'Cautious' clients hit revenues at S4 Capital
Martin Sorrell's posted a sharp fall in quarterly revenues on Thursday, after nervous clients reined in spending amid the worsening macroeconomic backdrop.
Like-for-like billings were up 8.6% at the advertising and marketing agency, at £463.3m. But revenues fell 14.3% on the same basis in the three months to March end to £178.1m.
All geographic regions saw a decline in revenues, including a 10.5% drop in the Americas, S4 Capital's biggest market by some distance.
S4 Capital did not provide a figure for operational earnings before interest, tax, depreciation and amortisation, other than to confirm it was line with expectations.
Executive chair Sorrell, who founded the business after more than three decades at WPP, said: "Trading in the first quarter reflects the continuing impact of, to say the least, volatile global macroeconomic conditions.
"As a result, clients remain cautious, with technology clients - which account for almost half our revenue - continuing to prioritise capital expenditure on AI over operating expenditure such as marketing."
As at 1130 BST, shares in the firm were down 3% at 25.0p.
Looking to the full year, Sorrell said the macroeconomic environment had 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," he said.
However, Sorrell said he still expected an improved performance in the second half, as clients assessed the impact of tariffs and revenue from new business flows through.
He continued: "We will continue to focus on our cost base and will take further action to support profitability, and expect net revenue and operational EBITDA to be broadly similar to 2024, on a constant currency basis, with a further reduction in net debt."
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