Martin Sorrell's S4 Capital reported strong billings growth for the half year to June but greater operating losses as the pure-play digital advertising group stops hiring and acquisitions to concentrate on organic growth.
Billings grew 22% to £765.6 million on a like-for-like basis. Revenue was up 30% to £446.4 million.
However, the company reported an operating loss of £75.4 million compared to a £16.6 million loss in the same six months last year. Gross profit was £375.3 million, up almost 28%.
Net debt was £135.5 million, up from £6.6 million.
Significant cost management measures, including a brake on hiring and discretionary cost controls, were implemented in the second quarter and half of the year.
The number of people in the company stabilised at 9,100.
The full year like-for-like gross profit/net revenue growth target remains unchanged at 25%.
For the full year expected operational EBITDA target remains unchanged at £120 million.
Founder Sir Martin Sorrell: “Our top line growth continues to outperform the digital advertising and transformation markets.
“This momentum is underlined by the increasing recognition of the success of our new age/new era model in industry surveys such as the Forrester Waves (the guide for buyers considering their purchasing options in a technology marketplace) and increasing conversion of client relationships at scale as we land more “whoppers”.
S4 is now focused on organic growth, rather than acquisitions.
“Whilst the global economy faces many significant challenges in areas such as climate change, a lengthy war on Continental Europe, rising inflation and interest rates, energy shortages, fractious US/China and Western/Russia relationships and with Iran, the prospects for digital advertising and transformation remain relatively bright, whilst traditional media languish.
“There is evidence that demand accelerates during periods of economic uncertainty as we saw with Covid in 2020, when we performed strongly.”
The numbers:
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