Revenue Slide Continues for S4

Sir Martin Sorrell's S4 Capital has reported first half revenue down 16.2% (like-for-like basis) to £422.5m, and operational EBITDA down 8.2% (LFL) to £30.1m. The group, now certified as a B-Corp, blames 'continued global macroeconomic uncertainty, higher interest rates and client caution' for the decline.

The group, which was set up by Sorrell (pictured) within weeks of his departure from WPP in May 2018, said in January that 2023 had been a 'difficult year' - with revenue down about 4% - and that it did not expect any improvement in macro-economic conditions this year. Sure enough in May, it reported a sharp drop in first quarter net revenue.

S4 has shed around 1,000 staff over the twelve months to June 30th '24, protecting its profit and operating margin - operating expenses have been reduced by 14.4%. Of the three divisions, the group says Content had a difficult first half net revenue performance, down 9.3% LFL to £234.3m reflecting ongoing caution and lower activity with some of its larger tech clients in particular; while Technology Services' net revenue dropped 36.3% LFL 'as anticipated' to £46.1m, due to with lower activity from one key client, as well as longer sales cycles for new business. In the Data&Digital Media division performance was 'as expected', with lower revenue in the activation business line partly offset by growth in media agency of record - revenue here was down 7.7% LFL at £95.7m. The current strong pound also impacted the group's reported growth, although LFL comparisons take account of this.

Americas net revenue was down 14.9% and now accounts for 78% of the Company's total; EMEA was down 7.9% and accounts for 16%; and Asia Pacific, accounting for the remaining 6% was down 8.6%.

S4, which has recently achieved B-Corp status based on its approach to environmental, social and DE&I matters, says its strategy 'remains the same' and that its business model aligns with the needs of clients. The group will however focus its activity into just two practices, Marketing Services and Technology Services - to be reflected in reporting from next year.

Web site: www.s4capital.com .