Patchy Q1 Performance but Overall Growth for S4

Sir Martin Sorrell's S4Capital has reported first quarter revenue up 26.5% to £262m, representing like-for-like growth of 6.1%. Growth came mainly from the new Technology Services division and entirely from the Americas.

Formed by Sorrell just six weeks after his departure from WPP, S4 describes itself as a 'tech-led, new age/new era digital advertising, marketing and technology services company' and combines businesses in three practices: Content, Data&digital media and Technology Services. Earlier this month the group announced it was working on a succession plan after it was revealed in April that 78-year-old Sorrell is undergoing 'further preventative treatment' following keyhole surgery in February to remove a tumour.

In the first quarter of 2023 billings were £455.9m, up 26.5% reported and 10.4% like-for-like, while headcount fell around 2% to 8,713, reflecting 'more active and measured control of the balance of hiring across the Company'. Executive Chairman Sir Martin described the quarter as 'solid', with growth rates 'in line with those of the major tech platforms', while the firm pointed to tough Q1 comparatives and maintained its full year outlook of 8-12% net revenue growth. Pro-forma operational EBITDA for the latest twelve months to 31 March 2023 was £132.8m.

Revenue in the Content practice was up 15.5% reported or 1.6% like-for-like, to £173.1m; in the Data&digital media practice up 8.3% reported or 0.6% like-for-like to £53.5m; and in Technology services up 368% reported or 51.9% like-for-like to £35.1m. Growth was driven by a strong showing in the Americas, where net revenue rose 39.4% reported / 10.9% like-for-like to £173.6m, while in EMEA and Asia Pacific like-for-like net revenue actually fell (in EMEA down 4.7% to £32.7m, and in Asia Pacific down 9.9% to £12.8m, with China a particular drag as Covid problems persist).

S4 says its current geographical revenue split is around 70/20/10 Americas / EMEA / APAC, and its target 60/20/20; while in terms of practices, Content currently accounts for c.60%, Data&digital media 30% and Technology Services 10%, with the long-term objective for this 50/25/25.

Web site: www.s4capital.com .