System1, Inc. · NYSE:SST
System1 — SPAC Merger (September 2021)
47 slides from System1's SPAC merger presentation, September 2021
Slide 1: Investor Presentation
Investor Presentation September 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: 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 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 $278B in 20241 • Serving advertisers across every industry vertical for mass relevancy System1’s RAMP platform drives a long term sustainabl
Slide 7: Leverage Trebia Value Creation Playbook
Leverage Trebia Value Creation Playbook Trebia Co-Founders have consistently scaled public businesses, executed M&A, increased margins and drove multiple expansion and public investor returns William P. Foley II Frank R. Martire Jr Co-Founder Co-Founder Consistent Success in Decades of Driving Prove
Slide 8: Partnership Will Accelerate Business Opportunities and Drive Multiple Expansion
Partnership Will Accelerate Business Opportunities and Drive Multiple Expansion Leading Omni- Profitable & Compelling Following Significant channel Customer Proven Growth Entry Valuation Established Opportunity for Acquisition and Story With Attractive Value Creation Value Creation Monetization Tran
Slide 9: Company Overview
Company Overview 9
Slide 10: Leading omnichannel customer acquisition marketing platform
is a leading omnichannel customer acquisition marketing platform, delivering high-intent customers to advertisers and to our own subscription products 10
Slide 11: System1 at a Glance
System1 at a Glance ● System1 finds and delivers high intent customers across 130M+ 50+ major advertising verticals Monthly Visitors1 ● System1’s proprietary Responsive Acquisition Marketing 2M+ Platform (RAMP) drives the business and provides a Active Subscribers2 sustainable competitive advantage
Slide 12: Consistent Growth & Profitability
Consistent Growth & Profitability… Adj. Revenue Adj. EBITDA ($ in millions) ($ in millions) $109 $778 $560 $68 $63 $439 $53 $385 $46 $297 $257 $21 2018 2019 2020 2021E 1H 2020 1H 2021 2018 2019 2020 2021E 1H 2020 1H 2021 Change in Deferred Revenue +$9 +$13 +$18 +$22 +$9 +$11 Note: Adj. Revenue and A
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 Other Social No dependency on any Retail Privacy / Security specific advertiser or Home & Organic Garden vertical Search Jobs & Native 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 Adj. Gross Profit: 1 $119M $36M $22M 14 1. All metrics shown are for
Slide 15: Our Business Model: Find & Deliver High Intent Customers
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 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 130M+ Monthly Visitors1 ~29M Monthly Users1 ~38M Monthly Users1 ~8M Monthly Users1 Other System1 500M Owned & Operated 25+ more Monthly Distinc
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 $530M+ • Total User Sessions: 2.8BN • 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: Recent Privacy Shifts 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 21: Our Responsive Acquisition Marketing Platform (RAMP)
Our Responsive Acquisition Marketing Platform (RAMP) is the Underlying Technology Driving Our Success 21
Slide 22: 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 23: 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 + 23 Monetization Subscription
Slide 24: Growth Strategy
Growth Strategy 24
Slide 25: 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 65K ad Delivering Customers to International Advertising campaigns daily ~100 Advertisers Directly R
Slide 26: 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) $78 ($ in millions) 1,902 $43 861 2018 2020 2018 1H2020 2021 Launch New Products Increase in Billings Per User1 $83+ $29+ 2018 2020 26 1.
Slide 27: Strategic M&A Can Drive Upside to Our Projections
Strategic M&A Can Drive Upside to Our Projections Focus on Proprietary RAMP is Built to Target Rich Deals & Growth Facilitate Plug & Play Environment Synergies M&A 27
Slide 28: We Have a Successful & Growing M&A Track Record
We Have a Successful & Growing M&A Track Record Develop and Build strong augment new brands Search RPM Growth Under System1 user in focus Diversify O&O Accelerate acquisition markets monetization Product international Acquisition channels or verticals capabilities Extension growth • Strong consumer
Slide 29: High Priority M&A Opportunities
High Priority M&A Opportunities CURRENT FOCUS AREAS RAMP bolt-on Accelerate existing Enter adjacent technology business lines markets 29
Slide 30: Founder-Led Team With an Exceptionally Deep Bench
Founder-Led Team With an Exceptionally Deep Bench 350+ Employees Michael Blend Tridivesh Kidambi Paul Filsinger CEO & Co-Founder CFO President 50% Of employees in engineering, product, & data science 52% Pro-forma founder and Jen Robinson Beth Sestanovich Brian Coppola management Chief Technology Of
Slide 31: Financial Performance
Financial Performance 31
Slide 32: Financial Highlights
Financial Highlights A Rule of 40 Business 1 Strong Revenue Growth and Profitability 2 Diverse Business Model Generating Revenue Across Verticals Through Advertising and Subscriptions Strong and Consistent Organic Growth 3 RAMP Platform Enables Continuous Optimization Driving Operating Leverage Exce
Slide 33: Rule of 40 Company Strong Growth Trajectory
Rule of 40 Company Strong Growth Trajectory & Track Record of Profitability Adj. Revenue Adj. EBITDA ($ in millions) ($ in millions) $109 • The Company increased its $778 guidance since transaction $133 announcement $68 given strong $560 $63 performance of its business lines $88 16% $53 $439 $46 • I
Slide 34: A Highly Diversified Business Model
A Highly Diversified Business Model Diversified Across Verticals and Acquisition Channels Platform Advertising Revenue by Platform Revenue by Vertical Acquisition Channel Resiliency through COVID Adj. Gross Profit1 Resilience through Social Other Other ($ in millions) COVID19 Retail Privacy / Securi
Slide 35: Acquisition of Protected Drives Our Subscription Business
Acquisition of Protected Drives Our Subscription Business Customer Count Subscription Billings Subscription Adj. Gross Profit (in millions) ($ in millions) ($ in millions) $180 2016 Cohort 2017 Cohort 2018 Cohort 2.2 2019 Cohort 2020 Cohort 2021E Cohort $150 1.9 $16 $120 1.2 $90 0.9 70%+ from $60 cu
Slide 36: Historical and Projected Financial Detail
Historical and Projected Financial Detail ($ in millions) 2018 2019 2020 2021E 1H 2020 1H 2021 Adj. Revenue Owned & Operated Properties $228 $348 $434 $606 $199 $302 Network Partners $35 38 38 39 19 17 Advertising Total $263 $386 $472 $644 $218 $318 Subscription 34 53 88 133 40 67 Total $297 $439 $5
Slide 37: Investment Highlights
Investment Highlights A fast growing and profitable business RAMP platform provides a strong and sustainable competitive advantage A highly diversified business across its marketing and monetization capabilities Proven M&A capabilities Strong, industry-experienced and founder-led managemen
Slide 38: Transaction Overview
Transaction Overview 38
Slide 39: Transaction Overview
Transaction Overview Sources and Uses ($m)1 Pro Forma Valuation ($m) Sources Amount % Valuation Amount SPAC Cash $518 33% PF Shares Outstanding 128.5 Share Price $10.00 S1 / Protected Equity Rollover 668 43% 2 PF Equity Value $1,285 Term Loan Debt 325 21% (+) PF Net Debt3 141 Cash on Balance Sheet 3
Slide 40: Defining System1's Public Comparables
Defining System1’s Public Comparables Leading User Acquisition & Monetization Businesses 40
Slide 41: Peer Trading Analysis – Benchmarking
Peer Trading Analysis – Benchmarking Median: 18.7% 2020-2021 38.2% 35.1% Revenue 28.4% 21.9% 18.7% Growth 14.5% 14.2% 11.0% (1) Median: 17.2x TEV / 27.1x 24.2x 23.3x 2021 17.2x 15.4x EBITDA 10.9x 11.7x 10.3x EBITDA Margin 16.4% 37.1% 9.5% 5.7% 13.1% 9.5% 40.3% 11.5% Source: FactSet (as of 9/17/21) N
Slide 42: TEV / 2021 EBITDA Regression
Regression: TEV / EBITDA vs. Revenue Growth R2 = 73.7% 30.0x TEV / 2021 EBITDA 25.0x 20.0x 15.0x 10.0x 5.0x 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 2020 - 2021 Revenue Growth Source: FactSet (as of 9/17/21) Note: For purposes of comparability in analyzing performance, System1 and selected comparab
Slide 43: Appendix
Appendix 43
Slide 44: GAAP Revenue to Adj. Revenue & Adj. Gross Profit
GAAP Revenue to Adj. Revenue & Adj. Gross Profit ($ in millions) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 2018 2019 2020 GAAP Revenue O&O Advertising $78 $88 $87 $117 $112 $92 $108 $125 $139 $161 $231 $370 $438 Network Advertising 8 8 10 12 11 8 9 11 8 9 35 38 38 Subscription 11 1
Slide 45: GAAP Revenue to Adj. Revenue & Adj. Gross Profit
GAAP Revenue to Adj. Revenue & Adj. Gross Profit ($ in millions) (continued from previous page) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 2018 2019 2020 Consolidated Adj. Revenue $97 $103 $108 $130 $136 $121 $142 $160 $179 $206 $297 $439 $560 Less: Pro-Forma Cost of Revenue O&O Adv
Slide 46: Net Income to Adj. EBITDA
Net Income to Adj. EBITDA ($ in millions) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 2018 2019 2020 Consolidated Net Income / (Loss) ($4) ($1) $2 $6 $- ($12) $3 $13 $5 $19 ($18) $4 $3 Plus: Tax - 1 1 (1) 1 - 1 1 - - - 1 2 Plus: Interest Expense 6 6 6 7 7 6 6 6 4 4 21 26 25 Plus: Dep
Slide 47: Peer Public Market Data
Peer Public Market Data ($ in millions) Share s Market Enterprise TEV / Rev TEV / EBITDA Revenue Growth EBITDA Growth EBITDA Margin Company (1) (2) Price Cap ($mm) Val ($mm) CY21E CY21E CY21E CY21E CY21E (3) (4) $10.00 $1,285 $1,426 1.8x 10.9x 38.2% 62.0% 16.4% User Monetization $132.51 $6,830 $8,06