Sorrell expects S4 Capital to exceed 2022 market projection in latest trading update
S4 Capital is expected to outpace the market expectation of high single-digit growth for its digital advertising peers, according to its executive chairman Sir Martin Sorrell, in a fourth-quarter trading update released today.
The digital advertising and marketing services group confirmed its performance in 2022’s fourth quarter was in line with expectations. For the full year, S4 is set to deliver at least £120 million (A$213.44 million) of Operational EBITDA (earnings before interest, taxes, depreciation, and amortisation).
In its third-quarter earnings, the company posted its Pro-forma Operational EBITDA for the latest twelve months to 30 September 2022 as £126.2 million (A$224.43 million).
Sir Martin Sorrell
S4 Capital said it improved Operational EBITDA margin performance in the second half, with like-for-like gross profit/net revenue growth also in line with 25% guidance.
With improved liquidity, net debt is now expected to be “well towards the lower end” of the guided £130-170 million (A$231.23-$302.4 million), the same range posted in Q3. The monthly debt sat between £10 million (A$17.78 million) and £30 million (A$53.35 million) same time last year.
The annual result for 2022 is set to be announced by Thursday 30 March at the latest.
Sorrell added: “We look forward to updating our shareowners on the progress with our results in March. Most market commentators are now projecting high single digit growth for digital advertising and high teens percentage growth for digital transformation, which we believe we can continue to outpace, given our addressable markets including Technology services and as we build further momentum with our clients.
“Their priorities for 2023 seem to be focussed on driving revenue growth through ‘lower funnel’ performance and activation and reducing cost through digital marketing transformation.”
S4 Capital merged 4 Mile Analytics and Media Monks in January last year, following the full integration of Media Monks and MightyHive in 2021.
On the same day last year, S4 Capital traded at £541 ( A$962.46), with the share price dropping 35% on 30 March 2022, following the company pulling its annual results due to a delay from its auditors.
Sorrell later called the delay “unacceptable and embarrassing”.
The company currently trades at £222.60 (A$396.01) on the London Stock Exchange, and has a market cap of £1.25 billion (A$2.23).
