S4 Capital boosted by tech clients as organic growth surges 23%

Martin Sorrell's business makes 55% of its money from tech, well ahead of any other sector.

Mini and BMW: Some of S4's 'whopper' client wins last quarter.
Mini and BMW: Some of S4's 'whopper' client wins last quarter.

S4 Capital’s share price hit a record high on Monday morning after Martin Sorrell’s “new age/new data” business reported a 23% growth in organic revenue for Q3. 

The company’s valuation rose to almost £2.4 billion after S4’s share price opened at £4.60 this morning, up 4.5%, following the announcement of its latest earnings. 

Its organic revenue, reported as gross profit, was £75.3 million for July to September, while year-to-date billings are up 12% year-on-year to £424 million. Gross profit was up 18% in July, 24% in August and 25% in September.

It also announced several client wins in the quarter, including two “whoppers”: S4’s programmatic media agency Mightyhive has won T-Mobile’s in-house digital media account and MediaMonks has won BMW and Mini’s pan-European account. It also signed deals in Q3 with Shopify and Beyond Meat.

The company is benefitting from a client base that is heavily weighted towards technology companies, with 55% of its overall revenue coming from the sector, compared with 8% for FMCG companies and 8% for agencies.

Tech companies’ growth has been boosted even further this year as consumers and business accelerate digital transformation due to people working, shopping and being entertained more from home.

S4 expanded its revenue last quarter with Facebook, Google, Netflix, and Procter & Gamble, it said. Peter Kim, Mightyhive’s chief executive, cited S4’s partner relationships with the likes of Facebook and Google as being a determining factor behind recent business successes. 

Its organic growth does not include the three mergers it carried out over the quarter: Orca Pacific, the full-service Amazon account management agency; BrightBlue, the data measurement company; and Dare Win, the Paris-based digital agency that gives Sorrell's business a presence in France.

The business employed 2,870 people as of the end of September, which is up 26% compared with the same time last year on a like-for-like basis, and S4 told investors today it would “continue to hire aggressively around strong gross profit growth and significant new business wins."

Sorrell, S4’s executive chairman, admitted that the company had more to do when it comes to hiring more Black people in the organization. S4 is made up of 40% of people of color and has a gender balance in the U.S. and the U.K. 

Of S4’s overall business performance, he said: “Our consistent, very strong organic gross profit growth of almost 16% so far this year, and almost 23% in Q3, indicates that we are well positioned in the digital sweetspot of an otherwise stagnant advertising and marketing industry and that clients are responding very well to our new age/new era, purely digital, 'holy trinity' model of first-party data fuelling digital content, data and digital media.”

"Our mantra of 'faster, better, cheaper' or 'speed, quality, value' and our unitary, one P&L structure, are clearly resonating with clients and differentiating our offer," he added. 

This story first appeared on campaignlive.co.uk. 

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