S4 Capital PLC (LSE:SFOR, OTC:SCPPF) shares rose 5.5% to 27.2p in early trading on Wednesday despite the digital advertising and marketing group giving a mixed trading update for the first five months of the year.
Net revenues are expected to decline by a low single-digit percentage in 2025, compared to the previous guidance of broadly flat as stated in an update last month, but its target for operational EBITDA remains unchanged and is expected to be "broadly similar" to last year.
CEO Martin Sorrell said in a statement ahead of the group's annual shareholder meeting today that clients "remain generally cautious" in the first five months of 2025, given the uncertainty caused by volatile global macroeconomic conditions.
Technology clients, which account for almost half of group revenues, are "continuing to prioritise capital expenditure on expanding AI capacity", while there has been "a reduction" in one of the larger client relationships.
Sorrell said he expects a stronger second half, aided by revenues from recent new business wins, including General Motors, Amazon and T-Mobile, with profit margins assisted by use of AI to automate marketing workflows and produce content at lower cost.
With other new business wins including assignments with Asana, Amplifon, Samsung, Square and T-Mobile, he expects a ramp-up in activity from these accounts in the second half too.
Liquidity is "much improved", Sorrell said, with average net debt down nearly 30% to £144 million in the first five months of 2025 and the board has proposed a final dividend of 1p per share, its first, payable on 10 July 2025