S4 Capital reports profit growth in Q3 and year-to-date
Sir Martin Sorrell’s post WPP venture, S4 Capital, has posted its third quarter trading update, and it’s good news for Sorrell.
S4 Capital reported strong organic gross profit growth of almost 16% so far this year, and almost 23% in the third quarter. Sorrell said that the company was “well positioned in the digital sweetspot of an otherwise stagnant advertising and marketing industry,” and that “clients are responding very well” to its purely-digital model.
Sir Martin Sorrell, , Executive Chairman of S4 Capital.
“COVID-19 has acted as an accelerator for search, social and ecommerce. Our very significant client wins in 2020, which include the BMW/Mini “Engine” in Europe, signal that we are achieving client conversion at scale, after achieving brand awareness in 2018 and brand trial in 2019,” he added.
Revenue was up almost 53% to £86.4 million, and gross profit up almost 79% to £75.3 million. Like-for-like (including impact of combinations, asset purchase and currency movements) revenue and gross profit were up almost 13% and almost 23% respectively.
Gross profit improved sequentially each month in the third quarter, up 18% in July, 24% in August and 25% in September. In addition, the Company has secured debt capacity of well over £100 million, before reaching its maximum target limit of 1.5-2x EBITDA.
Quarterly billings were £163.1 million up almost 13%. “Controlled” billings, the overall billings the company directs, were US$0.4 billion.
In the Asia Pacific gross profit is up almost 83% to £7.3 million in the third quarter and up over 26% like-for-like. Year-to-date gross profit grew over 85% to £18.4 million and like-for-like it was up over 21%.
The Americas showed strong growth in the third quarter with gross profit up over 93% to £55.1 million and almost 27% like-for-like. Europe, the Middle East and Africa also grew in the third quarter, with gross profit up over 34% to £13.0 million and like-for-like up almost 7%.
The content practice revenue was up over 69% in the third quarter to £69.3 million, with like-for-like up almost 15%. While the data & digital media practice third quarter revenue was up just under 10% to £17.1 million and almost 7% like-for-like.
Year-to-date content revenue was up 74% to £181.0 million and almost 10% like-for-like. Year-to-date revenue for data & digital media was up over 15% to £46.7 million and up almost 7% like-for-like.
The company’s latest and third three-year plan for 2021-2023 calls yet again for a doubling of top and bottom line organically.
The number of people in the firm was 2,870 at the end of the third quarter, up 26% like-for-like compared to the same time last year, and the company is set to continue to hire aggressively post gross profit growth and significant new business wins.The company also reported new clients such as T-Mobile, Hasbro, Fidelity, Whirlpool, Shopify and a number of clients that are undisclosed.
The S4 Capital board returned executive and non-executive directors’ compensation from 1 October to the levels they were in March, when they were cut by 50% and no cash bonuses were taken for 2019. “Normal” recruitment, pay raises and promotional policies have also been restored across the business in the third quarter.
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Olivia Kruimel is the managing editor at Mumbrella. She has more than 15 years of experience in journalism, communications and marketing. Her journalism career began at Fairfax Media (now part of Nine) and includes various B2B publications such as B&T, Travel Today and ALB. As a marketer Olivia has worked for Standard Chartered and various global law firms.
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