System1 (NYSE:SST) reported second-quarter 2026 revenue of $30.2 million, down 61% from a year earlier and 19% sequentially, as the company continued to reduce owned-and-operated marketing activity and faced weaker Google monetization across parts of its search and partner-network businesses.
Chief Executive Officer Michael Blend said the company made progress in audience growth and engagement across its product portfolio, even as changes in Google advertising coverage and payouts limited the financial benefit of that traffic growth. Total sessions to System1’s owned-and-operated product sites rose 31% year over year and 5% from the first quarter.
Products Segment Gains Traffic, but Startpage Monetization Weighs
Products revenue was $19.5 million, down 19% year over year but up 3% sequentially. The sequential increase was primarily driven by a 5% rise in total sessions, according to Chief Financial Officer Tridivesh Kidambi. Products represented 64% of total revenue during the quarter.
Product revenue per session declined 2% from the first quarter, largely because of monetization pressure at Startpage, System1’s private search engine. Startpage sessions increased 11% sequentially, while mobile app sessions climbed 63% year over year. However, Blend said Google showed fewer ads on Startpage searches and paid less per query, more than offsetting the gains in usage.
During the question-and-answer session, Kidambi said Startpage’s monetization challenges were currently outweighing its user-session growth. Blend said the company had seen “green shoots” in monetization recently but did not provide a definitive outlook, citing the need for additional data.
System1 also highlighted growth in its CouponFollow shopping business. Organic sessions rose 11% from the first quarter following a rebound in Google search-engine optimization traffic. Blend said CouponFollow became the second-largest coupon site by organic traffic behind Reddit, while gross profit from paid traffic acquisition rose 37% year over year.
The company said CouponFollow is developing AI-related commerce opportunities using its proprietary, verified promotional-code data and affiliate relationships with merchants. Blend said System1 believes those assets could be useful to shopping-focused AI applications and agentic-commerce services.
In its location business, MapQuest’s total sessions increased 25% year over year during the first half of 2026. The company said display advertising performance remained strong, supported by healthy CPMs, its high-intent audience and first-party data. MapQuest also soft launched Lighthouse, a family-safety app, and was set to launch a Model Context Protocol server intended to let MapQuest navigation and location data integrate with AI agents and applications.
Partner Network Impacted by Google Changes
Marketing GAAP revenue totaled $10.7 million, falling 80% year over year and 42% sequentially. Excluding the wind-down of owned-and-operated marketing activity, marketing revenue declined 49% year over year and 21% from the prior quarter.
Blend said the partner-network business performed well in April and May, generating more than $100,000 per day in net revenue. But a Google partner-network-wide change implemented in late May and early June reduced monetization by more than 30%, narrowing the spread between revenue and traffic-acquisition costs.
By the end of June, daily net revenue had recovered about half of the decline, Blend said, though the impact on second-quarter results remained significant. System1 said it is seeking to stabilize the business, diversify network partners, improve traffic quality and broaden monetization sources to reduce its concentration risk with Google.
The company ended the quarter with 59 active partners, up 5% sequentially. Revenue per active partner declined 25%, primarily due to monetization volatility in the final month of the quarter. System1 had 28 scaled partners, defined as those generating at least $50,000 of quarterly revenue.
Profitability and Balance Sheet
Adjusted gross profit was $25.5 million, down 38% from a year earlier and 10% sequentially. Product segment profit totaled $17.5 million, down 23% year over year but up 1% sequentially, while marketing segment profit fell 51% year over year and 24% sequentially to $9.5 million.
Operating expenses, net of add-backs, were $23.6 million, declining 20% year over year and 8% sequentially as the company continued cost-saving initiatives. Adjusted EBITDA was $1.9 million, down 83% from the prior-year quarter and 29% from the first quarter.
Kidambi said System1 had previously expected adjusted EBITDA to increase sequentially in the second quarter, but the June deterioration in Google RSOC monetization changed that outlook. He said the company expects EBITDA to rise sequentially in each remaining quarter of the year, though System1 is not providing formal third-quarter or full-year guidance because of continuing volatility.
System1 completed its debt exchange on July 23, reducing total outstanding debt to $150 million from $302.6 million before the exchange agreement announced in May. Pro forma for the closing cash payment, cash at June 30 was $16.2 million and consolidated net leverage was 5.88 times, Kidambi said.
The company also began marketing its IntentStream audience-data product, which packages non-private first-party data into real-time pre-purchase intent signals for brands. Blend said the product excludes Startpage data and has begun adding initial customers, though it remains too early to discuss material financial results.
About System1 (NYSE:SST)
System1, Inc (NYSE: SST) is a technology-driven marketing company that leverages machine learning and first-party consumer intent data to connect advertisers with potential customers. Headquartered in Venice, California, System1 focuses on developing automated, data-powered solutions to drive performance marketing across digital channels. The company’s platform captures real-time consumer insights and applies predictive analytics to optimize ad delivery and improve campaign efficiency.
The business operates through two primary segments: Consumer Acquisition and Consumer Research.
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