S4 Cuts Costs to Weather Double Figure Revenue Drop

Sir Martin Sorrell's digital ad group S4Capital has reported first quarter revenue of £178.1m, down 11.4% on a like-for-like (LFL) basis, reflecting 'continuing technology client caution' in general and a specific 'headwind' from one key client in Technology Services.

The group now has two business segments. Revenue for Marketing Services was £162.6m, down 11.3% LFL, and for Technology Services £15.5m, down 36.5% (group total £178.1m). Net revenue, which S4 says is a more accurate guide to performance, fell 7.5% in Marketing Services, to £148.3m, and 36.9% in Technology Services to £15.4m (group total £163.7m).

Net revenue in the Americas was £130.5m, down 10.5% LFL; in EMEA £24.3m, down 15.9%; and in Asia-Pacific £8.9m, down 11.0%.

Executive Chairman Sorrell says results reflect 'the continuing impact of, to say the least, volatile global macroeconomic conditions' - with tech clients in particular 'continuing to prioritise capital expenditure on AI over operating expenditure, such as marketing.' He notes however that 'Our liquidity and cashflow was much improved compared with the first quarter of 2024 and net debt was at a similar level to the yearend.' The group expects its customary improved performance in the second half of the year, aided by the phasing of revenue from new business; and says it will continue to focus on its cost base and take further action to support profitability. Headcount has been reduced from c.7,600 to c.7,000 in the last twelve months.

The company has appointed Radhika Radhakrishnan, formerly Global Chief Finance Officer of Wavemaker, as its CFO from 1st May; succeeding Mary Basterfield whom the Board thanked for her 'hard work and commitment over the last three years and for improving cost management, liquidity and the financial processes of the company.' Also on 1st May Nirvik Singh - previously Global COO and President International of WPP's Grey Group - joined S4 as an independent Non-executive Director.

S4 says it continues to target net revenue and operational EBITDA broadly similar to 2024 on a constant currency basis, and concludes: 'Over the longer term we continue to expect our growth to outperform our markets and operational EBITDA margins to return to historic levels of around 20%.'

The group is online at www.s4capital.com .