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SEGMENT REPORTING
 6 Months Ended
Jun. 30, 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. System1’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 and agency fees to acquire users (refer to Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES), as well as content, publishing, domain name registration costs, licensing costs to provide mapping services to Mapquest.com, credit card processing fees, and licensing costs related to the antivirus and other software available via APIs for sale and distribution of its SaaS products to end customers. 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 four business lines and operating segments: Publishing and Lead Generation, Search & Applications, Partner Network, and Subscription.

The Publishing and Lead Generation and Search & Applications operating segments are aggregated into one reportable segment, referred to as Owned and Operated, based on their similar economic characteristics, technology platform utilized, types of services provided, Advertising Partners, and cost structures. The Company has three reportable segments: Owned and Operated, Partner Network and Subscription.

The following summarizes revenue by reportable segments:

Three-Month PeriodSix-Month Period
SuccessorPredecessorSuccessorPredecessor
Three Months Ended June 30, 2022Three Months Ended June 30, 2021Period from January 27, 2022 through June 30, 2022Period from January 1, 2022 through January 26, 2022Six Months Ended June 30, 2021
Owned and Operated$157,952 $160,816 $284,836 $49,249 $300,242 
Partner Network19,077 8,763 30,427 3,463 16,898 
Subscription42,768 — 70,642 — — 
Total revenue$219,797 $169,579 $385,905 $52,712 $317,140 
The following summarizes adjusted gross profit by reportable segments:

SuccessorPredecessorSuccessorPredecessor
Three Months Ended June 30, 2022Three Months Ended June 30, 2021Period from January 27, 2022 through June 30, 2022Period from January 1, 2022 through January 26, 2022Six Months Ended June 30, 2021
Owned and Operated$36,799 $37,572 $66,217 $8,768 $69,700 
Partner Network13,908 8,763 22,321 3,012 16,898 
Subscription22,890 — 35,537 — — 
Adjusted gross profit$73,597 $46,335 $124,075 $11,780 $86,598 
Other cost of revenues6,358 2,923 11,112 575 6,410 
Salaries, commissions and benefits49,511 17,698 97,709 31,181 32,893 
Selling, general and administrative16,747 6,277 31,835 15,665 13,227 
Depreciation and amortization32,094 3,112 54,022 1,000 6,801 
Interest expense7,324 4,476 12,100 1,049 8,524 
Change in fair value of warrant liabilities(4,139)— 9,622 — — 
Net income (loss) before income tax$(34,298)$11,849 $(92,325)$(37,690)$18,743 

The following table presents the revenues disaggregated by geographic region.

Three-Month PeriodSix-Month Period
SuccessorPredecessorSuccessorPredecessor
Three Months Ended June 30, 2022Three Months Ended June 30, 2021Period from January 27, 2022 through June 30, 2022Period from January 1, 2022 through January 26, 2022Six Months Ended June 30, 2021
Geographic Region
United States$167,872 $163,072 $302,480 $51,701 $307,630 
United Kingdom42,924 168 70,643 — 169 
Other international9,001 6,339 12,782 1,011 9,341 
Total revenue$219,797 $169,579 $385,905 $52,712 $317,140