Rapid Acceleration for S4

Sir Martin Sorrell's S4Capital has reported a 'very strong' first half, with like-for-like gross profit (net revenue) up 49%, and pro forma EBITDA up 36% - results described as 'more in line with the fast-growing digital platforms' than the more traditional major media groups.

Founded in the middle of 2018 after Sorrell's abrupt departure from WPP, the firm recently merged its digital content production company MediaMonks and digital media solutions provider MightyHive into a single data, digital media and tech brand called Media.Monks. Both divisions had made multiple acquisitions since joining S4 in its first few months.

Billings rose more than 110% to £547.5m, representing growth of around 82% in pro forma terms. Revenue of £279.3m was up almost 98% reported, or around 57% pro-forma. Sorrell (pictured) says the firm's 73% 'two-year revenue growth stack' for Q2 is on a par with Google's (57%) and Facebook's Advertising revenue (66%), 'rather than the adholdcos, which were generally flat'. The Company is 'confident of doubling its size purely organically... for all its three, three-year plans covering the periods 2019-21, 2020-22 and 2021-23'.

Headcount increased to 5,751 from 2,644 at the end of the first half last year, with like-for-like headcount up 56%. An operating loss of £16.1m includes adjusting items of £47.5m, primarily acquisition payments. According to Sir Martin, who is Executive Chairman: 'We have had a super strong first half start to 2021, in line with the fast-growing digital platforms... These results confirm that S4Capital is converting at scale with five 'whopper' clients (more than $20m per annum gross revenues) already and ten more identified out of an overall target of 20. We are clearly in a disruptive, growth sweet spot and our digital only, faster, better, cheaper, unitary,'holy trinity' model, which combines first party data with digital content, data and digital media is gaining traction, particularly in a cookieless world'.

He concludes: 'With a strong and liquid balance sheet and significant combination firepower we are in a great financial place to expand through further combinations, which will add to our data, content, digital media and, potentially in the future, technology services capabilities'.

The Company now has nearly 6,000 people in 33 countries across the Americas, EMEA and Asia-Pacific, and a current market capitalisation of approximately £4.5bn (c.$6.3bn), which Sorrell notes would put it 'well inside the FTSE 125'. Since the end of the first half, S4 has secured new loan and debt facilities, to refinance existing borrowing and for future acquisitions.

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.