Financial Results S4 Capital Agencies

S4 posts 40% revenue growth in first quarter


By Sam Bradley, Journalist

May 30, 2022 | 4 min read

S4 Capital has reported a strong performance in the first quarter of 2022 following the problematic release of its full-year results earlier in the month.

s4 capital

S4 Capital has released its financial results for the first quarter of 2022

The firm recorded like-for-like revenue growth of over 40% in the first three months of the financial year. The disclosure follows the release of its annual results earlier this month, delayed after accounting issues were uncovered by auditor PricewaterhouseCoopers which had a significant negative impact on its share price.

In a statement, executive chairman Sir Martin Sorrell said: ”New business activity remains frenetic and the pipeline is above the level at this time last year, with considerable current pitch and land and expand opportunities across the board.”

What do the figures show?

Revenue rose 70% in the first quarter, to £206.8m ($260m); that's a 40.6% like-for-like increase on the previous year.

Net revenue in the same period was £171.1m ($215m), a rise of 64.6%.

S4 landed several new clients in the quarter, including two in its target range of companies worth over $20m in revenue. Highlights included Estee Lauder, which hired S4 agency Decoded, and expanded remits with Amazon, PayPal, Netflix and Google.

Net debt for the company sits at £48m ($60m); payments for recent mergers, such as the acquisition of TheoremOne, will surface next quarter.

The company reaffirmed its profit and revenue growth forecasts for this year, which sit at 25%, and it expects its operating EBITDA margin (earnings before interest, taxes, depreciation and amortization) to widen in the second half of the year.

Which areas of the business performed best?

S4’s content practice remains its core business; it accounted for 55% of net revenue, while data and digital made up 28.4%. Its nascent tech services arm contributed 4%.

Following several acquisitions in the region last year, including Zemoga, most of S4’s revenue came from the Americas (71.8%), while EMEA and APAC made up 19.9% and 8.3% respectively. Its Asian and European operations had stronger growth than the Americas, however, with like-for-like increases of 40.7% and 54.7% respectively.

Sorrell predicted that digital marketing growth as a whole would continue to help drive business expansion. ”While GDP growth is a driver of our four addressable markets - global media, marketing services, trade budgets and digital marketing transformation - the digital segments of these markets, as opposed to the analogue, are still forecast to continue to grow significantly,” he said.

”Despite the softening of global GDP growth because of the withdrawal of the Covid stimulus, significant inflation, increasing interest rates, the war in Ukraine and China’s continued zero-Covid lockdowns, the secular trend to digital marketing continues to provide strong tailwinds.”

Financial Results S4 Capital Agencies

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