S4 Capital PLC on Thursday said revenue dropped by 18% in the latest quarter, with its Content division doing particularly poorly, and gave a pessimistic full-year outlook.

S4 Capital shares were down 15% at 56.94 pence on Thursday around midday in London.

The London-based advertising agency said net revenue fell 15% in the third quarter of 2023, to £211.5 million from £249.9 million the year before, due to lower activity in both its Content and Data & Digital Media divisions.

S4 said total revenue fell 18% to £245.9 million from £300.1 million, with Content revenue plummeting 23% to £160.9 million from £208.2 million. Data & Digital Media revenue fell 15% to £49.6 million, while Technology Services revenue rose 4.4% to £35.4 million.

By region, Americas revenue dropped 15% to £167.6 million, while Europe Middle East & Africa revenue fell 19% to £30.4 million.

‘Trading in the third quarter was difficult,’ explained Executive Chair Martin Sorrell, ‘reflecting the global macroeconomic conditions with continued client caution to commit and extended sales cycles, particularly for larger projects and to some extent clients in the technology sector.’

S4 said that for the full year, it expects net revenue to decrease on a like-for-like basis from the £891.7 million delivered in 2022. It also anticipates an operational Ebitda margin of 10% to 11%, down from 13.9% last year. This is mainly thanks to ‘slower than expected trading in Q3 and current client activity levels’.

Sorrell, however, proclaimed: ‘We expect, as usual, Q4 profitability to be the strongest quarter of the year - stimulated by the usual seasonal levels of client activity and the artificial intelligence initiatives and use cases we are developing with our clients, along with the actions taken on cost management.

‘We remain confident our strategy, business model and talent, together with scaled client relationships position us well for above average growth in the longer term,’ he added.

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