Advertising and marketing services group S4 Capital (SFOR) continues to enjoy a run of good luck with revenue and gross profit growth ahead of expectations.
In a trading update, it said: ‘The pattern of first-half profitability and margins remains very similar to the first halves of 2019 and 2020, weighted to the second half.’
S4 was set up by former WPP boss Martin Sorrell in 2018 with a focus on digital media.
In 2018 digital advertising accounted for 45% or $225 billion of total global advertising spend of $500 billion. S4 Capital estimates this share will grow to approximately 55% by 2022.
S4’s shares have risen by 93% in the past 12 months to 645p, helped by positive trading news which has increased the market’s confidence that it can hit earnings guidance.
The group raised guidance in June for first quarter net revenue growth to 35% compared with prior expectations of 30%. This upgrade followed a similar rise in May, when estimates were increased from 25% to 30%. Today’s trading update will provide further reassurance to investors regarding the growth outlook for the company.
Investors are also likely to take comfort from today’s announcement that the group has secured an additional £200m liquidity to finance further corporate deals.
Mergers and takeovers have provided a critical component in S4’s growth strategy. Significantly, the group has made 11 takeovers in the 12 months to early June.
The group is seeking to expand its activity in technology services in addition to its content, data and digital media businesses in the Americas and Asia-Pacific.
