Martin Sorrell’s S4 Capital warned that revenue would be lower than forecast this year as technology clients of the pure-play digital advertising group pull back spending.
The company’s shares lost more than 21% to close at 108.60 pence on the London Stock Exchange.
S4 now expects full year like-for-like net revenue growth of 2% to 4%, down from previous guidance of 6%-10%.
Sir Martin’s company has been hit by the same wave as IPG which reported a 1.7% drop in June quarter organic growth as technology clients cut or delay advertising spend in an uncertain economic climate.
Other major advertising players have reported better results. Omnicom reported organic revenue growing 3.4% and Publicis Groupe 7.1% in the June quarter.
S4 says its net revenue in the second quarter was below budget with May and June in particular reflecting the challenging macroeconomic conditions and clients, especially those in the technology sector, being cautious.
“We continue to see longer sales cycles, particularly for larger transformation projects,” the company said.
“Some impact has been seen in each of the practices, but it is particularly evident in content.”
Like-for-like net revenue growth for the company is expected to be about 5% in the first half.
“Reflecting the market backdrop, the company continues to maintain a disciplined approach to cost management, including headcount and discretionary costs,” the company said.
“As in prior years, 2023 will again be significantly second half weighted reflecting our seasonality.
“Based on our preliminary review of the H1 results, Technology services continues to perform well, data & digital has seen growth slow compared to 2022, but is trading satisfactorily, while content has had a more difficult period generating results below our budget.”
The London Stock Exchange:
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