Revenue Jumps for Sorrell's S4

Sir Martin Sorrell's digital advertising and marketing services company S4 Capital plc has published a trading update for the first half of 2019, with like-for-like revenues and gross profit up around 40%, well ahead of its target.

The company was formed just six weeks after Sorrell quit WPP last May, and in July beat WPP in a race to buy Dutch creative digital production company MediaMonks; then in December it agreed to merge with programmatic solutions provider MightyHive, Inc., for an enterprise value of US$150m. In April it bought Amsterdam and Miami-based film production studio Caramel Pictures and São Paulo-based programmatic consultancy ProgMedia.

The firm has said it wants to double its revenues and gross profit organically over the three years to 2021. Reported pro-forma operational EBITDA margins were lower in H1 2019 than a year earlier, reflecting increased recruitment spend ('a doubling of the like-for-like headcount') and geographical expansion for both the MediaMonks and MightyHive wings of the business, as well as particularly tough comparatives for the former. The EBITDA figure is expected to improve in the second half of 2019, and the firm says cash flow is strong, with net debt approximately halved from the level incurred to part fund the MediaMonks merger.

Executive Chairman Sorrell (pictured) says of the results: 'The continued top-line revenue and gross profit momentum at twice the digital market's growth rate clearly demonstrates the contemporary relevance to clients, of the purely digital, 'faster, better, cheaper', unitary, first party data, content and programmatic model'.

Formal results will be reported on 11th September. The company has a market capitalization of around £600m ($750m) and employs around 1,400 people in 20 countries worldwide.

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.