Strong Third Quarter for Sorrell's S4

Sir Martin Sorrell's digital advertising and marketing services company S4 Capital has issued a trading update for the third quarter, with like-for-like revenue up almost 13% and profit also up 'very strongly'.

The Group said the third quarter brought it 'more in line' with its target of doubling organically in three years by 2021; and now has a third three-year plan for 2021-2023, which 'calls yet again' for a doubling of top and bottom line organically. Q3 billings were up nearly 13% to £163.1m, and revenue up almost 53% to £86.4m, while headcount rose around 26% like-for-like to 2,870.

S4 also reports prominently on its diversity initiatives, stating: 'A diverse workforce is a business imperative and we are relatively well positioned, with 40% people of colour and gender balance already in the United States and the United Kingdom, to compete for assignments that increasingly demand diverse teams as a pre-requisite'.

Looking at results by division, revenue for the Content practice was up over 69% to £69.3m, with like-for-like up almost 15%, while in the Data & digital media practice it rose by almost 10% to £17.1m, equivalent to just under 7% like-for-like. By geography, The Americas saw exceptionally strong growth, with gross profit up over 93% to £55.1m, almost 27% like-for-like; while in EMEA the equivalent figures were 34% (£13.0m) and just under 7%; and Asia Pacific grew from a smaller base by 83% to £7.3m, more than 26% like-for-like.

The company recently developed a 20² client objective: it aims to 'develop' twenty clients with more than $20 million revenue per year, and calls such clients 'whoppers'. The Content practice / MediaMonks recently won the BMW/Mini European content and production account, which will become a third 'whopper' alongside Google and 'an NDA tech company' in 2021.

The Group, which with the exception of some permitted delays to taxes has taken no Government support during the pandemic, has decided to return Executive and Non-Executive Directors' compensation to the levels they were in March, and says 'normal' recruitment, raise and promotional policies were restored across the firm in the third quarter.

Sorrell comments: 'Our consistent, very strong organic gross profit growth of almost 16% so far this year and almost 23% in the third quarter, indicates that we are well positioned in the digital sweetspot of an otherwise stagnant advertising and marketing industry and that clients are responding very well to our new age/new era, purely digital, 'holy trinity' model of first party data fueling digital content, data & digital media'.

Web site: www.s4capital.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.