Credit: Quino Al via Unsplash
Martin Sorrell’s S4 Capital reported revenue down 11.4% to £163.7 million on a like-for-like basis in the March quarter, reflecting technology client caution and headwinds from one key client.
The pure-play digital advertising group said the tariff war had create short-term uncertainty, but opportunity for long-term technology adoption, particularly AI, to implement greater efficiency in a slower growth world
The company continues to focus on costs and expects net revenue to be broadly similar to 2024, with a further reduction in net debt by year end to the range of £100-140 million.
The Americas like-for-like net revenue, which accounts for 80% of the company’s total, was down 10.5%, but with strong growth in Latin America.
EMEA, accounting for 15%, was down 15.9%, with lower activity in the UK, Germany and the Netherlands.
Asia Pacific, with 5% of total revenue, was down 11.%, affected by Australia and Singapore.
"As indicated previously, trading in the first quarter reflects the continuing impact of, to say the least, volatile global macroeconomic conditions,” said Sir Martin, the executive chairman.
“As a result, clients remain generally cautious, with technology clients, which account for almost half our revenue, in particular, continuing to prioritise capital expenditure on AI over operating expenditure, such as marketing.
“As anticipated, our Technology Services Practice continued to be affected by a reduction in one of our larger relationships.
“The global macroeconomic environment has become even more challenging in 2025. Assessing the impact of US imposed tariffs has been added to the three principal risks around US/China relations, Russia/Ukraine and Iran/Middle-East.
“Clients, therefore, are likely to remain cautious. However, once the levels of tariffs are negotiated and impacts assessed, we believe clients will become more selective about the geographies in which they operate in order to find growth and focused on implementing technologies, such as, but not only AI, to drive efficiency in a slower growth, higher inflation and higher interest rate environment. This may be the time when AI-adoption accelerates at scale.
“With that said, we expect an improved performance in the second half of the year, aided by the phasing of revenue from new business.
“We continue to focus on our larger, scaled relationships with leading enterprise clients and our drive for margin improvement through greater efficiency, utilisation, billability and pricing. “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.
"We continue to capitalise on our prominent AI positioning and are seeing multiple initial AI-related assignments and new business opportunities.”
March quarter 2025:
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