Everyone, thanks for joining us on our Q2 earnings call. Tridi and I are glad to be able to speak with you about the business, as our last opportunity was last November for our Q3 2022 earnings. We thankfully are now past the restatement issues we've been dealing with. We look forward to being able to provide updates to our public stakeholders on a regular basis. The most common question we get asked by shareholders is whether we are seeing a rebound in digital marketing, so I thought I would start there. The good news is that we are no longer seeing the rapid declines that we experienced in the back half of 2022 and the first quarter of this year. The not-so-good news is that we continue to see volatility in the areas we focus on, specifically performance marketing.
At this point, we're not yet ready to call a rebound in the market, although we are cautiously optimistic. Now, against that backdrop, let's talk about our second quarter. System1 delivered $147 million of revenue and $53 million of gross profit, which was up 12% sequentially. Our adjusted EBITDA was $14.6 million, which unfortunately did not deliver on our EBITDA guidance. The specific reason is that we were informed in late July that one of our network partners was terminated by one of our primary advertising partners. Tridi will go into more details on this, but as a result, we took an unexpected $3.3 million charge to adjusted EBITDA. On the subscription side, we had another strong quarter, with the business acquiring more than 550,000 new paying subscribers.
Net of churn, we increased our subscriber count from 2.6 million last quarter to almost 2.8 million at the end of this quarter. Our advertising spend was slightly down quarter-over-quarter, and we increased billing sequentially by 2%, representing a 17% year-over-year increase. On the advertising side of System1, we continue to face headwinds in our owned and operated business specifically. Advertising spend was $49.7 million, down 35% sequentially. We generated over 800 million sessions with a spread of $0.03 per session. These results are disappointing, and I would like to go into more detail to help shareholders understand the struggles we have had here. A specific reason for the O&O decline is our SEM-related business.
This is where we place advertisements on search engines like Google and Bing, then we send the resulting traffic to offers on our platform. It traditionally has been our highest revenue and lowest gross margin business. This business has been in steady decline since last summer, when we started experiencing traffic quality issues from traffic we purchase. The resulting decline as we pulled back spend represents over 200% of the overall sequential decline in our owned and operated gross profit and the majority of the year-over-year decline. SEM is no longer a major driver of our gross profit, the rest of our owned and operated business is up sequentially, despite the economic headwinds. On a positive note, our network advertising business continues to shine, with revenue and gross profit of $19.6 million.
This was up 30% sequentially. This growth is inclusive of the termination of the network partner I mentioned earlier. Our network advertising business has been the biggest beneficiary of the upgrade to the RAMP platform we deployed at the end of last year. We're rapidly winning new customers and expanding revenues from our existing base. We expect this part of our advertising business to continue to deliver significant year-over-year growth for the rest of the year. We had several business highlights in the quarter. We announced the official launch of our RAMP Partner Console. This is our new portal designed to provide a comprehensive suite of self-serve tools and reporting capabilities to our network partners. As I mentioned, this has been very well received in the industry. It's been a big help as we launch new partners.
On Startpage, our private search engine, we launched a new mobile offering in collaboration with Microsoft Bing, which includes enhanced features such as product listing, ads, and shopping. The Startpage team has been doing a great job in quickly adding features to what we refer to as the world's most private search engine. We encourage everybody to use Startpage. In addition to working with Microsoft on Startpage, we were selected as the Global Supply Partner of the Year by Microsoft Advertising. We're really proud of our relationship with Microsoft and the whole team there. We look forward to further growing our business with them in the future. I can't let the call go by without mentioning how quickly we have integrated large language models into our RAMP platform. When you think about how our advertising business works, you can break it down into three primary areas.
First, the advertisements we place, then the content we show consumers, and then ultimately, the monetization of these consumers. LLMs, specifically generative AI, have very quickly permeated through the first two steps of our process. First, on the ad creation, we manage thousands of advertising campaigns at any given time. Each of these campaigns requires original creative elements, including images, ad headlines, and calls to action. Then after someone clicks on an ad, the next step in our flow is presenting content that educates a consumer on an offer. With generative AI, we can optimize much of this creative process, including image creation, headline creatives, content, and then categorizing and expanding our advertising verticals. When we find something that works particularly well, algorithms can then create new versions of our winners at almost no cost.
I'm really proud of our team for integrating LLMs into our overall platform so quickly, and we are still in the early stages. I'm anticipating we will see continued efficiencies and upside as we continue to refine our AI-related systems. Going forward, we're laser-focused on our cost structure and generating operating cash flow in the short term. Overall, over the last year, we have reduced headcount by approximately 15% throughout the business. We also are reducing several pockets of non-payroll related operating expenses. We will continue to take opportunities to reduce costs where we can, without sacrificing investment in future growth opportunities. Now, Tridi will get into specific guidance for the second half of 2023, but I remain bullish on our ability to operate through an uncertain macro outlook.
As I like to remind our shareholders every quarter, management is very highly aligned with you as we own over 50% of System1. We have navigated business cycles in the past, and this one will be no different. Our team is doing much more with fewer people, and we are set up well as the cycle turns. While the past year has not been the public debut that we envisioned, we are in this for the long haul and hope you are with us for the ride back up. I'll now hand things off to Tridi to discuss the quarterly results in more detail, as well as updated guidance. Take it away, Tridi.
Thanks, Michael. Thank you everyone for joining us today. Overall, our financial results were varied, with the subscription and network advertising businesses delivering year-over-year growth. That growth was more than offset by year-over-year declines in our owned and operated advertising businesses. That being said, we continue to be bullish on the future payback of the investments we have been making on our RAMP platform throughout the past quarters, and believe we are poised to be at the forefront of a rebound in advertising marketplaces. Revenue was $147 million, as compared to $220 million last year, a 33% decrease year-over-year. The year-over-year decrease was primarily driven by the owned and operated advertising business, which is down 51%, while network advertising revenue is up 3% and subscription revenue was up 18%.
Adjusted gross profit was $53 million, down 21% year-over-year. Revenue less advertising spend for the owned and operated advertising segment declined 25% to $28 million, while subscription revenue less acquisition spend was down 22% year-over-year to $17.8 versus 22.9 million last year. This was impacted mainly by increased marketing spend of $12.5 million year-over-year. Network revenue less agency fees was up 6% to $14.8 versus 13.9 million last year. Continuing a trend we have been seeing throughout the year, both CPS and RPS, cost per session and revenue per session, were down sequentially. In Q2, RPS was down $0.01 sequentially to $0.09 per session, while CPS was also down $0.01 to 0.06 versus 0.07 versus last quarter.
As a result, we maintained our spread between revenue per session and cost per session at $0.03. On the network advertising business, RPS remained flat at $0.03 per session, per session. Our subscription business performed well, with billings up 17% year-over-year to $54.2 million. Subscriber RPU was $20 in the period, roughly flat year-over-year. Total subscribers in June were just under 2.8 million, reflecting a 7% quarter-over-quarter increase and a 21% increase year-over-year. We deployed $32.4 million towards new acquisition, up 63% year-over-year. We acquired 557,000 new users at a CTA of $58, down year-over-year from $62.
At the start of Q3, we started to see some headwinds in the business, with our total customer acquisition marketing spend increasing significantly. I will discuss the implications of this trend later in my remarks when discussing guidance. Operating expenses net of add-backs for $38.7 million, up 17% year-over-year, which is reflective of increased accounting and consulting costs associated with the extended audit and financial statement reclassifications. We expect our operating expenses to revert back to the same quarterly levels we saw in the second half of last year, starting with Q3. Adjusted EBITDA was $14.6 million, versus $34 million last year, down 57% year-over-year, and representing a 27% margin on gross profit.
In late July, we had a network partner terminated by an advertising partner, and as a result, we're charged an ad credit for the platform revenue generated by the partner during the look-back period. The net impact on adjusted EBITDA was negative $3.3 million, which represents the amount paid to us by our advertising partner, less any rev share payments to partners that we recovered. Outside of this adjustment, we would have delivered EBITDA within our guidance range. With respect to liquidity, we ended the quarter with $26.2 million of cash on the balance sheet, of which $8.6 million was unrestricted. Gross debt was $430 million, which includes the full revolver drawdown of $50 million, and $5 million of our new $20 million revolver from April drawn.
At quarter end, our LTM billings-based EBITDA, as defined by our credit facility, was $99.6 million, resulting in a net leverage ratio of 4.2 times. As Michael discussed, we are laser-focused on cost structure and also liquidity. While we have already taken several steps throughout the year to improve our cost structure, we're continuing to develop plans for future cost reduction measures to address our forecasted reduction in future cash flows and reduce the company's leverage ratio. On to guidance. Given we are still early in Q3 and do not yet see the expected ramp we would normally see in advertising markets at this time of the year, we are not guiding to Q3 specifically, but instead we'll be providing guidance for the back half of 2023 in total.
Our guidance assumes current levels of advertiser demand continue throughout the year, including the current headwinds we are seeing in our ability to scale advertising spend. On advertising, we expect to see a continuation of the RPS and CPS trends we have seen all year, with RPS and CPS either flat or declining in tandem, and RAMP maintaining our spread in the 3-4 cent range on a per session basis. This will also translate to advertising spend being in line with Q2 for the back half of the year, and we expect to deploy approximately $100 million in Q3 and Q4, versus $200 million in the second half of last year. We expect our network advertising business to continue to deliver significant growth, with over 60% growth year-over-year in the second half on network revenue.
On the subscription business, as a result of the increased customer acquisition costs I described earlier to start Q3, we expect to spend over $70 million in customer acquisition in the second half of the year versus $48 million last year. We are estimating second half revenue to come in between $289 and 297 million, representing a 24% year-over-year decline at the midpoint. We are estimating gross profit to come in between $100 and 105 million, representing a 16% decline year-over-year at the midpoint. We are estimating adjusted EBITDA to come in between $35 and 40 million.
Our EBITDA guidance for the back half of the year represents a 50% increase over EBITDA for the first half of the year, reflecting our forecast of the stabilization of owned and operated advertising, growth in the network advertising, and realization of the benefits of our cost-cutting measures. While our recent financial performance has been negatively impacted by market conditions, we have a proven business model with a track record of performing through volatility. In the short term, we will continue to streamline our cost structure while investing in and deploying our resources against our most compelling opportunities. We have been prudent stewards of capital historically, and we expect to be able to continue delivering adjusted EBITDA, operating cash flow, and margin expansion in the short term, while managing liquidity needs and without compromising our future success.
Well, thanks everybody for joining us. We're glad that we're getting back into a regular cadence of communicating with you, and look forward to having you join us for our Q3 earnings call. Thank you.