Sir Martin Sorrell’s S4 Capital roars on, reporting first quarter 2021 revenue up 71% to £122 million, up 35% like-for-like, with gross profit up 71% to £104 million, up 33% like-for-like (S4 is a lot bigger now than a year ago.)
Gross profit takes into account production costs but not other unavoidable company costs but even so these numbers are pretty spectacular. Roughly two thirds of S4’s revenue comes from content, headed by MediaMonks (what a buy that was) with the reminder media-related, headed by MightyHive. S4 has just bought another Brazilian business, Raccoon, to fold into MightyHive.
S4 says all its regions did well and is targeting 30% growth for the rest of the year as the global economy recovers. S4 now employs around 5000 people. Its shares in London rose 12% in early trading, valuing the three-year creation at well over £3bn.
Sorrell (above) says: “We feel very optimistic about our Company and its prospects. Clients are focused on taking back control of their marketing functions, which favours our in-house, embedded or even outsourced capabilities. In addition, the privacy decisions by both Google and Apple and the resultant crumbling of third party cookies have all played to the strengths of our global data and analytics network and stressed the fundamental importance of first party data and the walled gardens.
“Agility continues to be the key corporate attribute and our go-to-market mantra faster, better, cheaper or speed, quality, value is resonating increasingly with our current clients and potential ones. The pandemic has accelerated digital transformation. The recovery in global GDP and the secular trend to digital marketing provide strong tailwinds.”
So what’s in store? Sorrell says he hopes for more “whoppers,” $20m revenue clients to add to last year’s BMW and Mondelez. S4 is also trialling a rebrand of sorts although Sorrell says, wisely: “We are in the process of a soft launch to socialise the new identity with our people and our clients, in order to avoid the elephant traps some others have fallen into recently.” Standard Life and Aberdeen presumably.
Looking at these numbers there’s no reason for S4 to do anything differently but the great dealmaker must be tempted to use his soaring share price to effect a really big deal. We’ll see. Some believe Sorrell’s ambition is for S4’s valuation to overtake that of his old empire WPP, currently about £11bn.
With WPP returning to growth (albeit at 3%) S4 still needs a big deal to overtake it any time soon.