Shares in S4 Capital PLC (LSE:SFOR, OTC:SCPPF, FRA:9S4) fell 13.1% to 36.29p after Sir Martin Sorrell's digital advertising group reported lower first-quarter revenue and flagged continued client caution.
Net revenue fell 8.9% to £149.2 million, or 5.0% on a like-for-like basis, reflecting macroeconomic uncertainty and reduced spending from technology clients.
Reported revenue declined 7.5% to £164.8 million, while billings dropped 9.4%.
Performance was weakest in the Europe, Middle East and Africa region, where net revenue fell more than 26%, while the Americas proved more resilient with a marginal decline on a like-for-like basis.
Executive chairman Sorrell said trading was "in line with the board's expectations, despite client caution reflecting continuing macroeconomic and geopolitical volatility, heightened by the increased conflict in the Middle East".
He added: "Technology clients continue to increase capital expenditure on expanding AI infrastructure and capacity, with the four main hyperscalers alone planning to spend well over $700 billion in 2026.
"We anticipate that clients will remain cautious in the near term, as global GDP growth slows, inflation increases and interest rates stubbornly refuse to fall or even increase.
"However, we remain confident in our strategy, business model and talent, together with our scaled client relationships and strong momentum behind our new go-to-market proposition."
The group reiterated full-year guidance, expecting like-for-like net revenue to be slightly below 2025 levels but in line with analyst forecasts. It is targeting at least a 100 basis point improvement in operational EBITDA margin, supported by cost-cutting measures.
S4 also confirmed plans to introduce a dividend, after net debt dropped to £111.8 million, with further reductions targeted to between £60 million and £90 million by year-end.
The shares had more than doubled over the past six months, from around 20p to top 45p the recent weeks.