17 June 2025
By Maynard Paton
H1 2025 results summary for System1 (SYS1):
- A record H1 for both revenue and profit, after Test Your Ad income gained 53%, the gross margin once again exceeded its 85% target and employee productivity reached a £229k high.
- News of a £2m “additional discretionary investment” led to an upgraded “illustrative growth scenario“, whereby a tantalising 20-30% platform-revenue CAGR ambition could now apparently lead to a “longer term” £36m Ebitda.
- But the £2m “discretionary” investment actually appears mandatory, given the lack of obvious ‘fame building’ options for Test Your Innovation and a startling admission of needing to further “professionalise” the workforce.
- Although January’s Q3 update raised FY 2025 profit guidance, April’s Q4 update revealed a sudden sensitivity to the global economy alongside ominous revenue performances from Test Your Ad, the United States and ‘data-led’ consultancy.
- The shares trade on an estimated 15x P/E, which seems to adequately reflect SYS1’s anticipated “strong revenue growth” for FY 2026 mixed with a greater “downside risk” to client budgets. I continue to hold.