Martin Sorrell’s S4 Capital applies emergency brakes

Credit: Logan Weaver via Unsplash

S4 Capital, the pure-play digital advertising firm, issued a profit warning as cost growth outpaced revenue.

The company, known for its rapid growth since its inception in 2018 after Sir Martin Sorrell left global advertising group WPP, has applied a brake on hiring and discretionary cost controls.

S4’s market capitalization fell to £700m from £1.26bn as the shares fell 47% to 118.42p.

In May, the company reported like-for-like revenue growth of 40% in the March quarter, with an optimistic outlook for the full year.

However, the latest trading update says earnings and margins were “below its expectations for the first half of the year.”

Like-for-like sales and gross profit/net income growth were in line with expectations of 25% on a full-year basis.

However, continued heavy investment in hiring, particularly in content practice, negatively impacted first half EBITDA (earnings before interest, tax, depreciation and amortization) and operating margin. EBITDA.

S4 lowered its expectations for its full-year EBITDA target to £120m while maintaining a 25% like-for-like gross profit/net sales growth target.

Market analysts currently expect EBITDA to be between £154m and £165m.

s4 capital shares

Do you have anything to say about this? Share your opinions in the comments section below. Or if you have any news or tips, email us at [email protected]

Sign up for the AdNews newsletter, like us on Facebook or follow us on Twitter to break stories and campaigns throughout the day.

About Joel Simmons

Check Also

Unilever posts revenue of N23.25 billion in 6 months

Unilever Nigeria Plc recorded revenue of N23.246 billion in its six-month financial year ended June …