System1 (SYS1) AI Stock Analysis

• Market Cap: £77.09M
• Dividend Yield: 0.82%
• Average Volume (3M): 5.84K
• Price to Earnings (P/E): 24.3
• Beta (1Y): 0.70
• Revenue Growth: 33.67%
• EPS Growth: 154.85%
• Country: UK
• Employees: 160
• Sector: Communication Services
• Sector Strength: 74
• Industry: Advertising Agencies
• EPS (TTM): 0.25
• Shares Outstanding: 12,689,073
• 10 Day Avg. Volume: 10,509
• 30 Day Avg. Volume: 5,841
• PEG Ratio: 0.16
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.14
• Price to Cash Flow (P/CF): 98.30
• P/FCF Ratio: 488.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 865.00p
• Price Target Upside: 42.39% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

System1's overall stock score of 70 reflects its robust financial performance and positive corporate events, counterbalanced by weak technical indicators. The company's strong revenue growth and strategic initiatives are significant strengths, while bearish technical signals and moderate valuation metrics suggest caution. Sustained financial management and innovative expansion efforts will be crucial for future performance.

System1 Business Overview & Revenue Model

Company Description

System1 (SYS1) is a leading company in the digital marketing and consumer acquisition sector. The company specializes in leveraging advanced data science and machine learning technologies to identify and target high-intent consumers across various digital channels. System1 operates a proprietary platform that optimizes the acquisition of these consumers for its clients, making it a key player in the digital advertising and marketing industry.

How the Company Makes Money

System1 generates revenue primarily through its performance marketing platform that connects advertisers with consumers who are actively searching for products and services. The company's revenue model is based on a cost-per-action (CPA) basis, where advertisers pay System1 when a specified action is completed, such as a click, lead, or sale. Key revenue streams include partnerships with search engines, social media platforms, and websites where it displays targeted advertisements. System1 also benefits from its proprietary technology, which enhances the efficiency and effectiveness of its marketing campaigns, contributing significantly to its earnings.

System1 Financial Statement Overview

Summary

System1 exhibits strong financial health with upward trends in revenue, profitability, and cash flows. The company effectively manages its leverage and capital structure, ensuring stability and growth. Continued focus on maintaining efficient operations and prudent financial management will be key to sustaining this positive trajectory.

Income Statement

The income statement shows a strong improvement in revenue and profit margins. The company achieved a Gross Profit Margin of 87.0% and a Net Profit Margin of 6.8% in the last annual period, indicating efficient cost management. Revenue growth of 28.2% year-over-year reflects a robust upward trend. EBIT Margin improved to 10.3%, and EBITDA Margin reached 14.7%, demonstrating increased operational efficiency. However, the company must remain cautious of market fluctuations impacting future revenue.

Balance Sheet

The balance sheet reflects a stable financial position with a Debt-to-Equity Ratio of 0.03, indicating low leverage and reduced financial risk. Return on Equity is solid at 19.2%, showcasing effective use of equity capital to generate profits. The Equity Ratio of 55.3% suggests a healthy capital structure. Nonetheless, maintaining equity growth while managing liabilities remains crucial for long-term stability.

Cash Flow

Cash flow analysis reveals significant improvements, with a Free Cash Flow Growth Rate of 370.7% year-over-year, highlighting strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio of 2.9 indicates effective cash management. The Free Cash Flow to Net Income Ratio of 2.5 further emphasizes strong liquidity and reinvestment potential. However, the company should focus on sustaining positive free cash flow over time.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
30.02M	23.41M	24.10M	22.84M	25.48M
	Gross Profit
26.12M	19.72M	20.20M	19.11M	21.26M
	EBIT
3.10M	855.00K	151.00K	3.19M	918.00K
	EBITDA
4.40M	2.04M	1.10M	4.30M	2.60M
	Net Income Common Stockholders
2.03M	404.00K	955.00K	1.69M	-231.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.61M	5.72M	11.17M	9.01M	6.65M
	Total Assets
19.09M	14.98M	18.59M	17.41M	17.30M
	Total Debt
346.00K	1.46M	5.01M	5.08M	6.77M
	Net Debt
-9.22M	-4.26M	-6.17M	-3.93M	124.00K
	Total Liabilities
8.52M	6.37M	10.33M	10.17M	11.54M
	Stockholders Equity
10.57M	8.61M	8.26M	7.23M	5.76M
Cash Flow		Free Cash Flow
5.10M	-1.88M	3.90M	3.71M	1.68M
	Operating Cash Flow
5.93M	-628.00K	4.04M	3.91M	2.60M
	Investing Cash Flow
-833.00K	-1.25M	-138.00K	-198.00K	-916.00K
	Financing Cash Flow
-1.12M	-3.82M	-1.95M	-1.09M	648.00K

System1 Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 607.50
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SYS1, the sentiment is Positive. The current price of 607.5 is above the 20-day moving average (MA) of 592.75, above the 50-day MA of 603.25, and below the 200-day MA of 646.13, indicating a neutral trend. The MACD of 0.47 indicates Negative momentum. The RSI at 64.42 is Neutral, neither overbought nor oversold. The STOCH value of 88.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SYS1.

System1 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SYS1	70 Outperform	£77.09M	24.35	29.58%	0.82%	33.67%	154.85%
CRE	68 Neutral	£550.25M	5.33	12.25%	8.47%	27.08%	-34.38%
RCH	64 Neutral	£225.71M	4.22	8.15%	10.24%	-5.28%	148.54%
YOU	62 Neutral	£321.27M	―	0.70%	3.27%	29.81%	-106.55%
Sector *	59 Neutral	$27.83B	1.88	-18.16%	4.00%	2.13%	-44.45%

System1 Corporate Events

System1 Group PLC Announces Change in Major Holdings

System1 Group PLC has announced a significant change in its voting rights structure, following a notification of major holdings by Crucible Clarity Fund Plc. The new holding represents an increase in voting rights from 3.20% to 4.33%, indicating a strategic shift that may influence the company’s governance and decision-making process.

System1 Group PLC Reports Strong Q3 Growth and Strategic Expansions

System1 Group PLC reported significant growth in its platform revenue for Q3 FY25, with a 53% year-on-year increase, driven by strong performance in data prediction and data-led consultancy services. The company expanded its client base with over 120 new clients in Q3 FY25, including prominent names like TikTok and a global leader in enterprise software. The appointment of Tristan Findlay as Managing Director of Innovation marks a strategic move to bolster innovation and drive further growth. Despite economic challenges in Europe and the UK, System1 anticipates meeting or exceeding full-year revenue and profit expectations.

System1 Group PLC: Notification of Major Shareholdings Change

System1 Group PLC has received a notification regarding a change in major shareholdings, as the Crucible Clarity Fund Plc has adjusted its position in the company’s shares. This notification, which involves a 3.20% voting rights attached to shares, indicates a shift in investor dynamics, potentially impacting the company’s governance and stakeholder relations.