S4 Capital warns over revenues amid slump in tech marketing spend

Sir Martin Sorrell’s marketing group S4 Capital has seen shares tumble after warning over full-year sales as tech firms slash their spending.

The group said revenues plunged 18.3% in the six months to June 30 and cautioned turnover is set to fall by more than expected over the year as a whole, sending shares down by as much as 16% at one stage.

Executive chairman Sir Martin said trading was being hit as tech companies cut back on their marketing budgets.

S4 Capital has slashed its workforce by nearly 1,000, or about 12%, to 7,553 year-on-year in the first half as it looks to cut costs.

Its actions to drive savings is helping limit the impact on profits, with the group reporting underlying earnings down 17.5% to £30.1 million for the first half and holding its outlook for the full-year.

On a statutory basis, it saw pre-tax losses narrow to £17.2 million from £23.2 million a year ago.

“We continue to expect a broadly similar overall level to the like-for-like operational Ebitda of 2023, as a result of cost reductions made last year and a continued focus on our cost base, where we have taken further action,” the firm said.

Sir Martin said: “Trading in the first half reflects the continuing impact of both challenging global macroeconomic conditions and high interest rates.

“This particularly impacted marketing spend by some technology clients and our technology services practice was affected by a reduction in one of our larger relationships.”

He added: “We maintain our profit target for the full year and, as in prior years, financial performance will be significantly second half weighted.”