to integrate our mapping technology and our mapping expertise, our promo code technology. I don't think the search our start page search technology is something that would necessarily pop into those, but we do have, like, a lot of people coming to us to try to work with us on the search engine side as well. Speaker 500:32:33And then just lastly on the, you know, Google Partner Network stuff, I mean, yeah, obviously, kinda sloppy over there right now. I mean, you you know, the return on TAC was still pretty impressive in q two. I assume that that's probably continuing to attrite. I mean, should we think of you pulling back, on the O and O side in the near term until you get more favorable return again, or are you gonna kinda just weather the storm? And is it really you know, how much of it is platform change? Speaker 500:33:02How much of it how much of it is just query volume, how much of it is data analytics? Just any additional color would be super helpful. Speaker 100:33:09Sure. So so the what you know, there's several questions in there. I don't see us pulling back. So what we're gonna do essentially, what's happened just to kinda talk about it a little bit higher level is Google has rolled out a new product that their partner network is is shifting towards. It's called RSOC, which is an acronym for related search on content. Speaker 100:33:32And the idea behind that product is Google wants to ensure that there's a high quality of traffic going through that system and ultimately converting when when those consumers get to the advertisers sort of advertising via through Google. This is a pretty dramatic change for Google to shift from their old partner their old partner advertising network called AFD over to RSOC. And it's just been a little bit rocky. A lot of that is, you know, Google figuring out the ecosystem. It's a new product that that they're rolling out, and it's just kinda fine tuning that product such that, you know, that there's there's not volatility in it. Speaker 100:34:11So we don't anticipate, you know, we don't anticipate pulling back in that business. What we would anticipate though is it and as Google is working the kinks out of its RSOC product, we we do we do see continued volatility. And so so what we are hoping and, you know, we are in close contact with Google is that over the next couple quarters, that volatility is gonna go away, at which point we're gonna be quite well positioned to get that business growing again. So that's kind of a long winded answer, Dan. I I don't know if I addressed everything in there and happy to answer any follow ups on it. Speaker 500:34:53No. It's fine. I mean, so much for opt in, right, to Speaker 100:34:56a and d. Yeah. Yeah. Yeah. No. Speaker 500:34:59We'll see how it plays out, Michael. I I appreciate the color, and I was trying to keep it a little higher level, without getting too much in the weeds, but that's really helpful and color for me, and we can also Thanks, Michael. Thanks, Trudy. Speaker 100:35:10Appreciate it, Dan. Yep. Speaker 300:35:15Thank you for your questions. I will now turn the call back to Michael Blend, CEO and cofounder, for closing remarks. Speaker 100:35:22Well, thanks, everyone, for joining us on the our q two earnings call. It was nice to be able to report another good quarter. We are banging away at the business. We feel like we've got a good opportunity ahead of us. And if you are a current investor or or thinking about taking a position in us, please feel free to reach out to us for for more color. Speaker 100:35:42We'll talk to you next next quarter. Thank you very much. Speaker 300:35:47This concludes today's call. Thank you for attending. You may now disconnect.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) System1 Earnings HeadlinesSystem1, Inc. (SST) Q2 2025 Earnings Call TranscriptAugust 9 at 11:01 AM | seekingalpha.comSystem1 (SST) Fiscal Q2 Revenue Tops 6%August 8 at 11:07 AM | theglobeandmail.comPresidential Bombshell: $150T Resource to Be Released as soon as this Summer?Something extraordinary is happening in Washington. For the first time in over a century, a sitting President could release a national treasure that's been tied up in red tape, for generations. I'm talking about a $150 trillion American asset that's scattered across all 50 states. While the mainstream media focuses on political theater, this story is quietly developing behind closed doors. | Paradigm Press (Ad)System1 Announces Strong Second Quarter 2025 Financial ResultsAugust 8 at 11:07 AM | finance.yahoo.comSystem1 to Report Second Quarter 2025 Financial ResultsJuly 24, 2025 | finance.yahoo.comSystem1, Inc. (SST) Latest Stock News & Headlines - Yahoo FinanceJuly 2, 2025 | finance.yahoo.comSee More System1 Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like System1? Sign up for Earnings360's daily newsletter to receive timely earnings updates on System1 and other key companies, straight to your email. Email Address About System1System1 (NYSE:SST) provides omnichannel customer acquisition platform services through its proprietary responsive acquisition marketing platform in the United States, the United Kingdom, Canada, the Netherlands, and internationally. It operates through two segments: Owned and Operated Advertising, and Partner Network. The company engages in the provision of acquiring traffic to its owned and operated websites, as well as revenue-sharing arrangements and related services. It also operates MapQuest, a web-based navigation service that delivers turn-by-turn direction services to users; Info.com, a metasearch engine that consumers can use to search for relevant information; HowStuffWorks, a commercial website focused on helping people solve problems in their daily lives by using various types of digital media to easily breakdown and explain complex concepts, topics, terminology and mechanisms; Startpage, a private search engine that allows users to browse and search the Internet in complete privacy; and CouponFollow for coupon destinations for online shoppers, as well as ActiveBeat and Infospace. In addition, the company provides antivirus software solutions, which offers customers a single packaged solution that provides protection and reporting to the end users. 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There are 6 speakers on the call. Operator00:00:00Thank you for standing by, and welcome to the second quarter twenty twenty five earnings conference call for SystemOne. Joining me today to discuss SystemOne's business and financial results are our Co Founder and Chief Executive Officer, Michael Blend and Chief Financial Officer, Tridavesh Gadabi. A recording of this conference call will be available on our Investor Relations website shortly after this call has ended. I'd like to take this opportunity to remind you that during the call, we will be making certain forward looking statements. This includes statements relating to the operating performance of our business, future financial results and guidance, strategy, long term growth and overall future prospects. Operator00:00:36We may also make statements regarding regulatory compliance matters. These statements are subject to known and unknown risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call, in particular, described in our risk factors included in our annual report on Form 10 ks for fiscal year twenty twenty four filed on March 10 as well as the current uncertainty and unpredictability in our business, the markets, and the global economy generally. You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on management's assumptions and beliefs as of date hereof, and System one disclaims any obligation to update any forward looking statements except as required by law. Our discussion today will include non GAAP financial measures, including adjusted EBITDA and adjusted gross profit. Operator00:01:26These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non GAAP financial measures, including a reconciliation of our non GAAP financial measures to our most comparable historical GAAP financial measures, may be found on our Investor Relations website. I would now like to turn the conference call over to System Co Founder and Chief Executive Officer, Michael Blend. Speaker 100:01:54Thanks, Kyle. Good afternoon, everyone, and thank you for joining SystemOne on our Q2 earnings call. I'm happy to report Q2 was a very solid quarter for SystemOne with solid execution driven by our company wide adoption of AgenTi coating. Our adjusted EBITDA came in at $11,700,000 up 18% year over year. Second quarter revenue was approximately $78,000,000 and adjusted gross profit was 41,000,000 representing a 6% year over year increase. Speaker 100:02:26Our owned and operated products continued to perform well and had a particularly strong Q2. Revenue increased 34% year over year and 8% sequentially. We saw great performance from each of our major products, which includes Startpage, our private search engine MapQuest, our mapping solution and Coupon Follow, our leading promo code service. We have strong momentum across the entire product portfolio. Our teams are rolling out regular product improvements, and in turn, consumers are responding very favorably. Speaker 100:03:01In our marketing business lines, we continue volatility at our largest revenue source, which is Google. While the overall Google advertising market is relatively stable, the Google partner network we work with is going through significant changes. And while our team is doing a nice job navigating the Google volatility, our marketing businesses are not yet back in growth mode. On the technology front, our heavy investment in AI powered agentic coding is paying off. We set an ambitious road map for product development and platform expansion in 2025, and we've been executing ahead of schedule on everything. Speaker 100:03:39We believe that our investments are going to drive revenue growth while at the same time improving margins. I want to talk briefly about the skill set we have developed around Agintiq coating. While many companies talk about engineering efficiencies gained from Agintiq coating, SystemOne is one of the few that is using it to rebuild a sophisticated legacy technology platform. Now this is a very complex project as we have to essentially keep our trains running while rebuilding the engine and tracks at the same time. Looking forward, I think there's a real opportunity to leverage our early adopter agentic coding skill set to help other companies in a similar way. Speaker 100:04:20There are literally thousands of legacy technology platforms that can benefit from this skill set, and there are several ways System One can participate in the upside of modernizing their platforms. We intend to pursue this opportunity pretty aggressively in the future. Now let's get into more details on our product segment, which as I mentioned is on a strong run. We feel it is really important for investors to understand our Products business as management believes this segment alone is worth significantly more than investors currently value our entire company. Products revenue was $24,000,000 up 34% year over year and 8% sequentially. Speaker 100:05:00Adjusted gross profit was $22,700,000 up 32% year over year and up 8% sequentially. This segment is performing very well and is well positioned to sustain its momentum going forward. I'd like to spend some time on each of our major product lines as I know many of our investors have been focused on our marketing segment and may not be as familiar with our product segment. Let's start first with Coupon Follow, our promo code and couponing service. Coupon Follow is comprised of three major product segments. Speaker 100:05:32First, we have our Coupon Follow website, which is a leading couponing and promo code service in Google's organic rankings. Consumers visit our Coupon Follow website when they're looking to find a promo code as they are completing online purchases. In addition to our website, we also have our Sently browser extension, which is a patent protected solution that automatically inserts promo codes at checkout when shoppers are on a shopping site. Sently operates under its own brand and also powers b to b promo code solutions for third party web browsers. And finally, Coupon Follow offers a nascent cashback shopping business that consumers use to obtain cash rebates when they shop online. Speaker 100:06:13Combined, all these businesses are on a roll, and Coupon user sessions are up over 40% year over year. Now let's talk about Startpage, our private search engine that competes with DuckDuckGo. Startpage offers a search solution that enables consumers to search the Internet while maintaining their privacy. Our our Startpage search technology is a sophisticated combination of search results from Google and Bing, proprietary search widgets like mapping, and a privacy solution that protects our users' online identity and search history. Similar to Coupon Follow, Startpage comprises several business lines. Speaker 100:06:52We have our core Startpage search engine, desktop browser extensions, and a suite of private mobile browsers that integrate our search engine and maintain user privacy while they're browsing the Internet. SharpPage is growing very quickly, and our users are up 30% year over year. In addition to our core search engine, we recently introduced two new products in the search and AI space. First, we just launched a new AI privacy product called Vanish Private AI by Startpage. Vanish is a mobile app that allows people to to maintain their user privacy while using a variety of popular AI chatbots like ChatGPT. Speaker 100:07:34We also recently leveraged our Startpage search engine technology to launch 1.org, our new charitable search engine. 1.org lets users support charitable causes like hunger relief and animal welfare just by searching the web. While we don't expect vanish to displace chat GPT or 1.org to overtake Google, the search market is so huge and profitable that a small market share translates into meaningful high margin revenue. We have shown that with Startpage, and we look to replicate our success with our newer offerings. Our last major product line is MapQuest, the OG of online mapping that I'm sure many of you have fond memories of. Speaker 100:08:15We acquired MapQuest several years ago from Verizon, and frankly, the brand was in significant decline when we acquired it. I'm really pleased that we enabled we've been able to turn around MapQuest and get it back into growth mode. MapQuest is made up of several complementary businesses. The most well known is our original MapQuest consumer facing service, which includes both our website and a suite of mobile apps. MapQuest also offers a B2B mapping service where we power mapping for other companies and get paid a usage based license fee. Speaker 100:08:47And finally, we operate a subscription based mobile app called Road Warrior, where we help delivery drivers more efficiently plan their driving routes. Like our other products, MapQuest usage is surging, and visits from Google are up over 40% annually. Overall, our products business is doing really well. If you're a current system one investor or considering investing in our company, it's very important that you understand this business segment. Our products business requires low CapEx and low OpEx, and as a result, it is highly cash generative. Speaker 100:09:19On a stand alone basis, and this is important, we believe our combined product businesses are worth significantly more than the current enterprise value of the entire company. As an investor in our current market price, you effectively are buying our product segment at a significant discount, while holding an option on the upside as our marketing business rebounds. You should also remember that as a result of a corporate reorganization we did last summer, our products business segment is not collateral securing our credit agreement. Overall, we think that the market does not appreciate the true value of our product segment, particularly when you understand our overall corporate and capital structure. Alright. Speaker 100:10:03Now let's go on into more detail on our marketing segment, which includes both our owned and operated and partner marketing businesses. As you know, marketing has been going through a rough patch but remains a significant profit generator. Overall revenue came in at $54,000,000 reflecting a 29% year over year decline, but we did see a 4% increase sequentially. The annual decline primarily was driven by a 36% decrease in our advertising spend. Adjusted gross profit was $20,000,000 down 17% year over year and down 10% sequentially. Speaker 100:10:38The sequential decline was driven by a lower return on TAC, our traffic acquisition costs, driven by volatility from the O and O businesses. Advertising spend was up 13% from Q1, but our return on spend decreased significantly. The decline in our marketing segment is solely related to issues in our O and O marketing business that we attribute to volatility in the Google Search partner network. O and O revenue has been a significant decline over the past couple of years with both revenue and gross profit down significantly year over year. While the decline in this business line has masked our success in our Products Group, we anticipate the recent declines in our Owner Marketing business will begin leveling off over the next couple of quarters, and we're going to have some positive comps going forward. Speaker 100:11:22On a positive note, our partner marketing business has been performing quite well throughout the volatility. In our partner business, we work with Google, Bing, and Yahoo, and that diversification has helped us weather the Google storm. The partner business continues to remain focused on moving partners to Google's new RSOC product, and we're seeing really good success with that migration effort. In q two, average revenue per partner increased 29% sequentially, and we had approximately two twenty active partners in Q2. While we wait for the Google volatility to stabilize, we've been busy using agentic coding to regard, protect and scale our proprietary marketing platform. Speaker 100:12:04These efforts are working. We have connected Ramp into more buy side networks, and we continue to make large strides on advertising campaign automation. In q two, we launched over 82,000 marketing campaigns, up a 100% from q one. This marketing campaign automation is going be a critical part of going forward when we look to start scaling our O and O marketing business again. We're well positioned to capitalize once the Google volatility stabilizes over the next couple of quarters. Speaker 100:12:35Looking ahead to the rest of 2025, we remain cautiously optimistic. Our owned and operated products continue to show strong fundamentals, and we've been making large strides with our argentic coating efforts. Our biggest challenge over the next core couple quarters is related to continued volatility with Google, which remains our largest revenue partner. That said, we're putting ourselves in a good position to capitalize on the marketing side as we see stability from Google. Overall, I believe System one is really well positioned for the medium and long term. Speaker 100:13:06As I mentioned earlier, our product segment is growing, high margin, and generates a lot of cash. As a result, we believe that segment alone is worth more than the value the market currently places on all of System one. And as the O and O marketing business stabilizes and starts growing again, I'm confident smart investors will realize how undervalued our business is. System one's leadership team remains fully aligned with our shareholders. And as a group, we remain one of the company's largest stakeholders. Speaker 100:13:35Last quarter, I significantly added to my family's ownership stake in System one, and I continue to believe our equity is significantly undervalued. As System One continues our transition back to growth mode, we appreciate your continued support and look forward to delivering long term value. With that, I'll hand it over to Tridi to go over our financials. Take it away, Tridi. Speaker 200:13:56Thanks, Michael. First off, I'd like to spend a little bit of time discussing the change in our segment reporting starting with this quarter. Going forward, we are reporting our business across two segments, marketing and products. Our marketing business segment consists of our paid acquisition business lines, where we either deploy advertising spend directly to buy side networks to acquire traffic to our owned and operated websites to monetize, or we have network partners who acquire the traffic in exchange for a revenue share. This is the business we previously called our partner network. Speaker 200:14:32Through our marketing platform, we manage our acquisition channels holistically between our direct buy side relationships as well as via the traffic sourced by our network partners. And so we believe it is more helpful to present these businesses on a combined basis. Our key drivers for this business are TAC or traffic acquisition costs, which we define as the combination of our direct advertising spend and the revenue share we pay to our partners. In essence, this is the total cost to acquire traffic to our platform. And the way we measure the efficiency of our TAC is our second driver, RTAC, or return on traffic acquisition spend. Speaker 200:15:10This is defined as marketing platform revenue divided by TAC. Marketing platform revenue is defined as marketing GAAP revenue plus partner revenue share and represents the total revenue that flows through our proprietary platform from our advertising partners. Our product segment consists of our flagship consumer products, Coupon Follow, MapQuest, and Startpage. These products generate traffic primarily through organic means, and our key metrics here will remain the same as before, total sessions to the site and RPS or revenue per session. Shortly after this call concludes, we will be posting an updated supplemental financial information file on our Investor Relations website, which will include these updated metrics for the current period as well as historical information back to 2024. Speaker 200:16:01Now let's move on to the financial results for the quarter. We had mixed results in the second quarter as volatility in the owned and operated portion of our marketing business offset some solid growth in the other business lines. Despite that volatility, we delivered good year over year growth in key financial metrics, including an increase of 18% on adjusted EBITDA. Unfortunately, owned and operated marketing volunteer volatility is impacting sequential trends and the overall progress we are making. Let's get into the details. Speaker 200:16:34Q two revenue was $78,100,000 representing a 17% year over year decrease, but a sequential increase of 5%. Marketing GAAP revenue is $54,100,000 down 29% year over year, but up 4% sequentially. Products revenue was $24,000,000 representing a 34% year over year increase and a sequential increase of 8%. This growth shows the tremendous progress we have made over the last year and the overall strength of the businesses within this segment. Adjusted gross profit was $41,000,000 up 6% year over year and down 1% sequentially. Speaker 200:17:13Marketing segment profit was $19,600,000 down 17% year over year and down 10% sequentially. The year over year decline was driven by a 4% year over year decrease in TAC as well as a slight year over year decrease in our return on TAC or RTAC from 120% to 117%. As a result, total platform revenue for the marketing business was down 6% year over year, all driven by increased volatility and declines in the owned and operated marketing businesses. Offsetting this O and O volatility, we've seen real momentum in our partner network business in driving the marketing segment sequentially. While return on TAC dropped eight bps from '25, total TAC increased 34% from the first quarter, driven primarily by increased volume from the partner businesses. Speaker 200:18:01Marketing platform revenue also grew 25% sequentially. Products segment profit was $22,700,000 up 34 year over year and up 8% sequentially. This is driven both by a year over year increase in sessions of 12% as well as a year over year increase in RPS from $04 to $05 Product segment profit represents 54% of total segment profit, up from 42% in the 2024. On to operating expenses and adjusted EBITDA. In Q2, operating expenses net of add backs were $29,300,000 up 1% year over year and in line with Q1. Speaker 200:18:42Reducing costs in order to create greater operating leverage continues to be a focus, and we expect OpEx to decline in the second half of the year by roughly 5% versus the 2025. Adjusted EBITDA was $11,700,000 in Q2, up 18 percent year over year and down 3% from last quarter. With respect to liquidity, we ended the quarter with $63,600,000 of unrestricted cash on our balance sheet, which is an increase of approximately $20,000,000 compared to Q1. Although the cash balance increased, working capital declined, largely driven by a buildup in short term liabilities. As of June 30, we had an outstanding balance of $270,000,000 of term loan debt under our credit agreement, and our net consolidated leverage at quarter end was approximately four times. Speaker 200:19:27We also have 50,000,000 of availability under our revolver as of the end of '25, which is currently undrawn. Based on the volatility we saw in q two in the marketing segment and the ongoing changes in the Google marketplace, we will not be providing guidance for '25 or for the full year. We believe it is prudent to continue to wait for greater clarity on these items before offering guidance. While we acknowledge the current volatility has created some near term challenges, particularly in driving sustainable growth within the marketing segment, we remain confident in the strength of our platform and the ability to leverage new technologies for our marketing initiatives. The product segment continues to perform well, and we are focused on driving operational efficiencies. Speaker 200:20:10All in all, we are confident in the fundamental resilience of our business and remain committed to executing our strategic priorities to position the company for long term growth. Thank you for joining us today. Speaker 300:20:21Thank you. We will now begin the question and answer session. Your first question comes from the line of Tom Forte with Maxim Group. Line is open. Please go ahead. Speaker 400:20:51Thank you. So Michael and Tridi, congrats on the quarter and the progress you're making in a challenging environment. I have three questions. I'll go one at a time. On the product side, I definitely think you have underappreciated, undervalued nice portfolio there. Speaker 400:21:08How should investors think about the KPIs we should focus on, such as for coupon follow and MapQuest? Is it traffic sales trends? What what are the KPIs we should focus on? Speaker 100:21:21Yeah. Thanks Tom for the question. Thanks for joining. Appreciate your, your compliments on the product side which we agree. We think we've got a great portfolio which is underappreciated. Speaker 100:21:31And really each of those big business segments is doing really well. Shreedy, maybe you can talk a little bit about the KPIs. Speaker 200:21:37Yeah. Thanks for the question, Tom. Good to hear from you. So yeah, I mean, nailed it and it's the KPIs you would traditionally think about for you know, these types of kind of flagship online brands. So specifically, you know, we think about traffic, and we think about the rate at which we monetize that traffic. Speaker 200:21:56And so both of those are the metrics that we we we will be disclosing going forward. So sessions in terms of measuring traffic and then revenue per session in terms of in terms of measuring that monetization rate. Speaker 400:22:11Excellent. And then for my second question, recognizing you're not providing guidance, can you at least provide high level comments in the following? To the extent you're able to talk about the second half of this year, should investors think about the comparison of lapping last year's presidential election? I would think to the extent that you're both a buyer and seller of digital advertising, lapping the election would be favorable for you. Speaker 100:22:36I think, yeah. No. I I think you're right there, Tom. So so as some of the political spending dies off, which has a tendency to drive pricing across all marketplaces, we should be able to step in and get a bit lower pricing than we would have seen last last year. I would say that on the o and o marketing side, as we mentioned, you know, lot of that is not our issues are not really related to what's going on in the overall advertising market. Speaker 100:23:06It's much more specific to volatility in the Google search partner network. So on in the O and O segment, on marketing specifically, we would expect as that volatility lessens and the Google product that we products that we work with there start maturing a bit more, that's really where we're gonna see really sustained growth. We do expect that to happen over the next couple quarters. Speaker 400:23:30Great. Thanks, Michael. Alright. So last one for me. Historically, you've been able to engage in strategic m and a to advance your efforts, often buying things just unbelievably great valuations. Speaker 400:23:42What are your thoughts on strategic m and a and your ability to access capital if necessary to take advantage of opportunities? Speaker 100:23:50Yeah. So we appreciate you asking. You're correct. We've done, I think, 12 or 13 deals in our in our history. The vast majority of those have been pretty good deals that we ended up buying at effective low multiples and we're able to put some substantial growth behind them. Speaker 100:24:08And I think you're seeing that with the three big products that we talked about, Startpage, MapQuest and Coupon Follow. Each of those good deals. We were able to layer market on top of them, rebuild their platforms, and and then kind of go forward. So we think there's a pretty big opportunity for us on the m and a front going forward. Not only do we have historical ability to buy companies, retool their platforms, and get them growing again. Speaker 100:24:36The stuff that we're doing with agentic coding, you know, I talked about it briefly in my remarks, but but I talk about a little bit more here. We were pretty much early adopters in terms of using agentic coding to rebuild our technology platform. And while I talked about it for a couple sentences in my prepared remarks, I'll riff a little bit here. It's really hard to take an existing technology platform and rebuild it on the fly. And I've been doing this for, I think, twenty five years, and we've tried to do it several times. Speaker 100:25:06And it's just always more challenging than you think and gonna take longer than you would expect. With our agenda coding skills, we've actually been able to do it really successfully already. We're doing it ahead of schedule. And I'd estimated about 25% of the time it would have taken us previously. And so specifically on the M and A front, what we're gonna be looking to do going going forward is really find those companies that have legacy platforms that could benefit from a real makeover of their platform, make those technology platforms more efficient, a lot more cost effective, reduce OpEx, a lot of the stuff we've been doing internally. Speaker 100:25:43And as I've said, there's thousands of legacy digital companies out there both on the digital publishing side, on the software side, everywhere. And so we think that within those thousands of companies, we're going to find some pretty good opportunities for us. As far as accessing capital, we do think on a go forward basis as our numbers are improving and we're starting to show the business going, getting some momentum behind it, we'll have fairly straightforward access to capital to do those deals. And, Trudy, you wanna follow-up on anything there? Speaker 200:26:15No. I I I think you I think you captured it. Know, again, I think for the for the right deal, you know, we're confident that, you know, we'll be able to access the capital we need to to execute on it. So to to Michael's point, we're being very judicious about how we're approaching it, but we do think opportunities will be out there. Speaker 400:26:32Great. Thanks, Michael. Thanks, Trudy, for taking my questions. Speaker 200:26:34Thanks, Tom. Speaker 100:26:35Thanks, Tom. Thanks, Tom. Speaker 300:26:39Your next question comes from the line of Dan Kurnos with Benchmark. Your line is open. Please go ahead. Speaker 500:26:45Yeah. Afternoon, guys. Nice, continued progress here. Let's, maybe I'll go a little bit in reverse. Michael, just in in terms of what you just mentioned on agentic coding, I mean, you kind of alluded to helping optimize others' coding platforms. Speaker 500:27:05I mean, are you gonna white label an agentic coding product? Are you planning on providing kind of back end services to help optimize, you know, maybe some of the I don't know. Pick pick your vertical SMB market, however you wanna attack it, Michael. It's just it's a super interesting opportunity since it's worked for you, and there's plenty of companies out there with all the vibe coders and everyone else that are, you know, trying to, to help, advance this marketplace. So maybe just give us your thoughts on that unless I'm off base. Speaker 100:27:40Sure, Anne. Thanks for dialing in, Dan. Good to chat with you. So I don't, right now, see us releasing a standalone agentic coding product to help people, you know, re redo their platforms. I I guess that's a possibility in the future. Speaker 100:27:54But right now, our current strategy that we'd be looking at would be to, you know, partner with companies that don't have as much experience as we have kind of going through this process and really work with them so that they could probably keep their core teams operating on maintaining their existing platform and then bring in kind of an think of it as an agentic coding SWAT team that can come in and and rebuild that entire platform. And at at the end of that process, you basically shift all of your business over to the new platform, which is essentially what we're doing here at SystemOne. And and so, you know, think of us almost as consultants coming in. But in the in the case of m and a, we're we're doing that on our own behalf. So so, you know, we acquire a company, kind of rebuild their their platform, rip out the old legacy platform and and kind of go on with with that business. Speaker 100:28:49We don't have to do it via M and A. So there's a few different models that we've been thinking about that don't require us putting our own capital to use. Instead, we participate in the upside that we bring to the companies. But in in general, general, it's bringing our team in to to help companies that don't have the experience that we have. Speaker 500:29:12Yeah. That makes sense, Michael. You throw a big help button up on MapQuest. They'll come to you. The the next question I have for you is look. Speaker 500:29:20Obviously, products has has been on a great trajectory right now, really good in q two. You know, the the SEO environment's a mess, as you well know. And given that, you know, given what Google is doing, and I'll get to partner network in a second, you know, discoverability is just getting a little bit harder. Like, how are you optimizing kind of your brand footprint, and how do you expect to continue optimizing it as kind of, you know, AI and agentic browsing starts, cropping up more and more? Speaker 100:29:54Yeah. We've been good good question. We've been pretty fortunate in that the main products that we have are not the type of how to or informational products that typically are getting displaced by by anything happening on the Google side. So, you know, for instance, Startpage, you know, has has no SEO exposure. So Startpage is our search engine, which people are just coming directly to use it. Speaker 100:30:18MapQuest, in large part of that business, you know, we've got an enterprise business in there, we've got a direct consumer base, which is using our apps and and websites. We do have some Google exposure, you know, where we do get placement in Google and same with coupon follow as well. Coupon follow has got a lot of Google placements. But the nice thing about those two particular categories, both mapping and promo codes, they're not the kind of categories where Google can just provide a single answer. So when you look at what what ChatGPT and obviously the Google competitive products are, What they're really good at is you ask a question to just give you an answer. Speaker 100:31:00Mapping really isn't that kind of question. So if you're looking, you know, driving directions to a place, you really need a mapping service behind that. And same with couponing. You know, in in in couponing and promo codes, users are looking for a wide variety of promo codes that are working. They're not just looking for a single one. Speaker 100:31:18It's a little bit harder to displace those products. So, know, you in some ways, we've been fortunate that the categories that we're in and that, you know, those products we acquired were all kind of search and browsing related. So we just don't have we we we don't see ourselves as having the big exposure that a lot of knowledge based companies have. Speaker 500:31:37Yeah. And I I I that resonates, Michael. I I guess, you know, maybe the flip side is to the extent that, you know, e comm and other kind of pairing start taking place. I mean, you guys are clearly savvy enough on the AI side to create whatever API is necessary or to work maybe with the agentic guys to sort of, help them learn, on how to maybe attach some products to you know, if they're sponsored results or things like that. I don't know if that's a crazy statement, Michael, since nothing's been developed yet, but just a thought. Speaker 100:32:09Yeah. No. We'd love I mean, we'd love to work with with any of the platforms to integrate our mapping technology and our mapping expertise, our promo code technology. I don't think the search our start page search technology is something that would necessarily pop into those, but we do have, like, a lot of people coming to us to try to work with us on the search engine side as well. Speaker 500:32:33And then just lastly on the, you know, Google Partner Network stuff, I mean, yeah, obviously, kinda sloppy over there right now. I mean, you you know, the return on TAC was still pretty impressive in q two. I assume that that's probably continuing to attrite. I mean, should we think of you pulling back, on the O and O side in the near term until you get more favorable return again, or are you gonna kinda just weather the storm? And is it really you know, how much of it is platform change? Speaker 500:33:02How much of it how much of it is just query volume, how much of it is data analytics? Just any additional color would be super helpful. Speaker 100:33:09Sure. So so the what you know, there's several questions in there. I don't see us pulling back. So what we're gonna do essentially, what's happened just to kinda talk about it a little bit higher level is Google has rolled out a new product that their partner network is is shifting towards. It's called RSOC, which is an acronym for related search on content. Speaker 100:33:32And the idea behind that product is Google wants to ensure that there's a high quality of traffic going through that system and ultimately converting when when those consumers get to the advertisers sort of advertising via through Google. This is a pretty dramatic change for Google to shift from their old partner their old partner advertising network called AFD over to RSOC. And it's just been a little bit rocky. A lot of that is, you know, Google figuring out the ecosystem. It's a new product that that they're rolling out, and it's just kinda fine tuning that product such that, you know, that there's there's not volatility in it. Speaker 100:34:11So we don't anticipate, you know, we don't anticipate pulling back in that business. What we would anticipate though is it and as Google is working the kinks out of its RSOC product, we we do we do see continued volatility. And so so what we are hoping and, you know, we are in close contact with Google is that over the next couple quarters, that volatility is gonna go away, at which point we're gonna be quite well positioned to get that business growing again. So that's kind of a long winded answer, Dan. I I don't know if I addressed everything in there and happy to answer any follow ups on it. Speaker 500:34:53No. It's fine. I mean, so much for opt in, right, to Speaker 100:34:56a and d. Yeah. Yeah. Yeah. No. Speaker 500:34:59We'll see how it plays out, Michael. I I appreciate the color, and I was trying to keep it a little higher level, without getting too much in the weeds, but that's really helpful and color for me, and we can also Thanks, Michael. Thanks, Trudy. Speaker 100:35:10Appreciate it, Dan. Yep. Speaker 300:35:15Thank you for your questions. I will now turn the call back to Michael Blend, CEO and cofounder, for closing remarks. Speaker 100:35:22Well, thanks, everyone, for joining us on the our q two earnings call. It was nice to be able to report another good quarter. We are banging away at the business. We feel like we've got a good opportunity ahead of us. And if you are a current investor or or thinking about taking a position in us, please feel free to reach out to us for for more color. Speaker 100:35:42We'll talk to you next next quarter. Thank you very much. Speaker 300:35:47This concludes today's call. Thank you for attending. You may now disconnect.Read morePowered by