Martin Sorell’s S4 Capital, citing market uncertainty and significant volatility from US tariffs, has downgraded its outlook again, now expecting full year like-for-like net revenue to drop by mid-single digits.
The company reported tech platforms reducing operating expenses leading to cuts in sales and marketing spend.
S4 sees less project work, fewer pitches and shrinking new business opportunities at a local level.
And the company’s depressed share price, down by about half over 12 months, has put M&A on hold. S4’s model is based on a 50% equity 50% cash deal structure.
The pure play digital advertising group said its marketing services unit is forecast to be down by low single digits and technology services is expected to be down more due to longer sales cycles.
“We expect an improved performance in the second half of the year with a greater second half weighting than in the prior year, enhanced by the impact of new business revenue, including wins already secured and further incremental cost reduction which is being actioned,” Sir Martin said.
“Over the longer term we continue to expect our growth to outperform our markets and operational EBITDA margins to return to historic levels of around 2028."
S4 reported net revenue down 10% to GBP 328.2 million for the six months to June on a like-for-like basis.
However, the company said it is seeing significant opportunities for new business, particularly driven by AI tools and capability.
New business wins so far this year include new or broadened relationships with Asana, Amplifon, Samsung, Square, NCS and Opella.
And S4 is expanding many existing relationships, including General Motors and Amazon, which will ramp up significantly in the second half of the year.
The company has reduced staff by 9% to 6,900.
And further cost cutting is ahead, with further “significant” cost reductions in the second half of 2025 to bring staff cost to a revenue ratio more in line with the industry average of 65%, from the current 76%.
The June half 2025 numbers:
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