S4 Capital Q3 earnings: growth in the ‘sweet spot of an otherwise stagnant industry’
S4 Capital, Sir Martin Sorrell’s agency holding group, is built on the belief that a “new age, [needs a] new era model”.
S4's Q3 earnings help shine a light on the company's progress.
Today [Monday 9 November] the group shared its Q3 earnings performance to evidence whether Sorrell’s business is delivering on its promise.
The Drum shares what you need to know from the call.
Q3 figures
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Revenue: up 53% to £86.4m year on year.
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Reported gross profit up 79% to £75.3m.
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Like-for-like revenue up 13% / Q3 like for like gross profit up 23%.
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All regions ”showed strong growth”.
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Americas raised £55m of its £75m gross profit (EMEA: £12.9m, APAC: £7.2m).
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Strong recovery in a year heavily impacted by the pandemic, as evidenced below.
Analysis
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S4 Capital has been a path of rapid acquisitions and is building a model fit to clash with what Sorrell once oversaw at WPP. In Q3, it picked up French agency Dare.Win and Amazon agency Orca Pacific. There will be more to come in 2021. ”High taxes” could see it pursuing further mergers too.
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It felt the burn from the shut-down of its content wing from March to May, be it film, experiential and ”some” consultancy output. Travel clients also went quiet.
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S4 had to help clients restructure quickly around virtual events, next-gen broadcasting and live-streaming as well as develop ‘Covid-free‘ studios. Furthermore, clients were directed into e-commerce channels rapidly, where necessary.
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MediaMonks had a big win, taking BMW and Mini European content and production. This serves as a strong proof of concept for the S4 model. MediaMonks opened in Germany soon after the win.
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New clients include T-Mobile, Klarna, Shopify and Beyond Meat. 55% of its clients are in tech, the next biggest client sector is FMCG at 8%.
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Through Mightyhive, it is helping marketers in-house digital functions. A business accelerated by the pandemic.
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Executive chairman Sorrell said it continued “to trade in line with ambitious internal and external targets, which now include doubling both top and bottom lines organically over the period 2021 to 2023“.
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“We are well-positioned in the digital sweet spot of an otherwise stagnant advertising and marketing industry and clients are responding very well to our new age/new era, purely digital, ‘holy trinity’ model of first-party data fueling digital content, data and digital media.”
Last month, Sorrell shared three actionable insights with The Drum, showing the tenets of how to navigate industry and pandemic challenges.