System1 warns of lower profit

In a trading update issued for the financial year to the end of March, the company announced it expects revenue and gross profit for Q4 to be around 25% lower year-on-year. For the whole year, revenue and gross profit is expected to be down by around 2%.

This is expected to result in profit before tax for 2019/2020 of around £2.9m (excluding the AdRatings service and share-based payments), down from £3.6m the previous year. The company said: "Whilst we acknowledge this was a disappointing result, it does exceed our previous expectations."

Since the end of March, System1’s trading has been ‘adversely affected’ by the Covid-19 pandemic, the company said. It has cut salaries by 20% for board members and senior executives, furloughed some staff and reduced the number of hours paid for where the volume of work has fallen. It has also suspended a proposed share buyback scheme and payment of a final dividend for the latest financial year.