System1, Inc. · NYSE:SST
System1 — Investor Day (November 2021)
44 slides from System1's investor day presentation, November 2021
Slide 1: Analyst Day Presentation
Analyst Day Presentation November 2021
Slide 2: Disclaimer
Disclaimer Disclaimer This presentation does not constitute a prospectus and should under no circumstances be understood as an offer to sell or the solicitation of an offer to buy securities, nor will there be any sale of securities in any state or jurisdiction in which such offer, solicitation or s
Slide 3: Disclaimer (Continued)
Disclaimer (Continued) Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from any forward-looking statements contained in this presentation. Neither Trebia's nor System1's independent auditors have audited, reviewed, compiled or
Slide 4: Sponsors & S1 Management
Sponsors & S1 Management William P. Foley II Frank R. Martire Jr Michael Blend Tridivesh Kidambi Trebia Trebia CEO & Co-Founder Chief Financial Officer 4
Slide 5: Leverage Trebia Value Creation Playbook
Leverage Trebia Value Creation Playbook Trebia Co-Founders have consistently scaled public businesses, executed M&A, increased margins and drove multiple expansion and public investor returns William P. Foley II Frank R. Martire Jr Co-Founder Co-Founder Consistent Success in Decades of Driving Prove
Slide 6: System1 Checks All of Our Boxes
System1 Checks All of Our Boxes System1 operates in a very large and growing market Large TAM • U.S. digital advertising was a $150B market in 2021, growing to $278B in 20241 • Serving advertisers across every industry vertical for mass relevancy System1’s RAMP platform drives a long term sustainabl
Slide 7: Transaction Overview
Transaction Overview System1 Overview Key Transaction Highlights ● Transaction represents $1.4 billion Enterprise Value ● Transaction is attractively priced relative to comparable companies trading multiples and operating metrics ● Use of Proceeds include1: ○ $250M to exiting private equity investor
Slide 8: Partnership Will Accelerate Business Opportunities and Drive Multiple Expansion
Partnership Will Accelerate Business Opportunities and Drive Multiple Expansion Omni-channel Profitable & Compelling Following Significant Customer Proven Growth Entry Valuation Established Opportunity for Acquisition and Story With Attractive Value Creation Value Creation Monetization Transaction P
Slide 9: Company Overview
Company Overview 9
Slide 10: System1 is an omnichannel customer acquisition marketing platform
is an omnichannel customer acquisition marketing platform, delivering high-intent customers to advertisers and to our own subscription products 10
Slide 11: System1 at a Glance
System1 at a Glance ● System1 finds and delivers high intent customers across 135M+ 50+ major advertising verticals Monthly Visitors1 ● System1’s proprietary Responsive Acquisition Marketing 2M+ Platform (RAMP) drives the business and provides a Active Subscribers2 sustainable competitive advantage
Slide 12: Consistent Growth & Profitability…
Consistent Growth & Profitability… Revenue Gross Profit Pro Forma Adj. EBITDA ($ in millions) ($ in millions) ($ in millions) $142 $995 $255 $805 $203 $111 $90 $594 $156 $564 $133 $68 $460 $119 $63 $404 $91 $46 $299 $78 $40 2018 2019 2020 2021E 2022E Sept20 Sept21 2018 2019 2020 2021E 2022E Sept20 S
Slide 13: …and a Highly Diversified & Resilient Business
…and a Highly Diversified & Resilient Business Platform Advertising Revenue by Platform Revenue by Vertical Acquisition Channel Vertical Agnostic Other Social Other No dependency on any Retail Privacy / Security Organic specific advertiser or Home & vertical Garden Native Jobs & Search Education Omn
Slide 14: Our Business Lines
Our Business Lines Advertising Subscription Revenue Generated Through Revenue Generated Through Digital Advertising Digital Subscriptions Owned & Operated (O&O) Network Owned & Operated Properties Partners Digital Products +25 more Gross Profit:1 $137M $36M $36M 14 1. All metrics shown are for the t
Slide 15: Our Business Model: Find & Deliver High Intent Customers Across 50+ Major Advertising Verticals
Our Business Model: Find & Deliver High Intent Customers Across 50+ Major Advertising Verticals #1 Unlock Customer Intent #2 Refine Customer Intent #3 Monetize Customer Intent RAMP algorithmically places advertisement Consumer System1 is paid on a 3rd party views & clicks by sending customer on ad a
Slide 16: RAMP Dynamically Places Advertisements Across All Major Customer Acquisition Channels
#1 RAMP Dynamically Places Advertisements Across All Major Customer Acquisition Channels… Social Display AI & machine learning creates bespoke ads for 50+ advertiser verticals in each acquisition channel Native Search • RAMP dynamically adjusts bid pricing for each advertising campaign to maximize p
Slide 17: Advertising Directs Consumers To System1 Web Sites
#2 …Advertising Directs Consumers To System1 Web Sites, Which Further Qualify Consumer Purchase Intent... 40+ Internet Properties Across Multiple Industries 135M+ Monthly Visitors1 ~24M Monthly Users1 ~46M Monthly Users1 ~11M Monthly Users1 Other System1 ~500M Owned & Operated 25+ more Monthly Disti
Slide 18: Deliver High-Intent New Customers to Advertisers & Subscription Products
#3 …and Then We Deliver High-Intent New Customers to Our Advertisers & System1 Subscription Products Select Customers Metrics • O&O Advertising Ad Revenue: Networks $575M+ • Total User Sessions: 3.1BN • O&O Advertising Direct Revenue Advertisers Per Session: Monetizing $0.19 Consumer Proprietary Pro
Slide 19: RAMP Technology Enables Our Business Success
RAMP Technology Enables Our Business Success AI-powered Marketing Unlocks Leverage Our Websites to Further Deliver and Monetize High-Intent Customer Intent… Qualify Customer Intent…. Customers to Advertisers / Subscription Programmatic Content & Monetization Buying Ad Engine Decisioning Platform Rea
Slide 20: Our Responsive Acquisition Marketing Platform (RAMP) is the Underlying Technology
Our Responsive Acquisition Marketing Platform (RAMP) is the Underlying Technology Driving Our Success 20
Slide 21: What is RAMP?
What is RAMP? Publishing stack powers 40+ O+O sites Programmatic buying engine automates omni-channel advertising Monetization engine connects users with creative automation & bidding with highest value offers that satisfy optimization intent Powerful search stack processes Data & ML pipelines inges
Slide 22: RAMP Platform Architecture
RAMP Platform Architecture Search Partner Properties Properties Application Layer Acquisition Engagement Monetization Paid and organic Content and advertisement Monetization, measurement traffic acquisition delivery components. and revenue attribution Platform Layer services and APIs. engine. Data La
Slide 23: Deep Dive Keyword Service
Deep Dive Keyword Service > (Q LGOLED Tvé65in lv @ic & J Performance Data Entity https://en.wikipedia.org/wiki/LG_Corporation Entity https://en.wikipedia.org/wiki/Television_set#OLED Topic shopping::tech::television set:oled tv Query Intent Category /Shopping Language English Keyword Engine @ = — wa
Slide 24: Our Technology Moat Widens As Our Business Grows
Our Technology Moat Widens As Our Business Grows Key Competitive Advantages System1’s Virtuous Flywheel Highly Efficient Omnichannel Customer Acquisition Closed-Loop More Vertical Agnostic Attribution Customer Traffic Privacy Focused 1st Party Data Higher Data-Driven End to End Tech Stack Monetizati
Slide 25: System1's Differentiated Positioning in the Customer Acquisition Landscape
System1’s Differentiated Positioning in the Customer Acquisition Landscape Multi- Vertical Sub-scale companies Single Vertical Single Advertising + 25 Monetization Subscription
Slide 26: Recent Privacy Shifts in Digital Marketing Emphasize First-party Data
We are well positioned as 3rd party cookies & intrusive tracking goes away Recent Privacy Shifts in Digital Marketing Emphasize First- party Data… One of the largest independent 1st-party search providers RAMP does not Focused on 1st-party rely on 3rd-party intent data cookies First-party relationsh
Slide 27: Growth Strategy
Growth Strategy 27
Slide 28: Advertising: Multiple Drivers of Growth
Advertising: Multiple Drivers of Growth Optimizations to drive Expand our Direct-to- Grow & expand our acquisition & monetization Advertiser business international business efficiencies1 RAMP manages 90K+ ad Delivering Customers to International Advertising campaigns daily ~100 Advertisers Directly
Slide 29: Subscription: Land and Expand with Existing and New Products
Subscription: Land and Expand with Existing and New Products Continue to Acquire More High Subscriber Retention Drives Subscribers Billings Growth (in thousands) $116 ($ in millions) 2,208 861 $43 2018 YTD 9/30/21 2018 YTD 9/30/21 Launch New Products Increase in Billings Per User1 $130+ $29+ 2018 YT
Slide 30: Long Runway on Existing Strategy
Long Runway on Existing Strategy Advertising Subscription Total Total Current Product Suite Potential Categories Digital Digital Advertising Advertising Security & Privacy $150B1 $150B1 Hosting & Storage News & Education S1 S1 Ad Spend $500M 4x to Credit Monitoring Ad Spend $2B Home Services Gaming
Slide 31: Strategic M&A Can Drive Upside to Our Projections
Strategic M&A Can Drive Upside to Our Projections Focus on Proprietary RAMP is Built to Target Rich Deals & Growth Facilitate Plug & Play Environment Synergies M&A 31
Slide 32: We Have a Successful & Growing M&A Track Record
We Have a Successful & Growing M&A Track Record Develop and Build strong augment new brands Search RPM Growth Under System1 user in focus Diversify O&O Accelerate acquisition markets monetization Product international • Strong consumer brand for private search ~2x Acquisition channels or verticals c
Slide 33: High Priority M&A Opportunities
High Priority M&A Opportunities CURRENT FOCUS AREAS RAMP bolt-on Accelerate existing Enter adjacent technology business lines markets 33
Slide 34: Founder-Led Team With an Exceptionally Deep Bench
Founder-Led Team With an Exceptionally Deep Bench 375+ Employees Michael Blend Tridivesh Kidambi Paul Filsinger CEO & Co-Founder CFO President 50% Of employees in engineering, product, & data science 52% Pro-forma founder and Jen Robinson Beth Sestanovich Brian Coppola management Chief Technology Of
Slide 35: Financial Performance
Financial Performance 35
Slide 36: Financial Highlights
Financial Highlights A Rule of 40 Business 1 Strong Revenue Growth and Profitability, Management Focus on Gross Profit Dollars 2 Diverse Business Model Generating Revenue Across Verticals Through Advertising and Subscriptions Strong and Consistent Organic Growth 3 RAMP Platform Enables Continuous Op
Slide 37: Strong Growth Trajectory & Track Record of Profitability
Strong Growth Trajectory & Track Record of Profitability Revenue Gross Profit Pro Forma Adj. EBITDA ($ in millions) ($ in millions) ($ in millions) $995 $142 $805 $255 $203 $111 $594 $564 $90 $156 $460 $404 $133 15% $68 $119 $63 15% 15% 14% $299 $91 14% $46 $78 26% $40 26% 25% 26% 11% 24% 26% 10% 22
Slide 38: A Highly Diversified Business Model
A Highly Diversified Business Model Diversified Across Verticals and Acquisition Channels Platform Advertising Revenue by Platform Revenue by Vertical Acquisition Channel Resiliency through COVID Other Gross Profit Resilience through Privacy / Social Other ($ in millions) COVID19 Retail Security Org
Slide 39: Acquisition of Protected Drives Our Subscription Business
Acquisition of Protected Drives Our Subscription Business Customer Count Subscription Billings Subscription Gross Profit (in millions) ($ in millions) ($ in millions) $180 2016 2017 2018 2019 2020 2021 2.2 1.9 $150 $33 $120 1.2 $90 0.9 ~70% from customers $60 acquired in prior years ($2) $30 ($12) $
Slide 40: Historical and Projected Financial Detail
Historical and Projected Financial Detail ($ in millions) 2018 2019 2020 2021E Sept20 YTD Sept21 YTD Revenue Owned & Operated Properties $231 $370 $438 $637 $312 $463 Network Partners $35 $38 $38 $35 $28 $26 Advertising Total $266 $407 $476 $672 $340 $489 Subscription 34 53 88 134 64 105 Total $299
Slide 41: Investment Highlights
Investment Highlights A fast growing and profitable business RAMP platform provides a strong and sustainable competitive advantage A highly diversified business across its marketing and monetization capabilities Proven M&A capabilities Strong, industry-experienced and founder-led managemen
Slide 42: Appendix
Appendix 42
Slide 43: Net Income to Pro Forma Adj. EBITDA
Net Income to Pro Forma Adj. EBITDA ($ in millions) 2018 2019 2020 Sept20 YTD Sept21 YTD Consolidated Net Income / (Loss) ($18) $4 $3 ($3) $45 Plus: Tax - 1 2 0 2 Plus: Interest 21 26 25 19 12 Plus: D&A 5 11 14 11 10 Plus: Other Expense 0 1 0 0 0 Plus: Stock-Based Comp and Distributions 14 12 9 6 6
Slide 44: Impact of Acquisitions on Revenue and Gross Profit
Impact of Acquisitions on Revenue and Gross Profit ($ in millions) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 2018 2019 2020 Revenue Pre-Acquisition and Acquisition- 1 $8.2 $5.4 $4.8 $0.5 $0.7 $0.3 $0.2 $0.6 $47.4 $18.9 $1.8 Related Adjustments Gross Profit Pre-Acquisition and Acquisition- 1 $5