S4Capital, the digital advertising, marketing and technology services company founded by Sir Martin Sorrell, has reported another slowdown in revenue amid continued client caution in the advertising market.
For the first quarter, the company reported a like-for-like net revenue decline of 11.7 per cent. On a reported basis, revenue declined 14.9 per cent.
Its technology services division reported the most significant decline, with net revenue falling 28.4 per cent on a like-for-like basis. Its content, data, and digital media arms both reported an 8.5 per cent like-for-like decline in revenue.
However, despite the poor performance in the first quarter, the company said that its full-year growth targets are unchanged. It added that it continued to expect like-for-like net revenue to decline for 2024 while earnings before interest, tax, depreciation, and amortisation (EBITDA) would remain flat year on year.
S4Capital said an increased focus on margin improvement through efficiency and pricing would help support EBITDA for the full year despite the decline in overall revenue.
The company ended the first quarter with net debt of £206m, giving a net debt to EBITDA ratio of 2.2x. S4 said it expected net debt to trend lower throughout the year as it progressed with its restructuring programme.
Sir Martin Sorrell, executive chairman of S4Capital, said: “As indicated previously, trading in the first quarter reflects the continuing impact of volatile global macroeconomic conditions, general client caution, particularly amongst technology clients and a reduction in activity with some of our larger Technology Services clients.
“We maintain our targets for the full year and, as in prior years, financial performance will be significantly second half weighted reflecting both our normal seasonality and an expected improvement in market conditions,” Sorrell added.
He continued: “We remain confident in our strategy, business model and talent, which together with scaled client relationships position us well for growth in the longer term, with an emphasis on deploying free cash flow to improve shareowner returns, now all significant merger payments have been made. In addition to significant new business activity, we continue to capitalise on our prominent AI positioning, developing multiple initial assignments as clients start to experiment with and implement applications.”