S4 technology clients remain generally cautious given uncertainty / Image source: Adobe
  • Global macro conditions ‘challenging’
  • Shares down 19% year-to-date
  • New wins from GM, Amazon, T-Mobile

Shares in S4 Capital (SFOR) gained over 3% to 26p in morning trading despite the digital advertising agency reducing its forecast for full-year like-for like net revenue growth from flat to a low single-digit decline.

The agency headed up former WPP (WPP) boss Sir Martin Sorrell attributed the lowered forecast to the impact of challenging global macroeconomic conditions and reduced revenue from major US technology clients.

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However, the company said its target for year-end net debt remained in the range of £100 million to £140 million.

Over the longer term the company continues to expect growth to outperform its markets and ‘operational EBITDA (earnings before interest, taxation, depreciation and amortisation) margins to return to historic levels of around 20%.’

WHAT DID THE CEO SAY?

Martin Sorrell said: ‘Market conditions in the first five months of 2025 reflect the continuing impact of, to say the least, volatile global macroeconomic conditions.

‘As a result, clients remain generally cautious given the uncertainty, with technology clients, which account for almost half our revenue, in particular, continuing to prioritise capital expenditure on expanding AI (artificial intelligence) capacity.’

Analysts at Panmure Liberum commented: ‘Technically there is a downgrade of underlying full-year revenue growth guidance from flat to low single digit decline today linked to tariffs. We already have -2% for the year given our macro caution.

‘At a more granular level the company says April was a bit soft in activity terms, but there was no specific geographic factor and there have been no client losses.

‘S4 remains on track to move back into positive underlying growth in the second half and save the horrific level of global macro uncertainty we would be more bullish.

‘At the operational EBITDA level, guidance is unchanged with flat underlying reiterated. Continuing US dollar weakness means the actual number is still under a little pressure, but we are comfortable with our forecast at current foreign exchange rates.

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Issue Date: 04 Jun 2025