S4 Capital PLC said that challenging macroeconomic conditions and high interest rates restricted spending from technology clients, as it reported a revenue fall.

The London-based advertising firm said revenue fell 18% to £422.5 million in the first half of 2024 from £517.1 million a year prior.

Billings edged down 1.8% to £908.9 million from £925.4 million.

Excluding direct costs, net revenue was 16% lower at £376.1 million from £445.5 million.

Its pretax loss, however, narrowed to £17.2 million from £23.2 million. Operating expenses were 16% lower at £379.8 million from £451.9 million.

Executive Chair Martin Sorrell said: ‘Trading in the first half reflects the continuing impact of both challenging global macroeconomic conditions and high interest rates. This particularly impacted marketing spend by some technology clients and our Technology Services practice was affected by a reduction in one of our larger relationships.’

He added: ‘We maintain our profit target for the full year and, as in prior years, financial performance will be significantly second half weighted.

‘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 combination payments have been made.’

S4 Capital still expects its Content arm to ‘show improved profitability reflecting the benefit of cost reductions made in 2023 and in 2024’.

At group level, it still anticipates the like-for-like operating earnings before interest, tax, depreciation and amortisation to be at a ‘broadly similar overall level’ to 2023.

However, it believes like-for-like net revenue to be down on the prior year ‘to a greater extent than assumed in May’.

S4 Capital kept its profit outlook unmoved but lowered guidance for revenue.

S4 Capital shares fell 7.4% to 41.65 pence each on Thursday morning in London.

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