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Summary of Significant Accounting Policies (Tables) | 9 Months Ended
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Sep. 30, 2024
Accounting Policies [Abstract] |
Schedule of Revision of Previously Issued Consolidated Financial Statements | The following table reflects the revisions to the previously issued condensed consolidated balance sheet as of September 30, 2023 (in thousands):
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |  |  |  |
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |  |
Deferred tax liability | $ | 15,009 |  |  | $ | 338 |  |  | $ | 15,347 |  | (d) |  |  |
Total liabilities | 687,066 |  |  | 338 |  |  | 687,404 |  |  |  |  |
Stockholders’ Equity / Members’ Deficit |  |  |  |  |  |  |  |  |
Additional paid-in capital | $ | 849,398 |  |  | $ | 867 |  |  | $ | 850,265 |  | (a) (b) |  |  |
Accumulated deficit | (646,242) |  |  | 7,027 |  |  | (639,215) |  | (a) (b) (d) |  |  |
Accumulated other comprehensive loss | (435) |  |  | 156 |  |  | (279) |  | (d) |  |  |
Total stockholders' equity attributable to System1, Inc. | $ | 202,732 |  |  | $ | 8,050 |  |  | $ | 210,782 |  |  |  |  |
Non-controlling interest | 37,746 |  |  | (8,388) |  |  | 29,358 |  | (b) |  |  |
Total stockholders' equity | $ | 240,478 |  |  | $ | (338) |  |  | $ | 240,140 |  |  |  |  |
Total liabilities and stockholders' equity | $ | 927,544 |  |  | $ | — |  |  | $ | 927,544 |  |  |  |  |
The following tables reflect the revisions to the previously issued condensed consolidated statement of operations for the three and nine months ended September 30, 2023 (in thousands):
| Three Months Ended September 30, 2023 |  |  |  |  |
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |  |  |  |  |
Salaries and benefits | $ | 26,689 |  |  | $ | 6 |  |  | $ | 26,695 |  | (a) |  |  |  |
Total operating expenses | 108,666 |  |  | 6 |  |  | 108,672 |  |  |  |  |  |
Operating loss | (20,848) |  |  | (6) |  |  | (20,854) |  |  |  |  |  |
Loss before income tax | $ | (27,038) |  |  | $ | (6) |  |  | $ | (27,044) |  |  |  |  |  |
Income tax expense (benefit) | (920) |  |  | (196) |  |  | (1,116) |  | (d) |  |  |  |
Net loss from continuing operations | (26,118) |  |  | 190 |  |  | (25,928) |  |  |  |  |  |
Net loss from discontinued operations, net of tax | (137,209) |  |  | — |  |  | (137,209) |  |  |  |  |  |
Net loss | (163,327) |  |  | 190 |  |  | (163,137) |  |  |  |  |  |
Less: Net loss from continuing operations attributable to non-controlling interest | (6,328) |  |  | 247 |  |  | (6,081) |  | (b) |  |  |  |
Less: Net loss from discontinued operations attributable to non-controlling interest | (25,566) |  |  | — |  |  | (25,566) |  |  |  |  |  |
Net loss attributable to System1, Inc. | $ | (131,433) |  |  | $ | (57) |  |  | $ | (131,490) |  |  |  |  |  |
Amounts attributable to System1, Inc.: |  |  |  |  |  |  |  |  |  |
Net loss from continuing operations | $ | (19,790) |  |  | $ | (57) |  |  | $ | (19,847) |  | (a) (b) (d) |  |  |  |
Net loss from discontinued operations | (111,643) |  |  | — |  |  | (111,643) |  |  |  |  |  |
Net loss attributable to System1, Inc. | $ | (131,433) |  |  | $ | (57) |  |  | $ | (131,490) |  |  |  |  |  |
Basic and diluted net loss per share: |  |  |  |  |  |  |  |  |  |
Continuing operations | $ | (0.21) |  |  | $ | — |  |  | $ | (0.21) |  |  |  |  |  |
Discontinued operations | (1.19) |  |  | 0.01 |  |  | (1.18) |  | (b) |  |  |  |
Basic and diluted net loss per share | $ | (1.40) |  |  | $ | 0.01 |  |  | $ | (1.39) |  |  |  |  |  |
Weighted average number of shares outstanding - basic and diluted | 93,941 |  |  | 418 |  |  | 94,359 |  | (b) |  |  |  |
| Nine Months Ended September 30, 2023 |  |  |  |
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |  |  |  |
Salaries and benefits | $ | 82,484 |  |  | $ | (588) |  |  | $ | 81,896 |  | (a) |  |  |
Total operating expenses | 373,349 |  |  | (588) |  |  | 372,761 |  |  |  |  |
Operating loss | (67,498) |  |  | 588 |  |  | (66,910) |  |  |  |  |
Loss before income tax | $ | (98,033) |  |  | $ | 588 |  |  | $ | (97,445) |  |  |  |  |
Income tax expense (benefit) | (10,626) |  |  | (988) |  |  | (11,614) |  | (d) |  |  |
Net loss from continuing operations | (87,407) |  |  | 1,576 |  |  | (85,831) |  |  |  |  |
Net loss from discontinued operations, net of tax | (163,222) |  |  | — |  |  | (163,222) |  |  |  |  |
Net loss | (250,629) |  |  | 1,576 |  |  | (249,053) |  |  |  |  |
Less: Net loss from continuing operations attributable to non-controlling interest | (19,543) |  |  | 554 |  |  | (18,989) |  | (b) |  |  |
Less: Net loss from discontinued operations attributable to non-controlling interest | (30,472) |  |  | — |  |  | (30,472) |  |  |  |  |
Net loss attributable to System1, Inc. | $ | (200,614) |  |  | $ | 1,022 |  |  | $ | (199,592) |  |  |  |  |
Amounts attributable to System1, Inc.: |  |  |  |  |  |  |  |  |
Net loss from continuing operations | $ | (67,864) |  |  | $ | 1,022 |  |  | $ | (66,842) |  | (a) (b) (d) |  |  |
Net loss from discontinued operations | (132,750) |  |  | — |  |  | (132,750) |  |  |  |  |
Net loss attributable to System1, Inc. | $ | (200,614) |  |  | $ | 1,022 |  |  | $ | (199,592) |  |  |  |  |
Basic and diluted net loss per share: |  |  |  |  |  |  |  |  |
Continuing operations | $ | (0.73) |  |  | $ | 0.02 |  |  | $ | (0.71) |  | (b) |  |  |
Discontinued operations | (1.42) |  |  | — |  |  | (1.42) |  |  |  |  |
Basic and diluted net loss per share | $ | (2.15) |  |  | $ | 0.02 |  |  | $ | (2.13) |  |  |  |  |
Weighted average number of shares outstanding - basic and diluted | 93,281 |  |  | 368 |  |  | 93,649 |  | (b) |  |  |
The following tables reflect the revisions related to the previously issued condensed consolidated statement of comprehensive loss for the three and nine months ended September 30, 2023 (in thousands):
| Three Months Ended September 30, 2023 |
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |
Net loss | $ | (163,327) |  |  | $ | 190 |  |  | $ | (163,137) |  | (a) (d)
Other comprehensive loss: |  |  |  |  |  |
Foreign currency translation loss | (188) |  |  | — |  |  | (188) |  |
Comprehensive loss | (163,515) |  |  | 190 |  |  | (163,325) |  |
Comprehensive loss attributable to non-controlling interest | (31,932) |  |  | 247 |  |  | (31,685) |  | (b)
Comprehensive loss attributable to System1, Inc. | $ | (131,583) |  |  | $ | (57) |  |  | $ | (131,640) |  |
| Nine Months Ended September 30, 2023 |
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |
Net loss | $ | (250,629) |  |  | $ | 1,576 |  |  | $ | (249,053) |  | (a) (d)
Other comprehensive loss: |  |  |  |  |  |
Foreign currency translation loss | (109) |  |  | (1) |  |  | (110) |  | (c)
Comprehensive loss | (250,738) |  |  | 1,575 |  |  | (249,163) |  |
Comprehensive loss attributable to non-controlling interest | (50,019) |  |  | 554 |  |  | (49,465) |  | (b)
Comprehensive loss attributable to System1, Inc. | $ | (200,719) |  |  | $ | 1,021 |  |  | $ | (199,698) |  |
The following tables reflect the revisions to the previously issued condensed consolidated statement of changes in stockholders' equity for the nine months ended September 30, 2023 (in thousands). Although the impact of such revisions is pervasive throughout the condensed consolidated statement of changes in stockholders' equity as a result of the errors described above, the most significant revisions include a reduction of net loss of $1.6 million, an increase of non-controlling interest of $1.8 million, a reduction in accumulated deficit of $1.0 million and a reduction in additional paid-in-capital of $1.0 million.
| Class A Common Stock |  | Class C Common Stock |  |  |  |  |  |  |  |  |  |  |
| Shares | Amount |  | Shares | Amount |  | Additional Paid-In-Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non-Controlling Interest |  | Total Stockholders’ Equity |
As Previously Reported |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2022 | 91,674 |  | $ | 9 |  |  | 21,747 |  | $ | 2 |  |  | $ | 831,566 |  |  | $ | (439,296) |  |  | $ | (260) |  |  | $ | 78,650 |  |  | $ | 470,671 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (33,952) |  |  | — |  |  | (9,174) |  |  | (43,126) |  |
Cumulative-effect of adoption of ASU 2016-13 | — |  | — |  |  | — |  | — |  |  | — |  |  | (326) |  |  | — |  |  | — |  |  | (326) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 832 |  | — |  |  | — |  | — |  |  | (1,730) |  |  | — |  |  | — |  |  | — |  |  | (1,730) |  |
Issuance of common stock in connection with settlement of incentive plan | 407 |  | — |  |  | — |  | — |  |  | 1,659 |  |  | — |  |  | — |  |  | — |  |  | 1,659 |  |
Conversion of Class C shares to Class A shares | 234 |  | — |  |  | (234) |  | — |  |  | 955 |  |  | — |  |  | — |  |  | (955) |  |  | — |  |
Increase in tax receivable agreement liability | — |  | — |  |  | — |  | — |  |  | (441) |  |  | — |  |  | — |  |  | — |  |  | (441) |  |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | (62) |  |  | (47) |  |  | (109) |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 6,963 |  |  | — |  |  | — |  |  | — |  |  | 6,963 |  |
Balance at March 31, 2023 | 93,147 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 838,972 |  |  | $ | (473,574) |  |  | $ | (322) |  |  | $ | 68,474 |  |  | $ | 433,561 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (35,230) |  |  | — |  |  | (8,947) |  |  | (44,177) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 455 |  | — |  |  | — |  | — |  |  | (314) |  |  | — |  |  | — |  |  | — |  |  | (314) |  |
Other comprehensive income (loss) | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | 209 |  |  | (22) |  |  | 187 |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 5,571 |  |  | — |  |  | — |  |  | — |  |  | 5,571 |  |
Balance at June 30, 2023 | 93,602 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 844,229 |  |  | $ | (508,804) |  |  | $ | (113) |  |  | $ | 59,505 |  |  | $ | 394,828 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (131,433) |  |  | — |  |  | (31,894) |  |  | (163,327) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 656 |  | — |  |  | — |  | — |  |  | (54) |  |  | — |  |  | — |  |  | — |  |  | (54) |  |
| Class A Common Stock |  | Class C Common Stock |  |  |  |  |  |  |  |  |  |  |
| Shares | Amount |  | Shares | Amount |  | Additional Paid-In-Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non-Controlling Interest |  | Total Stockholders’ Equity |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | (165) |  |  | (23) |  |  | (188) |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 7,102 |  |  | — |  |  | — |  |  | — |  |  | 7,102 |  |
Balance at September 30, 2023 | 94,258 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 851,277 |  |  | $ | (640,237) |  |  | $ | (278) |  |  | $ | 27,588 |  |  | $ | 238,361 |  |
Revision Adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss | — |  | $ | — |  |  | — |  | $ | — |  |  | $ | — |  |  | $ | 150 |  |  | $ | — |  |  | $ | 50 |  |  | $ | 200 |  | (a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | — |  | — |  |  | — |  | — |  |  | 281 |  |  | — |  |  | — |  |  | (281) |  |  | — |  | (a) (b)
Issuance of common stock in connection with settlement of incentive plan | — |  | — |  |  | — |  | — |  |  | 160 |  |  | — |  |  | — |  |  | (160) |  |  | — |  | (b)
Conversion of Class C shares to Class A shares | — |  | — |  |  | — |  | — |  |  | 92 |  |  | — |  |  | — |  |  | (92) |  |  | — |  | (b)
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | (760) |  |  | — |  |  | — |  |  | 958 |  |  | 198 |  | (a) (b)
Balance at March 31, 2023 | — |  | $ | — |  |  | — |  | $ | — |  |  | $ | (227) |  |  | $ | 150 |  |  | $ | — |  |  | $ | 475 |  |  | $ | 398 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | 929 |  |  | — |  |  | 257 |  |  | 1,186 |  | (a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | — |  | — |  |  | — |  | — |  |  | 181 |  |  | — |  |  | — |  |  | (181) |  |  | — |  | (a) (b)
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | (1) |  |  | — |  |  | (1) |  | (c)
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | (615) |  |  | — |  |  | — |  |  | 615 |  |  | — |  | (a) (b)
Balance at June 30, 2023 | — |  | $ | — |  |  | — |  | $ | — |  |  | $ | (661) |  |  | $ | 1,079 |  |  | $ | (1) |  |  | $ | 1,166 |  |  | $ | 1,583 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (57) |  |  | — |  |  | 247 |  |  | 190 |  | (a) (b) (d)
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | — |  | — |  |  | — |  | — |  |  | 258 |  |  | — |  |  | — |  |  | (258) |  |  | — |  | (a) (b)
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | (609) |  |  | — |  |  | — |  |  | 615 |  |  | 6 |  | (a) (b)
Balance at September 30, 2023 | — |  | $ | — |  |  | — |  | $ | — |  |  | $ | (1,012) |  |  | $ | 1,022 |  |  | $ | (1) |  |  | $ | 1,770 |  |  | $ | 1,779 |  |
As Revised |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss | — |  | $ | — |  |  | — |  | $ | — |  |  | $ | — |  |  | $ | (33,802) |  |  | $ | — |  |  | $ | (9,124) |  |  | $ | (42,926) |  |
Cumulative-effect of adoption of ASU 2016-13 | — |  | — |  |  | — |  | — |  |  | — |  |  | (326) |  |  | — |  |  | — |  |  | (326) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 832 |  | — |  |  | — |  | — |  |  | (1,449) |  |  | — |  |  | — |  |  | (281) |  |  | (1,730) |  |
Issuance of common stock in connection with settlement of incentive plan | 407 |  | — |  |  | — |  | — |  |  | 1,819 |  |  | — |  |  | — |  |  | (160) |  |  | 1,659 |  |
| Class A Common Stock |  | Class C Common Stock |  |  |  |  |  |  |  |  |  |  |
| Shares | Amount |  | Shares | Amount |  | Additional Paid-In-Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non-Controlling Interest |  | Total Stockholders’ Equity |
Conversion of Class C shares to Class A shares | 234 |  | — |  |  | (234) |  | — |  |  | 1,047 |  |  | — |  |  | — |  |  | (1,047) |  |  | — |  |
Increase in tax receivable agreement liability | — |  | — |  |  | — |  | — |  |  | (441) |  |  | — |  |  | — |  |  | — |  |  | (441) |  |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | (62) |  |  | (47) |  |  | (109) |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 6,203 |  |  | — |  |  | — |  |  | 958 |  |  | 7,161 |  |
Balance at March 31, 2023 | 93,147 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 838,745 |  |  | $ | (473,424) |  |  | $ | (322) |  |  | $ | 68,949 |  |  | $ | 433,959 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (34,301) |  |  | — |  |  | (8,690) |  |  | (42,991) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 455 |  | — |  |  | — |  | — |  |  | (133) |  |  | — |  |  | — |  |  | (181) |  |  | (314) |  |
Other comprehensive income (loss) | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | 208 |  |  | (22) |  |  | 186 |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 4,956 |  |  | — |  |  | — |  |  | 615 |  |  | 5,571 |  |
Balance at June 30, 2023 | 93,602 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 843,568 |  |  | $ | (507,725) |  |  | $ | (114) |  |  | $ | 60,671 |  |  | $ | 396,411 |  |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  |  | (131,490) |  |  | — |  |  | (31,647) |  |  | (163,137) |  |
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | 656 |  | — |  |  | — |  | — |  |  | 204 |  |  | — |  |  | — |  |  | (258) |  |  | (54) |  |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  |  | — |  |  | (165) |  |  | (23) |  |  | (188) |  |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 6,493 |  |  | — |  |  | — |  |  | 615 |  |  | 7,108 |  |
Balance at September 30, 2023 | 94,258 |  | $ | 9 |  |  | 21,513 |  | $ | 2 |  |  | $ | 850,265 |  |  | $ | (639,215) |  |  | $ | (279) |  |  | $ | 29,358 |  |  | $ | 240,140 |  |
The following table reflects the revisions to the previously issued condensed consolidated statement of cash flows for the nine months ended September 30, 2023 (in thousands):
| As Previously Reported |  | Revision Adjustment |  | As Currently Reported |
Cash Flows from Operating Activities |  |  |  |  |
Net loss | $ | (250,629) |  |  | $ | 1,576 |  |  | $ | (249,053) |  | (a) (d)
Stock-based compensation | 43,909 |  |  | 203 |  |  | 44,112 |  | (a)
Deferred tax benefits | (18,397) |  |  | (988) |  |  | (19,385) |  | (d)
Changes in operating assets and liabilities: |  |  |  |  |
Accrued expenses and other current liabilities | 1,708 |  |  | (1,779) |  |  | (71) |  | (c)
Other non-current liabilities | (4,510) |  |  | 988 |  |  | (3,522) |  | (d)
Net cash used by operating activities | (5,908) |  |  | — |  |  | (5,908) |  |

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