S4 Capital continues to out-pace agency groups in H1 2021

Sir Martin Sorrell’s S4 Capital has reported a “very strong first half” for 2021, with like-for-like gross profit (net revenue) up 49% and accelerating to 66% in second quarter.

Revenue was £547.5 million, up over 110% for reported, and up over 82% like-for-like. While gross profit was £236.7 million, up almost 91% for reported, up over 49% like-for-like.

Operational EBITDA is up 91% reported, 30% like-for-like and 36% pro-forma with EBITDA margin of 14.5% reflecting continued investment.

When looking at a two-year stack, adding this half year’s like-for-like growth of 49% to last year’s 12%, the company reported an increase of 75% for the first half of 2021, which puts it more in line with the growth of the digital platforms, “rather than the ad holding companies, which were generally flat”: Google’s Q2 two-year revenue growth stack was 57% and Facebook’s Advertising revenue Q2 two-year growth stack was 66%.

Last month Sir Sorrell merged the two S4 agencies MediaMonks and MightyHive to create unitary brand Media.Monks.

Executive chairman of S4Capital Sir  Sorrell, said: “We have had a super strong first half start to 2021, in line with the fast-growing digital platforms. Even in comparison to 2019, we are up strongly, again more like the digital platforms. It is clear that the tragedy of COVID-19 has accelerated the speed of digital transformation and disruption at consumer, media and enterprise levels. Especially, in these difficult times, we continue to be committed to ensuring that our people are well and safe, with sustainability and responsibility being a priority.

“We are clearly in a disruptive, growth sweet spot and our digital only, faster, better, cheaper, unitary, holy trinity” model, which combines first party data with digital content, data and digital media is gaining traction, particularly in a cookieless world.

After only three years as a listed company S4 Capital is now is in to the top 125 FTSE companies.

“The second half of 2021 and the prospects for 2022 look very good primarily driven by the fiscal and monetary stimulus, as well as the years beyond driven by digital transformation,” Sir Sorrell added.

By geography, Asia-Pacific was up almost 76% for reported, and up over 43% both like-for-like. The Americas gross profit (net revenue) was up 90% for reported, over 47% like-for-like while Europe and Middle East and Africa was up over 101% for reported, up 60% like-for-like.

Content and data and digital media capabilities added in the United States, Canada, Brazil, Germany, China and Australia in the first half through seven combinations.

Given the growth in the first half of 2021 and July, the company expects to double organically  over the three-year period 2021-23.

Source: Morgan Stanley

Its client roster continues to be dominated by and increasing in technology, as well as in fast moving consumer goods (FMCG), in telecommunications and in pharmaceuticals, both by practice and geography.

Notable assignments in the first half of 2021 were won with existing clients such as Google, Facebook, HP, Netflix, Procter & Gamble and AB InBev, plus it added new clients including Amazon Fashion, FIFA, Burberry, Toblerone (Mondelēz), Shopify, Instacart, McLaren and OLX.

The company now has five “whopper” accounts: Google, another FAANG (NDA), BMW/MINI, Mondēlez, Facebook, and high hopes of adding two or three more “whoppers” next year to its roster of clients – which each represent more than US$20 million of gross revenue each year.

By practice, Content gross profit (net revenue) was up over 66% reported, almost 51% like-for-like. Data and digital media up over 169% reported, almost 47% like-for-like.

Adjusted basic earnings per share, which includes adjusting items after tax, of £0.309 per ordinary share, up over 66%, versus £0.203 per share in the first half of last year.


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