30 November 2024
By Maynard Paton
FY 2024 results summary for System1 (SYS1):
- The positive transition to data services continues, with a new “performance culture” delivering FY platform revenue up 43%, the highest reported FY profit for seven years and a reinstated annual dividend.
- SYS1’s “unique selling proposition of predictiveness” keeps winning ad-testing clients, plaudits and attention, but remains frustratingly under-exploited for innovation testing that offers a 5x addressable market.
- The bumper 87% gross margin, record £208k revenue per employee and near-£10m cash position were counterbalanced by one-off profit gains, mediocre bank interest and hefty bonuses obscuring margin progress.
- The board’s true growth ambitions will be revealed through a revised LTIP, and I would trust the award-winning directors to retain the scheme’s £45m-£88m revenue range and reinstate a profit ‘underpin’.
- A tantalising illustrative projection of revenue doubling to £60m should be very achievable given SYS1’s “3 Reasons to Believe“, and would support an adjusted Ebitda of £18m — and possible £16 share price — if the group’s margin target is met.