S4 Capital PLC (LSE:SFOR, OTC:SCPPF) shares surged 39% to 26.9p after digital advertising group said it closed the year with revenue and earnings ahead of market expectations.
Back November, the company run by Sir Martin Sorrell had warned on profits for the third time in six months, sending its shares to an all-time low, hitting an all-time low, after weaker trading than expected.
However, the new update today revealed that things were not quite so bad, with like-for-like net revenue down 8.5%, rather than the 10% decline as had been feared two months ago.
The operational EBITDA margin is now expected to be around 12%, with earnings now seen exceeding consensus estimates of £75 million.
Net debt ended the year significantly below the consensus figure of £133 million, due to changes in treasury management and tighter control of working capital. The company expects year-end leverage of around 1.1x operational EBITDA, ahead of its 1.5x target.
S4 Capital will propose a final dividend of 1p per share, subject to approval.
Executive chairman Sorrell said: “Good to see both delivery beyond revised net revenue and operational EBITDA guidance and the significant improvement in liquidity.
“However, there is still much more to be done around net revenue and margin growth in 2026 and beyond.”
Analysts at Peel Hunt said: "After a series of profit warnings, S4 has ended the year on a more positive note.
"However, this does not detract from the fact that the top line is still in decline, and we believe this trend will need to reverse for positive momentum in the shares."