System1 Inc (SST) 2024 Q2 法說會逐字稿

Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the System1 second-quarter 2024 earnings call. (Operator Instructions)

謝謝你的支持。我叫喬，今天我將擔任你們的會議操作員。此時此刻，我謹歡迎大家參加 System1 2024 年第二季財報電話會議。（操作員說明）

I would now like to turn the conference over to Kyle Ostgaard, Vice President of Finance. You may begin.

現在我想將會議交給財務副總裁凱爾‧奧斯特加德 (Kyle Ostgaard)。你可以開始了。

Thank you for standing by, and welcome to the second-quarter 2024 conference call for System1. Joining me today to discuss System1's business and financial results are Co-Founder and CEO, Michael Blend; and our Chief Financial Officer, Tridivesh Kidambi. Recording of this conference call will be available on our Investor Relations website shortly after this call has ended.

感謝您的耐心等待，歡迎參加 System1 2024 年第二季電話會議。今天與我一起討論 System1 的業務和財務表現的是共同創辦人兼執行長 Michael Blend；以及我們的財務長 Tridivesh Kidambi。本次電話會議的錄音將在本次電話會議結束後不久在我們的投資者關係網站上提供。

I'd like to take this opportunity to remind you that during the call, we will make 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. We may also make statements regarding regulatory or 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, those described in our risk factors included in our annual report on Form 10-K for the fiscal year 2023 filed on March 15 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 the date hereof, and System1 disclaims any obligation to update any forward-looking statements, except as required by law.

我想藉此機會提醒您，在通話過程中，我們將做出某些前瞻性陳述。這包括與我們業務的經營業績、未來財務表現和指導、策略、長期成長和整體未來前景相關的報表。我們也可能就監管或合規事宜發表聲明。這些陳述受到已知和未知的風險和不確定性的影響，可能導致我們的實際結果與本次電話會議期間預測或暗示的結果有重大差異。特別是，我們在 3 月 15 日提交的 2023 財年 10-K 表格年度報告中所描述的風險因素，以及我們業務、市場和全球經濟當前的不確定性和不可預測性。您不應依賴我們的前瞻性陳述作為未來事件的預測。我們在本次電話會議中所做的所有前瞻性陳述均基於管理層截至本新聞稿發布之日的假設和信念，System1 不承擔任何更新任何前瞻性陳述的義務，除非法律要求。

Our discussion today will include non-GAAP financial measures, including adjusted EBITDA and adjusted gross profit. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Historical performance and future estimates provided during this call exclude results from total security. 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.

我們今天的討論將包括非公認會計準則財務指標，包括調整後的 EBITDA 和調整後的毛利。這些非公認會計原則措施應作為我們公認會計原則結果的補充，而不是替代或孤立於我們的公認會計原則結果。本次電話會議期間提供的歷史表現和未來估計不包括整體安全性的結果。有關我們的非 GAAP 財務指標的信息，包括我們的非 GAAP 財務指標與我們最具可比性的歷史 GAAP 財務指標的調整表，請訪問我們的投資者關係網站。

I would now like to turn the conference call over to System1's Co-Founder, Chief Executive Officer, Michael Blend.

我現在想將電話會議轉給 System1 聯合創辦人兼執行長 Michael Blend。

Thanks, Kyle. Good afternoon, everyone, and thanks for joining us on our Q2 2024 System1 Earnings Call. We have a positive update for you today. I'm happy to announce that System1 delivered financial results, which exceeded the high end of guidance across our key financial metrics. System1 delivered $95 million of revenue and $39 million of gross profit. Adjusted EBITDA was $9.9 million, which was 42% higher than the high end of our guidance range. These strong results were driven by the positive returns from the continued investment in our RAMP platform, very strong international growth, significant progress in our owned and operated products and a tight focus on reducing OpEx.

謝謝，凱爾。大家下午好，感謝您參加我們的 2024 年第二季 System1 收益電話會議。今天我們為您帶來了正面的更新。我很高興地宣布，System1 交付的財務表現超出了我們關鍵財務指標的指導上限。System1 實現了 9,500 萬美元的收入和 3,900 萬美元的毛利。調整後 EBITDA 為 990 萬美元，比我們指引範圍的上限高出 42%。這些強勁的業績得益於我們對 RAMP 平台的持續投資所帶來的積極回報、非常強勁的國際成長、我們擁有和營運的產品的重大進展以及對降低營運支出的密切關注。

Let's get into some of the financial details. I want to start with our owned and operated business. Total owned and operated revenue was $77 million, flat year-over-year and up 12% from last quarter. Adjusted gross profit was $27 million, up 22% from last quarter and flat year-over-year. Our quarterly growth was driven by 7% sequential growth in advertising spend as well as a 21% quarter-over-quarter uptick in revenue from our owned and operated products. We generated over 2 billion sessions on our owned and operated properties, 145% year-over-year increase and a 66% quarter-over-quarter increase. Spread was approximately $0.015 per session.

讓我們來了解一些財務細節。我想從我們擁有和經營的業務開始。自有和營運總收入為 7,700 萬美元，較去年同期持平，較上季成長 12%。調整後毛利為 2,700 萬美元，較上季成長 22%，與去年同期持平。我們的季度成長是由廣告支出環比增長 7% 以及我們自有和經營的產品收入環比增長 21% 推動的。我們在自有和營運的資產上產生了超過 20 億次會話，較去年同期成長 145%，較上季成長 66%。每個交易時段的價差約為 0.015 美元。

Revenue per session was down nearly 60% year-over-year. The decline was driven by lower cost per click rates in the United States as well as a bigger mix shift towards international markets, which naturally have lower monetization rates in the United States.

每個會話的收入年減近 60%。這一下降的原因是美國的每次點擊成本較低，以及更多的產品組合轉向國際市場，而國際市場在美國的貨幣化率自然較低。

Now international growth continues to be a highlight with international revenue representing approximately 36% of owned and operated revenue. This is up from 29% in the first quarter. Our continued international growth demonstrates the power of RAMP's use of AI to very efficiently create content and advertising creatives in multiple languages.

現在，國際成長仍然是一大亮點，國際收入約佔自有和經營收入的 36%。這比第一季的 29% 有所上升。我們持續的國際成長證明了 RAMP 使用人工智慧以多種語言非常有效地創建內容和廣告創意的力量。

For example, when we're seeing an opportunity like engineering jobs in India or checking accounts in the UK, we can very quickly move to capitalize on the opportunity. Our owned and operated products had another strong quarter with continued favorable organic traffic trends on both CouponFollow and MapQuest. In May, CouponFollow benefited from a Google search algorithm update.

例如，當我們看到印度的工程工作或英國的支票帳戶等機會時，我們可以很快採取行動以利用該機會。我們自有和經營的產品又一個強勁的季度，CouponFollow 和 MapQuest 上的有機流量趨勢持續良好。5 月份，CouponFollow 受益於 Google 搜尋演算法的更新。

The update was aimed at eliminating spamming coupon and promo websites from Google Search results. This is not only a long overdue and welcome change, but was also great for consumers as the Google index was becoming polluted with copycat coupon-related sites. CouponFollow one of the most useful coupon websites, full of original content and thoroughly vetted promo codes and Google appropriately gave CouponFollow a positive boost.

此次更新的目的是從 Google 搜尋結果中消除垃圾郵件優惠券和促銷網站。這不僅是一個遲來的、受歡迎的變化，而且對消費者來說也很棒，因為Google索引正受到山寨優惠券相關網站的污染。CouponFollow 是最有用的優惠券網站之一，充滿原創內容和經過徹底審查的促銷代碼，Google 適當地給了 CouponFollow 積極的推動。

As a result, CouponFollow saw a significant increase in site traffic and corresponding revenue. June organic sessions were up nearly 80% year-over-year. And on some days, CouponFollow is the most traffic coupon site in the world. While MapQuest saw a similar story, although not as dramatic. Q2 organic visits were up 10% year-over-year. We've been very focused on improving the customer experience in both MapQuest and CouponFollow, and it's gratifying to see that we're paying dividends with increased users and revenue.

結果，CouponFollow 的網站流量和相應收入顯著增加。6 月的自然會話數較去年同期成長近 80%。有時，CouponFollow 是全球訪問量最大的優惠券網站。而 MapQuest 也看到了類似的故事，儘管沒有那麼戲劇化。第二季度自然訪問量年增 10%。我們一直非常注重改善 MapQuest 和 CouponFollow 中的客戶體驗，很高興看到我們隨著用戶和收入的增加而獲得紅利。

Startpage, our private search engine also had a very productive quarter. We launched our private browser app and have seen over 50,000 downloads with significantly positive user feedback, including over 2,000 5-star ratings to date across our iOS and Android app users. We have high hopes for the browsers for our loyal Startpage users, and we also hope to be able to profitably market them to new users in the coming quarters.

Startpage，我們的私人搜尋引擎也有一個非常有成效的季度。我們推出了私人瀏覽器應用程序，下載量已超過 50,000 次，用戶反饋非常積極，其中包括迄今為止我們的 iOS 和 Android 應用程式用戶獲得的 2,000 多個 5 星級評級。我們對忠誠的 Startpage 用戶的瀏覽器寄予厚望，我們也希望能夠在未來幾季向新用戶推銷它們，從而實現盈利。

\Now let's move on to our Partner Network business. Partner Network revenue was $17 million and adjusted gross profit was $13 million. Revenue decreased 12% year-over-year, but was up 8% sequentially. Adjusted gross profit decreased 9% year-over-year but was up 24% sequentially. Total sessions were $2 billion, up 203% year-over-year and up 33% sequentially as we continue to add partners to the network.

\現在讓我們繼續討論我們的合作夥伴網路業務。合作夥伴網路收入為 1,700 萬美元，調整後毛利為 1,300 萬美元。營收年減 12%，但季增 8%。調整後毛利年減 9%，但較上季成長 24%。會話總數達到 20 億美元，年增 203%，隨著我們不斷向網路添加合作夥伴，會話總數較去年同期成長 33%。

Partner Network RPS declined 71% year-over-year and 19% quarter-over-quarter. The higher sessions and lower RPS were driven by the same trends that we saw in our owned and operated business, lower pricing in the United States and a bigger mix shift to international markets.

合作夥伴網路 RPS 年減 71%，季減 19%。較高的會話數和較低的 RPS 是由我們在自有和經營的業務中看到的相同趨勢、美國較低的定價以及向國際市場的更大組合轉移所推動的。

Despite the decline in revenue, our Partner Network business continued to show solid demand from the market. In Q2, our total active partners grew 19% from the first quarter to almost 300 partners. Average revenue per partner decreased sequentially by 9% as new partners onboarded this quarter continue to scale up. At the end of Q2, we had 58 scale partners in line with the first quarter.

儘管收入下降，我們的合作夥伴網路業務仍顯示出市場的強勁需求。第二季度，我們的活躍夥伴總數較第一季成長了 19%，達到近 300 家。隨著本季新加入的合作夥伴規模不斷擴大，每個合作夥伴的平均收入環比下降了 9%。第二季末，我們有 58 家規模合作夥伴，與第一季持平。

As a reminder, we consider a platform customer to be a scale partner when they are generating at least $50,000 of revenue per quarter on RAMP. Before I hand things off to Tridi, I wanted to outline our key initiatives that we expect to drive System1's growth over the next few years. First, we are continuing to invest in our RAMP platform in three key areas. Buy-side efficiency is driven by AI, second is opening up our buy-side capabilities to our partners; and third is launching new products. Let me take this opportunity to walk you through each of these in more detail.

提醒一下，當平台客戶每季在 RAMP 上產生至少 50,000 美元的收入時，我們將其視為規模合作夥伴。在將工作交給 Tridi 之前，我想概述我們預計在未來幾年推動 System1 成長的關鍵舉措。首先，我們將繼續在三個關鍵領域投資 RAMP 平台。買方效率由人工智慧驅動，其次是向合作夥伴開放我們的買方能力；三是推出新產品。讓我藉此機會更詳細地引導您了解其中每一個。

First, let's talk about AI. As I mentioned in the last couple of quarters, we've been hard at work integrating AI capabilities into RAMP. AI enables us to create advertising campaigns and associated content at a scale, at least in order of magnitude greater than we could have in the past. This scale, combined with our improved bidding and optimization algorithms has enabled our owned and operated advertising business to reach a size only a handful of other companies can match.

首先，我們來談談人工智慧。正如我在過去幾季提到的，我們一直在努力將 AI 功能整合到 RAMP 中。人工智慧使我們能夠大規模地創建廣告活動和相關內容，至少比我們過去的規模更大。這種規模，再加上我們改進的出價和優化演算法，使我們擁有和經營的廣告業務達到了只有少數其他公司可以匹敵的規模。

Maintaining RAMP and constantly adding improvement requires a large engineering and product team laser-focused on AI integration, machine learning optimizations and speed. Traditionally, our Network Partners who rely on System1 solely for sell-side monetization. They have their own buy site capabilities to purchase traffic, and they rely on System1 to monetize that traffic. This strategy works well for many partners after a certain level, but typically partners cap out in size as their own buy-side capabilities and technology hit certain limitations.

維持 RAMP 並不斷進行改進需要龐大的工程和產品團隊專注於人工智慧整合、機器學習優化和速度。傳統上，我們的網路合作夥伴僅依賴 System1 進行賣方貨幣化。他們擁有自己的購買網站功能來購買流量，並且依靠 System1 來透過該流量獲利。在達到一定水平後，這種策略對於許多合作夥伴來說效果很好，但通常合作夥伴會因為自己的買方能力和技術受到某些限製而限制其規模。

Simply put, it is very difficult to buy traffic at the scale System1 does. It requires a sophisticated buy-side platform. And while our network partners are highly skilled at buying traffic, they typically just don't have a large enough team to scale beyond a certain point. By opening up the System1 buy-side platform for our partners, we expect to enable many of them to scale far beyond what they currently do.

簡而言之，以 System1 的規模購買流量非常困難。它需要一個複雜的買方平台。儘管我們的網路合作夥伴在購買流量方面非常熟練，但他們通常沒有足夠大的團隊來擴展規模超過某個點。透過為我們的合作夥伴開放 System1 買方平台，我們希望能夠使他們中的許多人的規模遠遠超出他們目前的規模。

In addition to better buying capabilities, we also are integrating new monetization products into RAMP. Each of these products follows a similar pattern. We build a product feature or enhancement into RAMP. We utilize our owned and operated properties and our own team to figure out how to scale the product. And once we have all the teams worked out, we opened it up to partners.

除了更好的購買能力之外，我們還將新的貨幣化產品整合到 RAMP 中。這些產品均遵循相似的模式。我們將產品功能或增強功能建置到 RAMP 中。我們利用我們擁有和經營的財產以及我們自己的團隊來弄清楚如何擴展產品。一旦我們完成了所有團隊的工作，我們就向合作夥伴開放。

Over the last year, our focus has been on launching and scaling a new product offering by Google-related search on content. This product requires setting high-quality traffic to content very highly tailored to specific advertising verticals. Google advertising has been integrated directly into the content.

去年，我們的重點是推出和擴展 Google 相關內容搜尋的新產品。該產品需要為特定廣告垂直領域高度客製化的內容設定高品質流量。谷歌廣告已直接整合到內容中。

While similar to Google-related products we have worked with in the past, the new product requires System1 to develop new technology to ensure we could scale it while maintaining very high quality. It took us some time, but now we're at the point where we are confident, we have the technology and processes in place to scale this new product. System1 is generating over seven figures of monthly revenue from the product, Google is very pleased with the results, and we now are in the process of rolling it out to partners. So we've done what we always do, use our owned and operated scale to explore and then scale a new market and then offer our new capabilities to our partners.

雖然與我們過去合作過的 Google 相關產品類似，但新產品需要 System1 開發新技術，以確保我們能夠在保持極高品質的同時進行擴展。我們花了一些時間，但現在我們有信心，我們有適當的技術和流程來擴展這個新產品。System1 的產品每月產生超過七位數的收入，Google 對結果非常滿意，我們現在正在向合作夥伴推出產品。因此，我們做了我們一直在做的事情，利用我們擁有和經營的規模來探索和擴大新市場，然後向我們的合作夥伴提供我們的新能力。

The next two areas we are planning to invest in are two segments we currently are under-indexed, shopping and subscription products. Both of these areas are huge consumer markets where we currently are not scaled. We have slightly different approaches for each of them. For shopping, we likely will partner with large shopping focused advertising networks, similar to our current approach of partnering with Google being in Yahoo!.

我們計劃投資的接下來兩個領域是我們目前索引不足的兩個領域：購物和訂閱產品。這兩個領域都是龐大的消費市場，我們目前還沒有規模化。我們對它們每個人都有稍微不同的方法。對於購物，我們可能會與大型購物廣告網路合作，類似於我們目前在雅虎與Google合作的方式。

We are still exploring these partnerships, but we believe partnering with networks is a better option than attempting to build out our own direct advertising network in commerce. We might take a different approach with subscription. We already operate two successful subscription products associated with MapQuest, and we have shown in the past that we know had a scale subscription into the hundreds of million dollars of revenue.

我們仍在探索這些合作關係，但我們相信與網路合作是比嘗試在商業領域建立自己的直接廣告網路更好的選擇。我們可能會採取不同的訂閱方法。我們已經經營了兩款與 MapQuest 相關的成功訂閱產品，而我們過去已經證明，我們知道訂閱規模已達到數億美元的收入。

We also already operate businesses in some huge consumer categories that could be right for subscription. We operate search engines, we have browsers that we run. We have big mapping services, and we're also big in shopping. So while we will consider partnering with existing subscription businesses, we also are exploring and building out our own products. The good thing is that RAMP will support these efforts with only minimal increase in OpEx or R&D. We've built RAMP to be very flexible in supporting new buy-side and sell-side capabilities and plugging in these new products will be pretty straightforward.

我們也已經在一些可能適合訂閱的龐大消費類別中開展業務。我們經營搜尋引擎，我們有我們運行的瀏覽器。我們有大量的地圖服務，而且我們的購物也很豐富。因此，雖然我們會考慮與現有的訂閱業務合作，但我們也在探索和建立我們自己的產品。好的一面是，RAMP 將支援這些努力，而只需增加極少的營運支出或研發費用。我們建立的 RAMP 在支援新的買方和賣方功能方面非常靈活，並且插入這些新產品將非常簡單。

I also want to take a few minutes talking about our organic products specifically. We traditionally have focused our earnings comments on our marketing-driven businesses and our ability to scale our overall business by purchasing traffic. The marketing can drive very fast scale in our business, but as we saw in 2022 and parts of '23, it can also cause volatility.

我還想花幾分鐘時間具體談談我們的有機產品。傳統上，我們的獲利評論主要關注我們的行銷驅動型業務以及我們透過購買流量來擴展整體業務的能力。行銷可以快速推動我們的業務規模擴大，但正如我們在 2022 年和 23 年部分時間所看到的，它也可能導致波動。

Now in contrast, our product businesses are comprised of utilities that consumers seek out and use every day. For example, CouponFollow helps people find promo codes that save them money when they're shopping. Startpage enables its users to search the web and privacy. MapQuest provides mapping for people who preferred over Google or Apple Maps, and RoadWarrior helps delivery drivers drop off packages more efficiently. And each one of these properties is supported by related products, whether it be our simply browser extension, which is part of CouponFollow, our Startpage private browsers or the MapQuest on RoadWarrior mobile apps.

相比之下，我們的產品業務現在由消費者每天尋找和使用的公用事業組成。例如，CouponFollow 可以幫助人們在購物時找到可以省錢的促銷代碼。Startpage 使其用戶能夠搜尋網路和隱私。MapQuest 為那些更喜歡使用 Google 或 Apple 地圖的人提供地圖服務，而 RoadWarrior 可以幫助送貨司機更有效地投遞包裹。這些屬性中的每一項都受到相關產品的支持，無論是我們簡單的瀏覽器擴充功能（CouponFollow 的一部分）、我們的 Startpage 私人瀏覽器還是 RoadWarrior 行動應用程式上的 MapQuest。

Because these products do not require marketing to generate usage, they are distinct from our marketing-driven business in two primary ways. First, their revenues are more consistent and less tied to shifts in the overall digital advertising market. Second, they are much higher margin businesses as we spend a much lower percentage of our revenues and marketing them. The dynamics of these product lines are different enough that we plan to begin presenting them independently from our marketing businesses. Tridi will go into more detail about this reporting change in his remarks.

由於這些產品不需要行銷來產生使用，因此它們在兩個主要方面與我們的行銷驅動業務不同。首先，他們的收入更加穩定，並且與整個數位廣告市場的變化聯繫較少。其次，它們是利潤率較高的業務，因為我們用於行銷它們的收入比例要低得多。這些產品線的動態差異很大，因此我們計劃開始獨立於我們的行銷業務來展示它們。特里迪將在演講中更詳細地介紹這項報告變更。

Overall, I am very pleased with our performance in the second quarter. Our System1 team has been executing very well over the last year and it's gratifying to see that execution starting to show up in our financial performance. We aren't yet where we want to be, but things are moving in the right direction.

總的來說，我對我們第二季的表現非常滿意。我們的 System1 團隊在過去一年中執行得非常好，很高興看到這種執行力開始體現在我們的財務表現中。我們還沒有達到我們想要的目標，但事情正在朝著正確的方向發展。

To close my section of our call, I would like to once again remind you that management is the largest shareholder group in System1 and our interests are very highly aligned with yours. We appreciate your overwhelming support of our new equity plan tied to hitting EBITDA targets, and we intend to hit those targets. As our business gets back into growth mode, we're excited to have you along for the ride.

作為本次電話會議的結束語，我想再次提醒您，管理階層是 System1 最大的股東團體，我們的利益與您的利益高度一致。我們感謝您對我們與實現 EBITDA 目標相關的新股權計劃的大力支持，我們打算實現這些目標。隨著我們的業務重新進入成長模式，我們很高興您能與我們同行。

I'll now hand things off to Tridi to discuss our quarterly results in more detail as well as our Q3 guidance. Take it away, Tridi.

我現在將把事情交給 Tridi，更詳細地討論我們的季度業績以及我們的第三季指導。把它拿走，特里迪。

Thanks, Michael. We are pleased with our second quarter performance and sequential growth trends highlighted by quarter-over-quarter adjusted gross profit growth of 24% and $9.9 million of adjusted EBITDA versus $400,000 in Q1. While the year-over-year metrics remain challenged due to the sequential step downs we saw in overall advertising demand going from Q2 to Q3 of last year, we significantly narrowed our year-over-year declines across key financial metrics and even grew adjusted EBITDA, which was driven by our cost-cutting initiatives over the past several quarters with operating expenses down 16% year-over-year.

謝謝，麥可。我們對第二季的業績和連續成長趨勢感到滿意，季度環比調整後毛利成長 24%，調整後 EBITDA 為 990 萬美元，而第一季為 40 萬美元。儘管由於去年第二季到第三季整體廣告需求的連續下降，同比指標仍然面臨挑戰，但我們顯著縮小了關鍵財務指標的同比降幅，甚至調整後的 EBITDA 也有所增長，這是由我們過去幾季的成本削減措施推動的，營運費用較去年同期下降了16%。

Now on to our specific operating results. Q2 revenue was $94.6 million, representing a 2% year-over-year decline and sequential increase of 11%. Revenue was $4.6 million above the top end of our Q2 revenue guidance that we provided in May. Owned and operated revenue was $77.4 million, flat year-over-year and up 12% sequentially. Network revenue was $17.2 million, down 12% year-over-year, but up 8% sequentially. Adjusted gross profit was $38.8 million, down 4% year-over-year but up 24% sequentially. We significantly narrowed our year-over-year decline, which was 18% in Q1.

現在來說說我們的具體經營業績。第二季營收為 9,460 萬美元，年減 2%，季增 11%。收入比我們 5 月提供的第二季收入指導上限高出 460 萬美元。自有和營運收入為 7,740 萬美元，較去年同期持平，較上季成長 12%。網路收入為 1,720 萬美元，年減 12%，但環比成長 8%。調整後毛利為 3,880 萬美元，年減 4%，但較上季成長 24%。我們大幅收窄了年減幅，第一季降幅為 18%。

Adjusted gross profit was above the high end of guidance by $3.8 million. Revenue less advertising spend for our owned and operated advertising segment grew 22% sequentially to $27.4 million Network revenue less agency fees was up 24% to $13.5 million versus the prior quarter. Owned and operated cost per session and revenue per session were both down $0.02 sequentially to $0.02 and $0.04, respectively.

調整後毛利比指導上限高出 380 萬美元。我們擁有和經營的廣告部門的收入減去廣告支出，比上一季增長了 22%，達到 2,740 萬美元。每次會話的擁有和營運成本以及每次會話的收入均環比下降 0.02 美元，分別降至 0.02 美元和 0.04 美元。

On the network advertising business, RPS was $0.01 per session. Most importantly, total sessions processed by RAMP in the most recent quarter was $4.06 billion, up 47% sequentially and 171% year-over-year. As Michael mentioned during his remarks, these RPS and CPM trends were primarily driven by growth in lower RPS and CPS international traffic sources.

在網路廣告業務中，RPS 為每個會話 0.01 美元。最重要的是，RAMP 在最近一個季度處理的會話總數為 40.6 億美元，環比增長 47%，同比增長 171%。正如 Michael 在演講中所提到的，這些 RPS 和 CPM 趨勢主要是由較低的 RPS 和 CPS 國際流量來源的成長所推動的。

I wanted to take some time here to focus on our owned and operated products, which today are primarily composed of our CouponFollow, MapQuest to Startpage businesses. A key feature of all these businesses is that they are not dependent on paid advertising to drive traffic and revenue and instead primarily rely on organic traffic, such as direct navigation, unpaid referrals and search engines. As a result, they provide some nice diversification versus our paid advertising business and the volatility that comes with it.

我想在這裡花一些時間專注於我們擁有和經營的產品，這些產品今天主要由我們的 CouponFollow、MapQuest 到 Startpage 業務組成。所有這些業務的一個關鍵特徵是，它們不依賴付費廣告來推動流量和收入，而是主要依賴自然流量，例如直接導航、免費推薦和搜尋引擎。因此，與我們的付費廣告業務以及隨之而來的波動性相比，它們提供了一些很好的多元化。

Also, while they comprise a smaller portion of our revenue, 19% of total revenue and 23% of owned and operated revenue in Q2, they make up a more significant portion of our gross profit. 42% of total adjusted gross profit is 63% of owned and operated adjusted gross profit in Q2. For these businesses, revenue was up 17% and gross profit was up 18% year-over-year in Q2. Sequentially, revenue was up 21% and gross profit was up 26%.

此外，雖然它們在我們第二季的收入中所佔的比例較小，佔總收入的19%，佔自有和經營收入的23%，但它們在我們的毛利中所佔的比例更大。第二季調整後毛利總額的 42% 是自營經營調整毛利的 63%。這些業務第二季營收年增 17%，毛利年增 18%。隨後，營收成長了 21%，毛利成長了 26%。

We recently reorganized our overall corporate structure to more easily report the performance of our products businesses. Please review the 10-Q filed earlier today for more information on this restructuring. Also, starting with our Q3 results, we will provide information on the current and historical performance of these businesses in our supplemental financials.

我們最近重組了整體公司結構，以便更輕鬆地報告我們產品業務的表現。請查看今天早些時候提交的 10-Q，以了解有關此次重組的更多資訊。此外，從第三季業績開始，我們將在補充財務報告中提供有關這些業務當前和歷史業績的資訊。

On to operating expenses and adjusted EBITDA. In Q2, operating expenses net of add-backs was $28.9 million, down almost $2 million quarter-over-quarter and down 16% year-over-year. We have been working hard to rationalize our operating expense structure following the total security sale at the end of last year. And year-to-date, we've already reduced operating expenses by $10 million on an annualized basis versus 2023, and we expect to drive even more cost savings in the back half of the year heading into 2025 and beyond.

關於營運費用和調整後的 EBITDA。第二季度，扣除附加費用後的營運費用為 2,890 萬美元，季減近 200 萬美元，年減 16%。自從去年底出售全部證券後，我們一直在努力合理化我們的營運費用結構。今年迄今為止，我們已經比 2023 年按年計算減少了 1000 萬美元的營運費用，我們預計在 2025 年及以後的下半年將進一步節省成本。

Adjusted EBITDA was $9.9 million versus $6.1 million last year. Adjusted EBITDA came in above the high end of the Q2 guidance range by $2.9 million. With respect to liquidity, we ended the quarter with $75.7 million of unrestricted cash on our balance sheet and an outstanding balance of $290 million of term loan debt under our credit agreement.

調整後 EBITDA 為 990 萬美元，去年為 610 萬美元。調整後的 EBITDA 比第二季指導範圍的上限高出 290 萬美元。在流動性方面，截至本季末，我們的資產負債表上有 7,570 萬美元的不受限制的現金，根據我們的信貸協議，未償還的定期貸款債務餘額為 2.9 億美元。

Our net leverage on a consolidated basis at quarter end was approximately 7.5x. Although we have been executing well and haven't seen as much volatility as we saw earlier in the year, there is still quite a bit of uncertainty in the online advertising environment in which we operate. So we will continue to provide quarterly guidance.

截至季末，我們的綜合淨槓桿比率約為 7.5 倍。儘管我們一直表現良好，並且沒有看到今年早些時候那麼大的波動，但我們經營的線上廣告環境仍然存在相當大的不確定性。因此我們將繼續提供季度指引。

It is worth noting that historically, Q3 has been relatively flat to down versus Q2, while Q4 has typically benefited from seasonal trends, and we expect to see the same this year as well. We are estimating Q3 revenue to come in between $86 million and $88 million, roughly flat year-over-year at the midpoint. We are estimating adjusted gross profit to come in between $36 million and $38 million, also flat year-over-year at the midpoint, but also with 150 bps of gross margin expansion at the midpoint.

值得注意的是，從歷史上看，第三季與第二季相比相對持平甚至下降，而第四季通常受益於季節性趨勢，我們預計今年也會出現同樣的情況。我們預計第三季營收將在 8,600 萬美元至 8,800 萬美元之間，與去年同期的中點大致持平。我們預計調整後毛利將在 3,600 萬美元至 3,800 萬美元之間，中點也與去年同期持平，但中點毛利率也增加了 150 個基點。

We estimate Q3 adjusted EBITDA to come in between $8 million and $10 million, up 11% year-over-year at the midpoint. We remain bullish about our ability to execute against both near and outer opportunities and remain focused on delivering financial results that reflect that execution. Thank you for joining us today.

我們預計第三季調整後 EBITDA 將在 800 萬美元至 1,000 萬美元之間，中點年增 11%。我們仍然看好我們應對近期和外部機會的能力，並繼續專注於提供反映這種執行力的財務表現。感謝您今天加入我們。

Thank you, Tridi. We are now going to open the line for some questions.

謝謝你，特里迪。我們現在要開通熱線詢問一些問題。

Thank you. The floor is now open for questions. (Operator Instructions) Your first question comes from the line of Daniel Kurnos of Benchmark Company.

謝謝。現在可以提問。（操作員說明） 您的第一個問題來自 Benchmark 公司的 Daniel Kurnos。

Nice progress. There's actually a lot to unpack here, but maybe we'll just start with some simplistic questions and just ask Tridi following up on your commentary around historical seasonality. Are you guys seeing anything that's giving you pause in the marketplace as you look towards the forward guidance?

進展不錯。實際上這裡有很多東西要解開，但也許我們會從一些簡單的問題開始，然後問 Tridi 跟進你對歷史季節性的評論。當你們展望前瞻性指引時，是否看到任何讓您在市場上猶豫不決的事情？

And given all of the initiatives, Michael, that you outlined, what kind of contribution should we be expecting or over what time frame, whether it's back half of this year into '25, just help us at least get the framework of how you're thinking about some of the new initiatives contributing to the P&L.

邁克爾，考慮到您概述的所有舉措，我們應該期待什麼樣的貢獻，或者在什麼時間範圍內，無論是今年後半年進入“25”，還是幫助我們至少獲得您如何做的框架正在考慮一些有幫助於損益的新措施。

Dan, this is Tridi. So yes, I get the easy question there. So short answer is no to your first question. So Q2 was in line with what we thought it would be. I think we mentioned in our last commentary back in May that we were seeing kind of the advertising markets behave as we would expect them to behave kind of sequentially coming off of Q1 that held through Q2 and knocking on with the first part of Q3 here. And we haven't seen anything that would give us pause or across any specific verticals or anything even given maybe the macro news that's kind of been around in the last week or so. And I'll turn it over to Michael for…

丹，這是特里迪。所以是的，我得到了一個簡單的問題。所以簡短的回答是你的第一個問題是否定的。所以第二季符合我們的預期。我想我們在五月的上一篇評論中提到，我們看到廣告市場的表現與我們預期的一樣，它們的表現是從第一季度持續到第二季​​度，並在第三季度的第一部分開始。我們還沒有看到任何會讓我們暫停的事情，或跨越任何特定垂直領域的事情，甚至沒有看到任何可能是上週左右出現的宏觀新聞的事情。我會把它交給麥可…

Yes. Thanks, Dan. So in terms of the new initiatives, so first of all, when Tridi talks about our Q3 guidance and also expecting the seasonal uptick in Q4, that would anticipate no contribution or very de minimis contribution from any of our new efforts. In terms of opening up the buy side to our partners, that's really ongoing right now. And we're going to start lighting the first partners on kind of as we speak. We're not modeling in any significant contribution in 2024, but we are highly confident that our buy-side platform is an improvement over -- for most of our partners, if not all of them, and we'll let them scale substantially beyond where they are now.

是的。謝謝，丹。因此，就新舉措而言，首先，當 Tridi 談論我們的第三季指引並預計第四季度的季節性成長時，預計我們的任何新努力不會做出任何貢獻或做出微乎其微的貢獻。在向我們的合作夥伴開放買方方面，目前確實正在進行中。就在我們說話的時候，我們將開始點亮第一批合作夥伴。我們不會對2024 年的任何重大貢獻進行建模，但我們非常有信心，對於我們的大多數合作夥伴（如果不是全部）而言，我們的買方平台有所改進，並且我們將讓他們的規模大幅超越他們現在在哪裡。

For shopping, again, we are just getting into market with one of our new partners there on the kind of commerce side and have really, really, really early results. We're not anticipating scale on that in the second half of the year. If we do see it in Q4, that would be some kind of unanticipated upside for us.

再說一次，在購物方面，我們剛剛與我們的新合作夥伴之一一起進入市場，在商業方面，並且已經取得了非常非常早期的成果。我們預計今年下半年的規模不會擴大。如果我們確實在第四季度看到這一點，那對我們來說將是某種意想不到的好處。

And then subscription, we do anticipate having at least one product in market in Q4. One of them -- our first one is pretty close to being complete and ready for testing. Again, just to reiterate, not modeling in any substantial contributions on any of these, but we will be a market in all three of those initiatives in the back half of the year.

然後是訂閱，我們預計第四季市場上至少有一種產品。其中之一——我們的第一個已經接近完成並準備好進行測試。再次重申，我們不會對其中任何一項做出任何重大貢獻，但我們將在今年下半年成為所有這三項舉措的市場。

That is super helpful and comprehensive. I appreciate that. Maybe I'll just follow up quickly. It's probably more of a fun question, Michael. But now that Google has decided not to deprecate third-party cookies anymore and they have really no alternative solution in place at this point. It feels like the whole industry, I guess, breathes a bit of a sigh relief. So I'm just kind of curious how you think that will impact sort of CPMs going forward, what reactions you've seen if it changes anything now that privacy sandbox is kind of on hold for the foreseeable future?

這是非常有幫助和全面的。我很欣賞這一點。也許我會盡快跟進。這可能是一個更有趣的問題，邁克爾。但現在 Google 決定不再棄用第三方 cookie，而且他們目前確實沒有替代解決方案。我想整個產業都鬆了一口氣。所以我只是有點好奇你認為這將如何影響未來的每千次展示費用，如果隱私沙箱在可預見的未來被擱置，如果它改變了任何東西，你會看到什麼反應？

Yes. So we're not anticipating much of a change. We were expecting that Q4, if they had fully rolled out the cookie deprecation the way they had talked about was going to be pretty volatile for a lot of people in market. Obviously, that's not going to happen now. But Dan, I know you and I talked about this in the past, we weren't really surprised to see Google take that stance and kind of indefinitely delay things. We've been hearing rumblings in the market.

是的。因此，我們預計不會有太大變化。我們預計，如果他們按照他們所說的方式全面推出 cookie 棄用，那麼對於市場上的許多人來說，這將是相當不穩定的。顯然，現在不會發生這種情況。但是丹，我知道你和我過去討論過這個問題，看到谷歌採取這種立場並無限期推遲事情，我們並不感到驚訝。我們一直聽到市場上的傳言。

I've been hearing a lot of the testing that will be being done and they really simply hadn't been able to come up with a replacement that was that competitive with current cookie solutions. What we are hearing and what I think some of the testing is starting to show is that the solution that Google has come up with is starting to get fairly competitive on the monetization side.

我聽說過很多即將進行的測試，但他們確實無法想出與當前 cookie 解決方案具有競爭力的替代方案。我們所聽到的以及我認為一些測試開始表明的是，谷歌提出的解決方案在貨幣化方面開始變得相當有競爭力。

It's just technically pretty complex to implement. So again, like, I guess, it doesn't really affect our stance and what we think our business is going to do. We do think the industry as a whole, a lot of people were, I think, probably more concerned about the effects that they were letting on and I'm sure they're breathing like a bit of a sigh relief.

只是技術上實現起來相當複雜。所以，我想，這並不會真正影響我們的立場以及我們認為我們的業務將要做什麼。我們確實認為整個行業，我認為，很多人可能更關心他們所造成的影響，我確信他們鬆了一口氣。

Last for me, Michael, I'll step aside. I always ask you about international, you always tell me it's on the come, and you highlighted it this quarter. So just love to hear if there's particular GEOS, you've been able to target particular verticals in international where you've had success. And how much you think that will be a contributing factor to what should be accelerating growth in the '25?

最後，邁克爾，我會退到一邊。我總是問你有關國際的問題，你總是告訴我它即將到來，並且你在本季度強調了它。因此，我很想知道是否有特定的 GEOS，您已經能夠在國際上取得成功的特定垂直領域。您認為這對 25 世紀加速成長有多大影響？

We're pretty bullish right now on international. We've had a lot of success in programmatic markets over the last couple of quarters. We've been scaling up, in particular, our relationship with TikTok and Pengo. Pengo is their programmatic network that's attached to the TikTok overall business. And we're seeing that across almost all international markets.

我們現在非常看好國際市場。過去幾個季度，我們在程序化市場取得了巨大的成功。我們一直在擴大與 TikTok 和 Pengo 的關係。Pengo 是他們的程式化網絡，附屬於 TikTok 的整體業務。我們在幾乎所有國際市場上都看到了這一點。

We're seeing it in Asia, South America, a bit in Europe as well. So I would say that if current trends continue, we're going to continue to see pretty rapid growth in our international business, continuing to take overall more and more of a contribution to our overall revenue.

我們在亞洲、南美洲以及歐洲也看到了這種情況。因此，我想說，如果當前的趨勢持續下去，我們的國際業務將繼續保持快速成長，並繼續為我們的整體收入做出越來越多的貢獻。

And right now, if you ask me, I don't think those trends are going to slow down. We've been tuning our platform to focus more international. There's a lot of idiosyncratic things you have to do to really attack the programmatic market, particularly internationally. But we think we've got those things figured out, and we see a lot of growth ahead of us, and it's starting to kick in already. So not on the comp anymore. We're actually seeing it.

現在，如果你問我，我認為這些趨勢不會放緩。我們一直在調整我們的平台，以更加關注國際化。要真正進軍程序化市場，尤其是國際市場，你必須做很多特別的事情。但我們認為我們已經解決了這些問題，並且我們看到了前方的大量增長，並且它已經開始發揮作用。所以不再參加比賽了。我們確實看到了。

There are no further questions at this time. I will now turn the conference back over to Michael Blend for closing remarks.

目前沒有其他問題。現在，我將把會議轉回邁克爾布倫 (Michael Blend) 致閉幕詞。

Okay. Great. Well, thanks, everybody, for joining us today. As we tried to make clear in our remarks today, things are really starting to move in the right direction here at System1. Overall, our team is executing really well. Our major customers are pleased both on our partner side and also on our revenue side.

好的。偉大的。好的，謝謝大家今天加入我們。正如我們試圖在今天的演講中明確指出的那樣，System1 的事情確實開始朝著正確的方向發展。總的來說，我們的團隊執行得非常好。我們的主要客戶對我們的合作夥伴和我們的收入都感到滿意。

And overall, we're seeing some decent stability in the digital advertising market, which is what we've been looking for over here for the last 1.5 years. And some things are looking pretty good. We're looking forward to have you join us again for Q3 earnings, and we are definitely hoping out some good news to report for you then as well. So thank you for joining.

整體而言，我們看到數位廣告市場具有一定的穩定性，這也是我們過去 1.5 年一直在尋找的。有些事情看起來還不錯。我們期待您再次加入我們，了解第三季的收益，我們也絕對希望屆時能向您報告一些好消息。感謝您的加入。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。