S4 Capital PLC (LSE:SFOR, OTC:SCPPF) shares fell back towards all-time lows on Monday after Sir Martin Sorrell's digital advertising group reported a fall in first-half revenues and profits, though full-year earnings are still expected to be "broadly" in line with last year.
The company said net revenue for the first six months of 2025 dropped 12.7% on a reported basis to £328.2 million, with like-for-like revenues down 10%.
Operational EBITDA fell 31% to £20.8 million, with margins narrowing to 6.3%.
S4, which has rebranded to Monks, said the results reflected continued caution among technology clients, who account for nearly half of group revenues, as they prioritise spending on artificial intelligence capacity.
Its technology services segment was hit by longer sales cycles and the impact of a reduced contribution from one major client, though this is expected to 'cycle out' in the second half.
Despite the weaker sales, net debt was cut to £145.9 million from £182.9 million a year earlier, supported by a £19.2 million working capital inflow and tighter cost control.
Looking ahead, executive chairman Sorrell now expects full-year like-for-like net revenue to decline by mid-single digits, with marketing services down low single digits and technology services seeing steeper falls.
However, operational EBITDA for the year is still expected to be broadly in line with 2024, helped by incremental cost savings and the benefit of new business wins.
Sorrell said market conditions remained “volatile”, but he expected revenue to improve in the second half, supported by contracts with General Motors, Amazon, T-Mobile and a US-based consumer goods group.
He said the board would consider an enhanced final dividend if performance and liquidity targets are delivered in the second half.