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SEGMENT REPORTING | 12 Months Ended
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Dec. 31, 2022
Segment Reporting [Abstract] |
SEGMENT REPORTING | SEGMENT REPORTING ASC 280-10, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), in deciding how to allocate resources and assess performance. The Company’s Chief Executive Officer, who is considered to be its CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. The CODM measures and evaluates reportable segments based on segment operating revenues as well as adjusted gross profit and other measures. The Company defines and calculates adjusted gross profit as revenue less advertising expense to acquire users. The remaining cost of revenues consists of non-advertising expenses such as set-up costs, royalties and fees. The Company excludes the following items from segment adjusted gross profit: depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments, that the CODM does not consider for the purposes of making decisions to allocate resources among segments or to assess segment performance. Although these amounts are excluded from segment adjusted gross profit, they are included in reported consolidated net income from operations before income tax and are included in the reconciliation that follows. The Company’s computation of segment adjusted gross profit may not be comparable to other similarly-titled measures computed by other companies because all companies do not calculate segment adjusted gross profit in the same fashion. Operating segments do not sell products and services across segments, and, accordingly, there are no intersegment revenues to be reported. The accounting policies for segment reporting are the same as for System1 as a whole. The CODM of the Company reviews operating results, assesses performance and makes decisions by operating segment. Management views each of the Company’s business lines as an operating segment. The Company has three business lines, operating segments and reportable segments: Owned and Operated Advertising, Partner Network, and Subscription. R efer to Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES for additional information regarding our revenue generating activities. The following table summarizes revenue by reportable segments:
| Successor |  |  | Predecessor
| Period from January 27, 2022 through December 31, 2022 |  |  | Period from January 1, 2022 through January 26, 2022 |  | Year Ended December 31, 2021
Owned and Operated Advertising | $ | 556,303 |  |  |  | $ | 49,249 |  |  | $ | 652,884 |
Partner Network | 55,926 |  |  |  | 3,463 |  |  | 35,505 |
Subscription | 161,711 |  |  |  | — |  |  | — |
Total revenue | $ | 773,940 |  |  |  | $ | 52,712 |  |  | $ | 688,389 |
The following table summarizes adjusted gross profit by reportable segments:
| Successor |  |  | Predecessor
| Period from January 27, 2022 through December 31, 2022 |  |  | Period from January 1, 2022 through January 26, 2022 |  | Year Ended December 31, 2021
Owned and Operated Advertising | $ | 138,560 |  |  |  | $ | 8,768 |  |  | $ | 143,284 |
Partner Network | 42,291 |  |  |  | 3,012 |  |  | 35,505 |
Subscription | 78,220 |  |  |  | — |  |  | — |
Adjusted gross profit | $ | 259,071 |  |  |  | $ | 11,780 |  |  | $ | 178,789 |
Other cost of revenues | 23,910 |  |  |  | 575 |  |  | 11,513 |
Salaries and benefits | 194,976 |  |  |  | 31,181 |  |  | 66,747 |
Selling, general, and administrative | 63,478 |  |  |  | 15,665 |  |  | 35,813 |
Depreciation and amortization | 118,652 |  |  |  | 1,000 |  |  | 13,885 |
Impairment of goodwill | 366,309 |  |  |  | — |  |  | — |
Interest expense | 32,050 |  |  |  | 1,049 |  |  | 16,870 |
Change in fair value of warrant liabilities | 3,751 |  |  |  | — |  |  | — |
Income (loss) before income tax | $ | (544,055) |  |  |  | $ | (37,690) |  |  | $ | 33,961 |
The following table summarizes revenue by geographic region:
| Successor |  |  | Predecessor
Geographic Region | Period from January 27, 2022 through December 31, 2022 |  |  | Period from January 1, 2022 through January 26, 2022 |  | Year Ended December 31, 2021
United States | $ | 593,527 |  |  |  | $ | 51,701 |  |  | $ | 652,622 |
United Kingdom | 162,019 |  |  |  | — |  |  | 543 |
Other countries | 18,394 |  |  |  | 1,011 |  |  | 35,224 |
Total revenue | $ | 773,940 |  |  |  | $ | 52,712 |  |  | $ | 688,389 |
The following table summarizes property and equipment, net and operating lease right-of-use assets by reportable segments:
| Successor |  |  | Predecessor
| December 31, 2022 |  |  | December 31, 2021
Owned and Operated Advertising | $ | 9,646 |  |  |  | $ | 830 |
Subscription | 860 |  |  |  | — |
Total | $ | 10,506 |  |  |  | $ | 830 |
The following table summarizes property and equipment, net and operating lease right-of-use assets by geographic region:
| Successor |  |  | Predecessor
| December 31, 2022 |  |  | December 31, 2021
United States | $ | 5,473 |  |  |  | $ | 718 |
Canada | 3,730 |  |  |  | 78 |
Other countries | $ | 1,303 |  |  |  | $ | 34 |
Total | $ | 10,506 |  |  |  | $ | 830 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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