S4 Capital reports Q3 revenue growth of more than 50%

Sorrell: 'peanut has morphed into a pumpkin in time for Halloween'
Sorrell: 'peanut has morphed into a pumpkin in time for Halloween'

Performance driven by surge in content and programmatic among existing and new clients.

S4 Capital, the holding group founded by executive chairman Sir Martin Sorrell, has reported a revenue boost of nearly 54% year on year to £56.6m for the third quarter, with gross profit up 50% to reach £42.1m.

Year-to-date revenue grew by 46% to £144.6m, with gross profit up 46% to £112.3m.

Attributing the third-quarter rise to surges in its content and programmatic business and particularly strong growth in the Americas, the results include the impacts of S4’s mergers with Progmedia in April and IMA in August, as well as the asset purchase of Caramel Pictures in April.

However, the third-quarter figures, for the three months ending 30 September, do not take into account the mergers with Firewood, Convergence Works and Datalicious Korea, all of which were completed in October, while the merger with BizTech is expected to be completed in November.

S4’s content practice accounted for the lion’s share of its growth. Revenue was up nearly 48% to £41.1m, while gross profit grew 40% to £26.6m. Year-to-date content revenue increased 37% to £104.1m, with gross profit up 33% to £71.8m.

Programmatic revenues shot up by more than 71% in the third quarter to £15.5m, while gross profit also grew 71% to £15.5m. Year-to-date programmatic revenue was up by more than 75% to £40.5m, with gross profit experiencing a 76% increase to £40.5m.

Like-for-like revenue and gross profit during the third quarter – which include the impact of mergers, asset purchases and currencies – were up 48% and 44% respectively.

The Americas was the biggest market, with gross profit up 51% (43% like for like) to £28.5m, while Europe, the Middle East and Africa saw gross profit growth of more than 26% to £9.7m (up 25% like for like).

Asia-Pacific posted the strongest rate of growth, albeit from a modest base, with gross profit up 156% (150% like for like) to £4m.

S4 said it was being bolstered by existing and new business activity. The group cited assignments from clients including Anheuser-Busch InBev Brazil, Sony Pictures, Coca-Cola, HP and Google, as well as undisclosed brands in the tech, healthcare, employment, retail and FMCG sectors.

S4 Capital said the latest figures demonstrated that it was "more than in line" with its target of doubling organically in three years by 2021.

The company said it will soon be announcing two non-executive board appointments, in California’s Silicon Valley and Asia-Pacific, bringing its non-executive director gender balance to 50/50.

Sorrell said: "We continue to trade in line with ambitious internal and external expectations, both top and bottom line. Our very strong organic growth of well over 40% so far this year indicates that clients are responding very well to our purely digital, unitary, ‘holy trinity’ model of first-party data fuelling digital content and programmatic.

"As our new content and media partners, Firewood, based in Silicon Valley put it, ‘speed, quality and value’ are key. The mergers and asset purchase we have completed, so far this year, will broaden and deepen our capabilities and client relationships and convert clients to scale. The peanut has morphed into a pumpkin in time for Halloween 2019 and we have also achieved US dollar ‘unicorn status’."

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