What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-05 · 124 added, 156 removed, 102 unchanged (73% of the section changed)

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Company Overview

We operates several flagship brands across multiple consumer verticals, including shopping, travel and search, and a best-in-class customer acquisition and marketing platform powered by AI and machine learning.

The Company's platform is omnichannel and omnivertical, delivering high-intent customers to its advertising partners to maximize their reach and effectiveness.

We provide our omnichannel customer acquisition platform services through our proprietary responsive acquisition marketing platform ("RAMP").

Operating seamlessly across major advertising networks and advertising category verticals to acquire end-users, RAMP allows us to monetize these acquired end users through our relationships with third party advertisers and advertising networks ("Advertising Partners").

RAMP operates across our network of owned and operated websites, allowing us to monetize user traffic that we source from various acquisition marketing channels, including Google, Meta, Outbrain, and TikTok.

RAMP also allows third party advertising platforms and publishers ("Network Partners") to send user traffic to, and monetize end-user traffic on, our owned and operated websites or through our monetization agreements.

Through RAMP, we process daily advertising campaign optimizations across approximately 40 advertising vertical categories as of September 30, 2025 .

We are able to efficiently monetize user intent by linking data on consumer engagement, such as first party search data like traffic sources, device type and search queries, with data on monetization rates and advertising spend.

This context-enriched data, combined with our proprietary and data science driven algorithms, creates a closed-loop system that is not reliant on personally identifiable information or information obtained through third-party cookies, but which allows RAMP to efficiently match consumer demand with the appropriate advertiser or advertising experience across advertising category verticals.

We monetize user traffic acquired by our Network Partners.

Since launching, this business has expanded to support additional advertising formats across multiple advertising platforms, and has acquired several leading websites, enabling it to control the entire flow of the user acquisition experience, while monetizing user traffic through our network of owned and operated websites.

As of September 30, 2025 , we own and operate approximately 40 websites, including leading search engines like info.com and Startpage.com , and digital media publishing websites and internet utilities, such as HowStuffWorks , MapQuest , CouponFollow and ActiveBeat .

Our primary operations are in the United States, and we also have operations in Canada and the Netherlands.

Operations outside the United States are subject to risks inherent in operating under different legal systems as well as various political and economic environments.

Among the risks are changes in existing tax laws, changes in the regulatory framework in foreign jurisdictions, data privacy laws, possible limitations on foreign investment and income repatriation, government foreign exchange controls, exposure to currency exchange fluctuations and employment laws impacting foreign employees.

We do not engage in hedging activities to mitigate our exposure to fluctuations in foreign currency exchange rates.

We operate flagship internet utilities including CouponFollow, MapQuest, and Startpage.com, and a best-in-class marketing platform powered by artificial intelligence, enabling third party publishers ("Network Partners") to monetize and maximize the value of user traffic across a wide range of advertising category verticals.

Reorganization

On August 1, 2024, we undertook a corporate reorganization, the result of which was that all of the assets and business operations of the Company are now held by System1 Holdings, LLC ("System1 Holdings"), a newly formed intermediate holding company of which we maintain the controlling interest and in which the non-controlling interest is owned by the holders of our Class C common stock.

Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco, the previous intermediate holding company with the non-controlling interests, and 100% of S1 Media, LLC (“S1 Media”), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with our Products businesses, which include CouponFollow, Startpage and MapQuest, and (c) S1 Holdco holds our assets related to our Marketing businesses.

Following the corporate reorganization, (a) System1 Holdings now owns 100% of S1 Holdco, LLC ("S1 Holdco"), the previous intermediate holding company with the non-controlling interests, and 100% of S1 Media, LLC ("S1 Media"), another new subsidiary formed in connection with the corporate reorganization, (b) S1 Media holds the assets and business operations associated with our Products businesses, which include CouponFollow, Startpage and MapQuest, and our acquisition marketing platform and (c) S1 Holdco holds our assets related to our Marketing businesses.

System1 Holdings holds our remaining assets and business operations.

S1 Holdco and its subsidiaries remain obligors and guarantors under our Term Loan and Revolving Facility, and System1 Holdings and S1 Media are not parties thereto.

On June 12, 2025, we effected a 1-for-10 reverse stock split of our issued and outstanding common stock.

The reverse stock split did not change the authorized number of shares or the par value of our common stock, but did effect a proportional adjustment to the number of shares of common stock outstanding and the number of shares of common stock issuable upon the vesting of restricted stock awards and stock appreciation rights, the conversion rate of our outstanding warrants into common stock and the number of shares of common stock eligible for issuance under our 2022 Incentive Award Plan.

See Item 1, "Financial Statements —Note 2, Significant Accounting Policies" for additional information.

regarding the reverse stock split.

Reverse Stock Split

On June 10, 2025, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a 1-for-10 reverse stock split of Class A and Class C common stock.

All share data and per share data amounts included in this Form 10-Q have been retrospectively adjusted to reflect the effect of the reverse stock split.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures.

The key indicators of the financial condition and operating performance of the business is Gross profit.

To help assess performance with this key indicator, the revenue metrics we use are return on traffic acquisition cost ("RTAC"), Products sessions and Products revenue-per-session ("Products RPS").

In addition, we also use Adjusted Gross Profit and Adjusted EBITDA as non-GAAP financial measures.

We believe these non-GAAP measures provide useful supplemental information to investors to better evaluate ongoing business performance.

These measures are not, and should not be viewed as, a substitute for accounting principles generally accepted in the United States of America ("GAAP") financial measures.

Refer to the "Revenue Metrics", "Adjusted Gross Profit" and "Adjusted EBITDA" sections below.

Components of Our Results of Operations

We earn revenue by directly acquiring traffic to our owned and operated websites and utilizing our RAMP platform and additional services to monetize end-users for our Advertising Partners.

For this revenue stream, we have a single performance obligation and have determined that we are the principal in the transaction and report revenue on a gross basis for the amounts received from Advertising Partners.

We have determined that we are the principal since we direct the use of our owned and operating websites, and as such have risk of loss on the user-traffic that we are acquiring for monetization with our Advertising Partners.

We earn revenue by directly acquiring traffic to our owned and operated websites and utilizing our platform and additional services to monetize end-users for our Advertising Partners.

For this revenue stream, we are the principal in the transaction and report revenue on a gross basis for the amounts received from Advertising Partners.

We have determined that we are the principal since we direct the use of our owned and operating websites, and as such have a risk of loss on the user-traffic that we are acquiring for monetization with our Advertising Partners.

Additionally, we maintain the website, provide the content and bear the cost and risk of loss associated with the digital online inventory available on our website.

Revenue is also earned from revenue-sharing arrangements with our Network Partners related to the use of our RAMP platform and additional services provided to them in order to direct advertising by our Advertising Partners to their digital online inventory.

Revenue is also earned from revenue-sharing arrangements with our Network Partners related to the use of our platform and additional services provided to them in order to direct advertising by our Advertising Partners to their digital online inventory.

We have determined that we are the agent in these transactions and therefore report revenue on a net basis, because our network partner runs the campaign to acquire user-traffic including managing traffic acquisition cost.

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We recognize revenue as we deliver user-traffic to our Advertising Partners based on a cost-per-click, cost-per-action or cost-per-thousand impression basis.

The payment terms with our Advertising Partners are typically 30 days.

The payment terms with our Advertising Partners are generally 30 days.

Revenue may fluctuate from period to period due to a number of factors including seasonality and the shift in mix of user acquisition sources from Advertising Partners.

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Operating Expenses

To conform to the current period’s presentation, depreciation and amortization expense was reclassified to cost of revenue and selling, general, and administrative in the prior period condensed consolidated statements of operations.

We classify our operating expenses into the following categories:

Cost of revenue .

Cost of revenue primarily consists of traffic acquisition costs, which are the costs to place advertisements to acquire customers to our websites and services, domain name registration costs, licensing costs to provide mapping services to Mapquest.com and amortization related to our RAMP platform.

We do not pre-pay any traffic acquisition costs, and therefore, such costs are expensed as incurred.

Amortization related to our RAMP platform is recognized over the estimated useful life of the intangible asset.

Amortization related to our platform is recognized over the estimated useful life of the intangible asset.

Salaries and benefits .

Salaries and benefits expenses include salaries, bonuses, stock-based compensation, and employee benefits costs.

Salaries and benefits expenses consists of salaries, bonuses, stock-based compensation, and employee benefits costs.

Selling, general, and administrative .

Selling, general, and administrative expenses consist of depreciation and non-internally developed software platform amortization, fees for software services, professional services, occupancy costs and travel and entertainment.

Depreciation and non-internally developed software platform amortization expense are primarily attributable to our capital investment(s) and consist of property and equipment depreciation and amortization of intangible assets with finite lives.

Selling, general, and administrative expenses consist of depreciation, general intangibles amortization, fees for software services, professional services, occupancy costs and travel and entertainment.

Depreciation and general intangibles amortization expense are primarily attributable to our capital investment(s) and consist of property and equipment depreciation and amortization of intangible assets with finite lives.

Impairment of long-lived assets.

Impairment of long-lived assets consists of the impairment of our general intangibles that are no longer recoverable from future operations.

Other Expenses or Incomes:

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Interest expense consists of interest on our debt and the amortization of deferred financing costs and debt discount.

Gain on extinguishment of debt .

The recognition of the gain from the repurchase of a portion of our Term Loan at a discount.

See Item 1, "Financial Statements —Note 5, Debt, Net" for additional information.

Interest income consists of interest earned on our cash deposits.

Change in fair value of warrant liabilities .

The mark to market of our liability-classified Warrants.

Income tax (benefit) expense

During 2023 and through July 31, 2024, we were the sole managing member of S1 Holdco and, as a result, consolidated the financial results of S1 Holdco .

S1 Holdco was treated as a partnership for U.S.

federal and most applicable state and local income tax purposes.

As a partnership, S1 Holdco was not subject to U.S.

federal and certain state and local income taxes.

Any taxable income or loss generated by S1 Holdco was passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis.

We were subject to U.S.

federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of S1 Holdco, as well as any stand-alone income or loss generated by us.

Income tax benefit

As of August 1, 2024, we are the sole managing member of System1 Holdings and, as a result, consolidate the financial results of System1 Holdings.

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Results of Operations

The following tables set forth our condensed consolidated results of operations and condensed consolidated results of operations as a percentage of revenue and comparative period changes for the periods presented (in thousands):

Three Months Ended September 30, Change

2025 % of Revenue 2024 % of Revenue ($) (%)*

Revenue $ 61,561 100 % $ 88,832 100 % $ (27,271) -31 %

Operating expenses:

Cost of revenue 38,819 63 % 63,999 72 % (25,180) -39 %

Salaries and benefits 21,354 35 % 29,177 33 % (7,823) -27 %

Selling, general, and administrative 16,953 28 % 17,472 20 % (519) -3 %

Total operating expenses 77,126 125 % 110,648 125 % (33,522) -30 %

Operating loss (15,565) -25 % (21,816) -25 % 6,251 -29 %

Other expense (income):

Interest expense, net 7,052 11 % 7,957 9 % (905) -11 %

Change in fair value of warrant liabilities (71) — % 281 — % (352) -125 %

Total other expense, net 6,981 11 % 8,238 9 % (1,257) -15 %

Loss before income tax (22,546) -37 % (30,054) -34 % 7,508 -25 %

Income tax (benefit) expense (543) -1 % 585 1 % (1,128) -193 %

Net loss (22,003) -36 % (30,639) -34 % 8,636 -28 %

Net loss attributable to non-controlling interest (3,487) -6 % (7,037) -8 % 3,550 -50 %

Net loss attributable to System1, Inc.

$ (18,516) -30 % $ (23,602) -27 % $ 5,086 -22 %

* Percentages may not sum due to rounding

Nine Months Ended September 30, Change

2025 % of Revenue 2024 % of Revenue ($) (%)*

Revenue $ 214,189 100 % $ 268,330 100 % $ (54,141) -20 %

The following table sets forth our condensed consolidated results of operations and our condensed consolidated results of operations as a percentage of revenue for the periods presented (in thousands):

Three Months Ended March 31,

Percentage of Revenue

Operating expenses:

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Selling, general, and administrative

Impairment of long-lived assets

Total operating expenses

Operating loss

Other expense (income):

Other expense:

Interest expense, net

Gain on extinguishment of debt — — (20,109) -7 % 20,109 -100 %

Change in fair value of warrant liabilities

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Loss before income tax

Income tax (benefit) expense (2,477) -1 % 359 — % (2,836) -790 %

Net loss (63,401) -30 % (79,275) -30 % 15,874 -20 %

Income tax benefit

Net loss attributable to non-controlling interest

Net loss attributable to System1, Inc.

$ (51,862) -24 % $ (60,512) -23 % $ 8,650 -14 %

Percentages may not sum due to rounding

Revenue Metrics

The key non-financial performance metrics we use to evaluate our business, track the effectiveness of our operations and measure our performance are return on traffic acquisition cost ("RTAC"), the number of Products sessions and Products revenue-per-session ("Products RPS").

We define RTAC as platform revenue divided by traffic acquisition cost.

Platform revenue is Revenue plus Network Partner revenue share.

Traffic Acquisition Cost ("TAC") is defined as the sum of total advertising spend, agency fees and Network Partner revenue share.

Advertising spend is the amount of advertising that is spent to acquire traffic.

Agency fees are the amount of costs for agencies acquiring traffic to Owned and Operated websites.

We believe RTAC is a relevant measure to evaluate our effectiveness and efficiency in deploying capital to acquire monetizable traffic to our Marketing segment.

The key non-financial performance metrics we use to evaluate our business, track the effectiveness of our operations and measure our performance are Revenue per AMP, the number of Products sessions and Products RPS.

We define Active Marketing Partners ("AMP") as partners who monetize user traffic on our platform and generate revenue above a predetermined minimum per quarter.

We define Revenue per AMP as GAAP Revenue from Marketing Partners divided by AMP.

We believe Revenue per AMP is a relevant measure to evaluate our effectiveness and efficiency in deploying capital to acquire monetizable traffic to our Marketing segment.

We define Products sessions as the total number of monetizable user visits to our Products websites.

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We believe Product sessions and RPS are relevant measures to evaluate our effectiveness and efficiency in converting monetizable traffic into revenue, which are key drivers of our Products reportable segment.

The following tables presents our revenue by reportable segment (in thousands):

Three Months Ended September 30, Change

2025 2024 ($) (%)

Marketing $ 39,065 $ 68,083 $ (29,018) -43%

Products 22,496 20,749 1,747 8%

Total revenue $ 61,561 $ 88,832 $ (27,271) -31%

Nine Months Ended September 30, Change

2025 2024 ($) (%)

Marketing $ 145,457 $ 214,867 $ (69,410) -32%

Products 68,732 53,463 15,269 29%

The following table presents our revenue by reportable segment (in thousands):

Three Months Ended March 31,

Total revenue

Marketing revenue decreased for the three and nine months ended September 30, 2025 as compared to the comparative periods.

This was driven by a decrease in TAC, where for the three months ended September 30, 2025, compared to the prior year comparative period, TAC decreased by $26.8 million to $84.0 million from $110.8 million.

This was slightly offset by an increase in RTAC of 2% to 120% from 118%.

Similarly, for the nine months ended September 30, 2025, compared to the prior year comparative period, TAC decreased by $53.3 million to $284.8 million from $338.1 million, which was slightly offset by an increase in RTAC of 1% to 120% from 119%.

Products revenue increased for the three and nine months ended September 30, 2025 as compared to the comparative periods.

The increase was driven by an increase in Products sessions, where for the three months ended September 30, 2025, compared to the prior year comparative period, Products sessions increased by 111.3 million to 584.7 million from 473.4 million while Products RPS remained flat at $0.04.

Similarly, for the nine months ended September 30, 2025, compared to the prior year comparative period, Products sessions increased by 208.6 million to 1,582.8 million from 1,374.2 million and Products RPS remained flat at $0.04.

Marketing revenue decreased by $33.9 million, or 65% for the three months ended March 31, 2026 compared to the prior period, primarily due to the termination for convenience of our Adsense for Domains monetization arrangement with Google and the significant reduction in marketing activities for search monetization in our publishing business.

For the three months ended March 31, 2026, compared to the prior period, AMP decreased by approximately 93 to 56 from 149, primarily due to the termination for convenience of our Adsense for Domains monetization arrangement with Google.

Revenue per AMP increased by approximately $0.1 million to $0.2 million from $0.1 million.

Products revenue decreased by $3.4 million, or 15%, for the three months ended March 31, 2026 compared to the prior period, primarily due to a change in mix shift from higher RPS sessions to lower RPS sessions.

For the three months ended March 31, 2026, compared to the prior period, Products sessions increased by approximately 178.0 million to 653.7 million from 475.7 million while Products RPS decreased by approximately $0.02 to $0.03 from $0.05.

Cost of revenue

Cost of revenue decreased for the three and nine months ended September 30, 2025 as compared to the comparative periods.

The decrease in advertising spend and agency fees is correlated with the decrease in revenue.

Amortization expense for our marketing platforms increased $0.5 million and $1.3 million for the three and nine months ended September 30, 2025, respectively compared to the prior comparative periods primarily due to increased am ortization for our continued investment in developed technology and internally developed software.

Cost of revenue decreased $32.2 million, or 70%, for the three months ended March 31, 2026 compared to the prior period primarily due to a decrease in advertising spend and agency fees which is correlated with the decrease in revenue.

This was primarily related to the termination for convenience of our Adsense for Domains monetization arrangement with Google and a related significant reduction in marketing activities for search monetization in our publishing business.

Amortization expense for our platform recorded in cost of revenue decreased $8.1 million or 62% for the three months ended March 31, 2026 compared to the prior period primarily due to our developed technology reaching the end of its estimated useful life.

Our chief operating decision maker measures and evaluates reportable segments based on segment operating revenue and segment adjusted gross profit.

We define and calculate segment adjusted gross profit as revenue less traffic acquisition costs incurred to acquire users.

The remaining cost of revenue consists of non-advertising expenses such as set-up costs, royalties, fees and amortization related to our marketing platforms.

The remaining cost of revenue consists of non-advertising expenses such as set-up costs, royalties, fees and amortization related to our platform.

We exclude the following items from segment adjusted gross profit:

other cost of revenue (total cost of revenue

excluding traffic acquisition cost), salaries and benefits, selling, general and administrative expenses and, at times, certain other transactions or adjustments.

The following tables presents our segment adjusted gross profit by reportable segment (in thousands):

Three Months Ended September 30, Change

2025 2024 ($) (%)

Marketing $ 16,648 $ 19,390 $ (2,742) -14 %

Products $ 21,218 $ 20,069 $ 1,149 6 %

Nine Months Ended September 30, Change

2025 2024 ($) (%)

Marketing $ 58,068 $ 62,668 $ (4,600) -7 %

Products $ 64,870 $ 51,040 $ 13,830 27 %

See the Revenue and Cost of revenue discussions above for changes to adjusted gross profit.

other cost of revenue (total cost of revenue excluding traffic acquisition cost), salaries and benefits, selling, general and administrative expenses and, at times, certain other transactions or adjustments.

The following table presents our segment adjusted gross profit by reportable segment (in thousands):

Three Months Ended March 31,

Total adjusted gross profit

See the Revenue and Cost of revenue discussions above for the changes to adjusted gross profit.

Salaries and benefits

Salaries and benefits expense decreased for the three and nine months ended September 30, 2025 compared to the comparative periods.

For the three months ended September 30, 2025, the $7.8 million decrease is primarily related to recognition of $7.2 million CouponFollow shared-based liability expense in the comparative period when all tier targets were determined to be probable of being achieved and a $1.4 million reduction in stock-based compensation related to reduced restricted stock unit issuances.

This was offset by an increase of $0.8 million in stock-based compensation expense related to the vesting of Tranche I stock appreciation right awards issued in the current period and the expense of Tranche II stock appreciation right awards.

For the nine months ended September 30, 2025, the $15.0 million decrease is primarily related to recognition of $17.6 million reduction in CouponFollow share-based liability expense in the comparative period when all tier targets were determined to be probable of being achieved and a $6.2 million reduction in stock-based compensation related to reduced restricted stock units issuances.

This was offset by an increase of $4.4 million in stock-based compensation expense related to the vesting of Tranche I stock appreciation right awards and continued accrual of Tranche II stock appreciation right awards, a $3.0 million increase in retention bonus expense, and a $1.3 million increase in severance expense.

Salaries and benefits expense decreased $4.2 million, or 17% for the three months ended March 31, 2026 compared to the prior period.

The decrease was primarily driven by a $2.4 million reduction in payroll and bonus expenses due to lower headcount, a $1.3 million decline in stock-based compensation resulting from less restricted stock unit outstanding and no stock appreciation rights expense, and a $1.2 million increase in capitalized internally developed software costs.

This was offset by an increase of $1.5 million in severance related expenses due to our reduction in workforce.

Selling, general, and administrative

Selling, general, and administrative expense decreased for the three and nine months ended September 30, 2025 as compared to the prior comparative periods.

The decrease was primarily related to a $0.5 million and $7.9 million reduction in professional services and consulting fees for the three and nine months ended September 30, 2025, respectively.

Other expense (income):

Selling, general, and administrative expense increased $0.2 million, or 1% for the three months ended March 31, 2026 compared to the prior period.

The increase was primarily driven by a $0.9 million increase in software and subscription services, offset by a decrease of $0.7 million in professional services and consulting fees.

Impairment of long-lived assets

Impairment of long-lived assets increased $36.8 million for the three months ended March 31, 2026 compared to the prior period due to the recognition of long-lived asset impairment expense at our Marketing asset group.

Other expense:

Interest expense, net

Interest expense, net decreased for the three and nine months ended September 30, 2025 as compared to the prior comparative periods primarily due to a lower outstanding debt balance.

Gain on extinguishment of debt

Gain on extinguishment of debt decreased for the nine months ended September 30, 2025 as compared to the prior comparative period due to the repurchase of our principal debt balances via a Dutch auction in the first quarter and repurchase of principal debt in the second quarter of 2024.

There was no repurchase of debt during the third quarter of 2024 or during 2025.

Interest expense, net decreased $0.5 million, or 6%, for the three months ended March 31, 2026 compared to the prior period primarily due to lower average interest rates in 2026 compared to 2025, offset by a higher loan balance primarily due to the drawdown of our Revolving Facility at the end of 2025.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities increased for the three months ended September 30, 2025 and decreased for the nine months ended September 30, 2025 as compared to the prior comparative periods due to the fair value remeasurement of Warrants which have been delisted from the New York Stock Exchange.

Income tax (benefit) expense

The difference between the effective tax rates for the periods presented above and the federal statutory tax rate of 21% was primarily due to the exclusion of non-controlling income (loss), nondeductible expenses, valuation allowance and outside basis adjustments.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA").

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

The Company does not expect these tax law changes to have a material impact on the Company's financial statements;

however, the Company will continue to evaluate their impact as further information becomes available.

Change in fair value of warrant liabilities was flat for the three months ended March 31, 2026 compared to the prior period due to the fair value remeasurement of our Warrants which have been delisted from the New York Stock Exchange.

Income tax benefit

The difference between the effective tax rates for the periods presented and the federal statutory tax rate of 21% was primarily due to the exclusion of non-controlling loss, state taxes, foreign rate differential, valuation allowance activity related to unrealizable deferred tax assets and outside basis adjustments.

Non-GAAP Financial Measures

In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance.

We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.

We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.

Adjusted Gross Profit

Adjusted Gross Profit is defined as gross profit plus depreciation and amortization recorded in cost of revenues.

The following table reconciles Revenue to Gross Profit and Adjusted Gross Profit for the periods presented (in millions):

Three Months Ended March 31,

Cost of revenue

amortization related to cost of revenue

Adjusted Gross Profit

The decrease in adjusted gross profit for the three months ended March 31, 2026 is primarily related to our decrease in revenue.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations, — Revenue Metrics" for additional information for explanations of our changes in revenue.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, and other cash and non-cash based income or expenses

that we do not consider indicative of our core operating performance, including, but not limited to impairment expense, deferred compensation, gain (loss) on extinguishment of debt, non-cash revaluation of warrant liability and acquisition and restructuring costs.

We believe that the use of Adjusted Gross Profit and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors.

However, investors should be aware that when evaluating Adjusted Gross Profit and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures.

In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate Adjusted EBITDA in the same fashion.

We adjust for nonoperating expenses and income, such as nonrecurring special projects, including for related consultant expenses, nonrecurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.

Because of the limitations described above, Adjusted Gross Profit and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

We compensate for these limitations by relying primarily on our GAAP results and using Adjusted Gross Profit and Adjusted EBITDA on a supplemental basis.

Investors should review the reconciliation of Gross profit to Adjusted Gross Profit and net income (loss) to Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

The following table reconciles net loss to Adjusted EBITDA for the periods presented (in millions):

Three Months Ended March 31,

Income tax benefit

Interest expense

Depreciation and amortization

Impairment of long-lived assets

Other expense

Stock-based compensation & distributions to members

Acquisition and restructuring costs

Adjusted EBITDA

Liquidity and Capital Resources

We expect existing cash and cash equivalents and cash flows from operating and financing activities to continue to be sufficient to fund our operating and cash commitments for investing and financing activities for at least the next twelve months.

Our principal sources of liquidity have historically been from cash received from the sale of Total Security Limited (formerly known as Protected.

To date, our principal sources of liquidity have historically been from the sale of Total Security Limited (formerly known as Protected.

net Group Limited), indebtedness available under our credit facilities, other indebtedness, and cash flows from operations.

Our principal sources of liquidity are expected to be from cash on hand and cash flows from operating and financing activities.

We have experienced declining cash flows and financial performance primarily as a result of reductions in Advertising Partner and overall consumer demand for our marketing services.

As of March 31, 2026, we had unrestricted cash and cash equivalents of $51.5 million, negative net working capital, which we define as current assets less current liabilities, of $14.1 million.

We had an aggregate principal amount outstanding of $50.0 million under our revolving facility with a maturity date of January 27, 2027, and $252.6 million of term debt outstanding on our term loan which matures in July 2027.

Management determined, as a result of this evaluation, that our current cash and cash equivalents, net working capital position, and the upcoming maturity date of our revolving facility raise substantial doubt about our ability to continue as a going concern for the twelve-month period following the date of this filing.

Our plan is to continue exploring options of refinancing all of our debt obligations.

Management cannot conclude as of the date of this filing that its plans are probable of being successfully implemented.

There can be no assurance that we will be able to obtain financing that will provide us with sufficient liquidity to satisfy our revolving facility in January 2027 or our term loan in July 2027.

Our principal sources of liquidity are expected to be from cash on hand and cash flows from financing activities.

Our ability to fund future operating expenses and capital expenditures, and our ability to meet our future debt service obligations, will depend on our ability to execute on our operational strategy and may be affected by our profitability, as well as general economic, financial and other factors which are beyond our control.

We continue to develop and implement plans to improve our liquidity.

Our main focus is executing on our operational strategy, which includes continued focus on expanding the number of advertising partners that are utilizing or integrated with RAMP by continuing to attract and monetize users with commercial intent on our owned and operated web properties and on behalf of our Network Partners as well as optimizing bids and driving higher returns on advertising spend.

Our revenue is dependent on two key Advertising Partners, which are Google and Microsoft.

See our concentration with customers discussion at Item 1 "Financi al Statements — Note 2, Summary of Significant Accounting Policies " for additional information.

Our main focus is executing on our operational strategy, which includes continued focus on expanding the number of advertising partners that are utilizing or integrated with our platform by continuing to attract and monetize users with commercial intent on our owned and operated web properties and on behalf of our Network Partners as well as optimizing bids and driving higher returns on advertising spend.

Additionally, we are focused on our current cost structure by reducing our cash operating expenses and debt service obligations.

Adverse macroeconomic conditions have affected, and may in the future affect, the demand for advertising, resulting in fluctuations in the amounts our advertisers spend on advertising, which could have a negative impact on our financial condition and operating results.

As of September 30, 2025, we had unrestricted cash and cash equivalents of $54.6 million and $50.0 million available to borrow on our 2022 Revolving Facility.

For the nine months ended September 30, 2025, we had cash outflows of $11.7 million.

Our revenue is dependent on two key Advertising Partners, Google and Microsoft.

See our concentration with customers discussion at Item 1 "Financi al Statements — Note 2, Summary of Significant Accounting Policies " for additional information.

Credit Facilities

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The following table summarizes our cash flows for the periods presented (in thousands):

Nine Months Ended September 30,

Net cash provided by (used in) operating activities

$ 6,491 $ (6,027)

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

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Operating Activities

Our operating cash flow activities are primarily impacted by growth in our operations, timing of payments to our suppliers for advertising inventory and data and related collections from our partners.

Our cash flows from operating activities are primarily impacted by growth in our operations, timing of payments to our suppliers for advertising inventory and data and related collections from our partners.

Payment and collection cycles can vary from period to period.

In addition, seasonality may impact cash flows from operating activities on a sequential quarterly basis during the year.

In the nine months ended September 30, 2025, cash provided by operating activities was $6.5 million.

The principal drivers of our cash inflow from operations primarily from favorable changes in net income, excluding the impact of non-cash items offset by unfavorable changes in working capital balances.

In the three months ended March 31, 2026, cash used in operating activities of $26.1 million resulted primarily from favorable changes in net income, excluding the impact of non-cash items offset by unfavorable changes in working capital balances.

The unfavorable changes in working capital balances included $13.0 million in outflows related to the payment of an earnout obligation for the CouponFollow acquisition offset by an decrease in account receivable balances.

In the nine months ended September 30, 2024, cash used in operating activities was $6.0 million resulted primarily from favorable changes in net income, excluding the impact of non-cash items offset by favorable changes in working capital balances.

The favorable changes in working capital balances included an increase in accrued expenses and other current liabilities offset by an increase in account receivable balances.

In the three months ended March 31, 2025, cash used in operating activities of $15.9 million resulted primarily from $13.2 million in outflows related to the payment of earnout obligations for the CouponFollow acquisition and $4.3 million in net interest paid on our Term Loan.

Investing Activities

Our primary investing activities consisted of costs capitalized for internally developed software.

In the nine months ended September 30, 2025 and 2024, cash used in investing activities was $5.1 million and $5.0 million resulted primarily from costs capitalized for internally developed software, respectively.

In the three months ended March 31, 2026 and 2025, cash used in investing activities of $2.2 million and $1.5 million resulted primarily from capitalization of software development costs.

Financing Activities

Our financing activities consisted primarily of borrowings and repayments of our indebtedness under our credit facilities.

In the nine months ended September 30, 2025, cash used in financing activities was $13.1 million of which $15.0 million was related to the repayment of the 2022 Term Loan, offset by $2.3 million of cash received from the private placement with our founders' family foundation.

In the nine months ended September 30, 2024, cash used in financing activities was $59.0 million was primarily related to the repayment of the 2022 Term Note in the amount of $56.8 million.

In the three months ended March 31, 2026, cash used in financing activities of $7.7 million resulted primarily from $7.5 million repayment of principal and interest on our Term Loan which increased by $2.5 million on March 31, 2026, and $0.2 million of share repurchases.

In the three months ended March 31, 2025, cash used in financing activities of $5.3 million resulted primarily from repayment of principal and interest on our Term Loan.

Off-Balance Sheet Arrangements

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Service Agreements

In June 2023, we entered into a multi-year agreement with a service provider whereby we are contractually obligated to spend $5.0 million annually between July 2023 and June 2026 .

As of September 30, 2025 , we remain contractually obligated to spend a remaining $3.4 million towards this commitment.

In June 2023, we entered into a multi-year agreement with a data cloud platform service provider whereby we are contractually obligated to spend $5.0 million annually between July 2023 and June 2026 .

As of March 31, 2026 , we have fulfilled our contractual obligation towards this commitment.

Contingencies

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Our actual results could differ from these estimates.

The critical accounting estimates, assumptions, and judgments that we believe to have the most significant impact on our condensed consolidated financial statements are valuation of goodwill, stock-based compensation and income taxes.

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K filed with the SEC on March 11, 2026.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis