Digital advertising and marketing services firm S4 Capital PLC (LON:SFOR) said it is trading in line with “ambitious internal and external expectations”.
The company, headed by Sir Martin Sorrell, said revenue in the third quarter rose 53.7% to £56.63mln from £36.86mln the year before. On a like-for-like (LFL) basis, revenue was up 48.0%, with the content practice division clocking up LFL growth of 43.0% and the smaller programmatic practice growing by 63.1% on an LFL basis.
The content practice, as the name implies, produces content, while the other arm of the business handles the programmatic placing of online ads.
Gross profit was up 50.0% (LFL: 44.3%) to £42.1mln from £28.1mln the year before, with the Americas seeing LFL growth of 43.2%; Europe, the Middle East and Africa LFL growth of 25.4%; and Asia-Pacific LFL growth of 44.3%.
Both reported and LFL underlying earnings (EBITDA) operating gross profit margins improved significantly in the third quarter at both the content and programmatic practices. This was in line with the improvement indicated in the half-year results statement in September.
Net debt averaged roughly £30mln in the third quarter, up from about £20mln in the first half of the year, reflecting merger and asset purchase cash payments in the second and third quarters. The company estimates it has further debt capacity of around £70mln before reaching its maximum target limit of two times annual EBITDA.
"We continue to trade in line with ambitious internal and external expectations, both top and bottom line,” said Sorrel, the executive chairman of S4.
“Our very strong organic growth of well over 40%, so far this year, indicates that clients are responding very well to our purely digital, unitary, 'holy trinity' model of first-party data fuelling digital content and programmatic. As our new content and media partners, Firewood, based in Silicon Valley put it, 'speed, quality and value' are key,” he continued.
“The mergers and asset purchase we have completed, so far this year, will broaden and deepen our capabilities and client relationships and convert clients to scale,” he added.