System1, Inc. Q3 FY2025 earnings call

• Product Segment Initiatives: CouponFollow expanded internationally with language-specific sites in Germany, France, and Poland; MapQuest redesigned iOS and Android apps with new features like CarPlay support and social features; Startpage released Vanish, a private AI chat app.
• Marketing Segment Challenges: Impacted by Google's AFD product sunset; transition to Google's RSOC product underway; focus on diversifying marketing sources; addressed invalid traffic issue with an advertising partner.
• AI and Innovation: Progress in AI-powered agentic coding; plans to launch new AI-focused products; investment in core businesses to strengthen positions in large addressable markets.

Product Segment: Revenue was $22.5 million, up 8% year-over-year (YOY) with adjusted gross profit of $21.2 million, up 6% YOY. Sessions increased 23% YOY and 12% sequentially. Represents 56% of total segment profit. Marketing Segment: Revenue was $39 million, down 43% YOY and 28% sequentially. Adjusted gross profit was $16.6 million, down 14% YOY and 15% sequentially. Impacted by Google's AFD product sunset.

No Q4 2025 guidance provided; anticipation of stability in the Marketing segment by 2026; focus on accelerating growth in the Product segment through product expansion and new launches.

• Volatility in Google's RSOC product; invalid traffic issue with an advertising partner, ongoing dispute for reimbursement.

Q: Talk about efforts with Microsoft and capitalizing on Bing's market share gains?

A: We work closely with Bing, shifting efforts as Bing's performance improves, retaining a strong partnership with Bing and Yahoo!.

Q: Other ways working with OpenAI and Anthropic?

A: Startpage's Vanish product for private AI chat; company working with multiple AI models, planning consumer-focused agents using AI.