Sorrell’s S4 Boasts Impressive First-Quarter Numbers Despite CV-19 Downturn

Sorrell’s S4 Boasts Impressive First-Quarter Numbers Despite CV-19 Downturn
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Sir Martin Sorrell’s new venture – S4 Capital – has posted some impressive first-quarter numbers for 2020 in a trading update posted overnight.

The London-headquartered S4 grew its revenue by 17 per cent like-for-like in the first quarter of the year, the company said.

Reported revenue was £71 million ($A135 million) in the first three months of 2020, with gross profit up 19 per cent like-for-like to £61 million ($A166 million).

Revenue from the group’s programmatic and data and analytics practice, MightyHive, grew by 18 per cent on a like-for-like basis.

It said its growth was below the level of a pre-COVID-19 budget but that the business still had a chance to meet its three-year plan of doubling organically.

S4 report half of its clients are tech companies who’ve largely continued to invest during CV-19 but the company notes there has been some postponement of spend to the second half of 2020. It noted that spends from FMCG, pharmaceutical brands and retailers was more mixed, with some reducing their spends.

The update noted: “The travel and hospitality verticals have virtually all stalled. Mostly all, however, are switching investment from traditional or analogue media to digital, as consumers increasingly shop, educate and communicate online, with online being cheaper, more flexible and more effective.”

Highlights of the update included:

• Most importantly and thankfully very few cases of infection and subsequent illness amongst our 2,500 people and their families in 30 countries

• Reported revenue up 73 per cent to £71 million, up 17 per cent like-for-like and 19 per cent Pro-forma

• Reported gross profit up 85 per cent to £61 million, up 19 per cent like-for-like and 22 per cent proforma

• Cash flow and balance sheet remain strong with no net debt

• Confident the Company will deliver sector leading double digit like-for-like revenue and gross profit growth and reasonably strong operating EBITDA margin in 2020

• Fighting chance to achieve the Group’s three-year plan of doubling organically

• Post covid-19 digital transformation will accelerate and the strong will get stronger

Geographically, all regions showed strong growth. The Americas, representing 73 per cent of gross profit, reported gross profit up 96 per cent, EMEA, representing 19 per cent, up 45 per cent, and Asia Pacific, representing the remaining eight per cent up 118 per cent.

On a like-for-like basis, the Americas were up 21 per cent, EMEA up 11 per cent and Asia Pacific up 21 per cent. On a pro-forma basis, the Americas were up 24 per cent, EMEA up 11 per cent and Asia Pacific up 23 per cent.

Sorrell commented: “In our view, Covid-19 will only accelerate the digital trends we have seen before at three levels – consumers, media owners and enterprise managers. It is effectively and sadly a burning platform that will encourage and drive digital transformation.”

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