- S4 Capital’s reported sales slumped by 15.3% to £178.2m in the first quarter
S4 Capital saw a significant decline in first-quarter revenue as the ad group’s technology clients continue to prioritise artificial intelligence spending over marketing.
Sir Martin Sorrell’s advertising agency revealed like-for-like turnover fell by 14.3 per cent in the three months ending March, while reported sales slumped by 15.3 per cent to £178.2million.
Sorrell, 80, noted customers remained cautious amid ‘volatile global macroeconomic conditions’ resulting from tariffs, the Ukraine war, cooling US-China relations and tensions in the Middle East.
S4’s net revenue from technology services plunged by 36.4 per cent to £15.4million due partly to lower activity from one major customer.
Tech firms’ focus on enhancing AI capacity instead of advertising led to marketing services turnover shrinking by £13.9million to £148.3million.
On a regional basis, net revenue in the Americas – its largest market – fell by 11 per cent to £130.5million despite solid growth in Latin America, while trading in Europe was hit by subdued activity in the UK, Germany and the Netherlands.
Restrained behaviour: Sir Martin Sorrell (pictured) noted customers remained cautious amid ‘volatile global macroeconomic conditions’
S4 Capital shares decreased 4.5 per cent to 24.65p on Thursday morning, taking losses to around 47 per cent over the past year.
However, S4 expects to perform better over the second half of the year, supported by the ‘phasing of new business revenue’ and a ramp-up in work from major clients such as GM and Amazon.
During the first quarter, the London-based company struck new partnerships with the likes of Samsung, software developer Asana, and Jack Dorsey’s payments platform, Square.
S4 also gained a deal worth at least $20million in annual turnover, which it calls a ‘whopper’, with an unnamed firm in the telecommunications, media, and technology sector.
Consequently, the group anticipates its annual net revenue and operational earnings before nasties will be broadly similar to last year’s levels.
Sorrell said: ‘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.’
London-born Sorrell set up S4 in 2018 after spending over three decades as chief executive of WPP, which he built into the world’s largest advertising business.
Like at WPP, he expanded the company through dozens of acquisitions, including Dutch firm MediaMonks, marketing consultancy MightyHive, and film studio Caramel Pictures.
However, this approach screeched to a halt in 2022 when accounting issues forced S4 to delay publishing its full-year results twice.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .