S4 Capital Continues Rapid Growth in Q1

Digital advertising and marketing services company S4 Capital has released results for the first quarter of 2022 in a trading update, with reported revenue up 70.1% to £206.8m, a rise of 40.6% on a like-for-like, pro forma basis.

The firm says it has strengthened financial reporting procedures and structures at the Board, Company and Content practice levels, following 'embarrassing' repeated delays to the publication of results for 2021; and that its three-year plan for 100% organic growth between 2022 and 2024 is on schedule. It also says it has added two further 'whopper' clients (£20m revenue) in the quarter, making a total of eight against a target of twenty - these are forecast to be 'fully effective' in 2023.

Reported gross profit / net revenue rose 64.6% to £171.1m, equivalent to a rise of 34.5% like-for-like and pro- forma. The company says that 'as in previous years' its result for the full year will be weighted to the second half, but more so this year after significant hiring in the first half to accommodate projected growth and client wins.

By business unit, the Content practice - just over two thirds of the firm by net revenue - grew like-for-like and pro-forma revenues and gross profit/net revenue 41.1%. The Data&digital media practice - 28.4% of total gross profit/net revenue - grew 34.7%; and the new Technology services practice (4% of the business) grew 58.3%. EMEA led the way in like-for-like, pro forma net revenue growth with 54.7%.

The group says it has 'five objectives for 2022':

1. to achieve greater client conversion at scale and achieve its 202 objective as rapidly as possible - eight 'whoppers' are in place for 2023 and nineteen more have been identified with revenue levels of $5-15 million.
2. to integrate its three practices even more effectively.
3. to 'strengthen its diversity, equity and inclusion and climate change achievements', including the S4 Fellowship programme and S4Women Leadership programme.
4. to look for further M&A activity to broaden and deepen its offer; and
5. 'to try to ensure that we never experience an unacceptable delays in our results again', strengthening financial control, treasury and legal, risk and governance functions, and with the forthcoming addition of a new Non-Executive Chairman to the Audit Committee.

Exec Chairman Sir Martin Sorrell says new business activity 'remains frenetic and the pipeline is above the level at this time last year, with considerable current pitch and land and expand opportunities across the board'.

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.

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