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SEGMENT REPORTING
 12 Months Ended
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. Refer to Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES for additional information regarding our revenue generating activities.

The following table summarizes revenue by reportable segments:

SuccessorPredecessor
Period from January 27, 2022 through December 31, 2022Period from January 1, 2022 through January 26, 2022Year Ended December 31, 2021
Owned and Operated Advertising$556,303 $49,249 $652,884 
Partner Network55,926 3,463 35,505 
Subscription161,711 — — 
Total revenue$773,940 $52,712 $688,389 

The following table summarizes adjusted gross profit by reportable segments:

SuccessorPredecessor
Period from January 27, 2022 through December 31, 2022Period from January 1, 2022 through January 26, 2022Year Ended December 31, 2021
Owned and Operated Advertising$138,560 $8,768 $143,284 
Partner Network42,291 3,012 35,505 
Subscription78,220 — — 
Adjusted gross profit$259,071 $11,780 $178,789 
Other cost of revenues23,910 575 11,513 
Salaries and benefits194,976 31,181 66,747 
Selling, general, and administrative63,478 15,665 35,813 
Depreciation and amortization118,652 1,000 13,885 
Impairment of goodwill366,309 — — 
Interest expense32,050 1,049 16,870 
Change in fair value of warrant liabilities3,751 — — 
Income (loss) before income tax$(544,055)$(37,690)$33,961 











The following table summarizes revenue by geographic region:
SuccessorPredecessor
Geographic RegionPeriod from January 27, 2022 through December 31, 2022Period from January 1, 2022 through January 26, 2022Year Ended December 31, 2021
United States$593,527 $51,701 $652,622 
United Kingdom162,019 — 543 
Other countries18,394 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:

SuccessorPredecessor
December 31, 2022December 31, 2021
Owned and Operated Advertising$9,646 $830 
Subscription860 — 
Total$10,506 $830 

The following table summarizes property and equipment, net and operating lease right-of-use assets by geographic region:

SuccessorPredecessor
December 31, 2022December 31, 2021
United States$5,473 $718 
Canada3,730 78 
Other countries$1,303 $34 
Total$10,506 $830