Sorrell’s S4 Reports 40% Profit Increase In First Half Of 2019

Sorrell’s S4 Reports 40% Profit Increase In First Half Of 2019

S4 Capital, Sir Martin Sorrell’s new era digital advertising and marketing services company, has reported continued trading progress in the first half of 2019, with further strong revenue and gross profit growth.

Like-for-like revenues and gross profit were up around 40 per cent, growing faster than the targeted rate required to double the company’s revenues and gross profit organically over the three years.

Both sterling reportable revenues and gross profit have strengthened slightly since its AGM statement in May and were up well over 40 per cent.

As also mentioned in the AGM statement, pro-forma reported operating EBITDA margins were lower than last year, reflecting increased human capital investment (a doubling of the like-for-like headcount) and geographical expansion, both at MediaMonks in digital content and MightyHive in programmatic, and the relatively stronger operating EBITDA margins at MediaMonks in the first half of last year.

Reported pro-forma operational EBITDA margins are expected to improve from the first half of the year to the second half, reflecting an even stronger second half at MightyHive in programmatic and an easier second half operating EBITDA margin comparison at MediaMonks in content. Operating cash flow remains strong with net debt approximately halved from the level incurred to part fund the MediaMonks merger.

Sorrell commented: “The continued top-line revenue and gross profit momentum at twice the digital market’s growth rate clearly demonstrates the contemporary relevance to clients, of the purely digital, ‘faster, better, cheaper’, unitary, first party data, content and programmatic model.

“We are investing in human capital and new geographies at a faster than anticipated rate, to take our ‘holy trinity’ model to the next level and this has flowed through to operational EBITDA margins in the first-half and we expect margin expansion in the second half of the year.”

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