Not an A1 Q3 for S4

Sir Martin Sorrell's S4 Capital has reported on a difficult third quarter, with net revenue down 15.4% (10% like-for-like) reflecting lower activity in its Content and Data&Digital media businesses.

S4 was formed in May 2018 after Sir Martin's departure from WPP, and a year ago seemed to have weathered the storm of reporting delays and a subsequent share price slump, reporting 26.5% like-for-like revenue growth with 'all three practices growing their top lines strongly'. However 2023 has been a challenging year both for the group and for Sorrell personally.

The group continues to target cost savings, and has reduced headcount from 8,551 to 8,187 during the quarter - at the high water mark in June '22 it employed more than 9,000.

Reported revenue in the Content practice fell 22.7% this quarter (18.2% like-for-like) to £160.9m, and the firm says it recently appointed a new co-CEO, Bruno Lambertini, and new leadership in several key markets including APAC. In the Data&Digital media practice revenue declined 14.5% to £49.6m, down 8.7% like-for-like, with lower activity particularly in the activation and performance business lines. The newest practice, Technology Services, saw reported revenue up 4.4% (12.4% like-for-like) to £35.4m.

By geography, the group's largest market is The Americas, and this saw 'the impact of the slowdown in activity' as well as of FX changes, with reported net revenue down 14.5% to £167.6m, down 8.3% like-for-like; while in EMEA decline was even steeper, down 18.9% or 18.5% like-for-like, to £30.4m. The firm's smallest region, Asia Pacific, reported net revenue down 17.2% to £13.5m, a like-for-like decline of 9.4%.

Chief Executive Sorrell described trading conditions as 'difficult, reflecting the global macroeconomic conditions with continued client caution to commit and extended sales cycles, particularly for larger projects and to some extent clients in the Technology sector'. He expects Q4 profitability 'as usual' to be the strongest of the year and concludes: 'We remain confident our strategy, business model and talent, together with scaled client relationships position us well for above average growth in the longer term...'

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.