S4 Capital PLC (LSE:SFOR) delivered first-quarter results on time after saying it had strengthened financial reporting procedures following the repeated delays to its full-year numbers that boss Sir Martin Sorrell said were "unacceptable".
Revenue growth for the marketing and advertising group's first quarter was slower than last year but ahead of guidance.
Revenue for the first three months of the year of £206.8mln was up 70.1% compared to last year, compared to growth doubling in 2021, while like-for-like revenue growth of 40.6% compared to 52.4% last year.
The company said its performance is in line with its three-year plan of doubling organically by 2024.
Reported gross profit rose 64.6% to £171.1mln, up 34.5% on a like-for-like (LFL) basis, compared to 43.7% last year.
Despite the slowdown in forecasts for global economic growth this year and next, S4 said it continues to target 25% LFL revenue and gross profit growth, as demand for digital advertising and marketing transformation is forecast to expand at 10-15% per year.
“We remain optimistic about our prospects for this year, particularly as consumer and corporate balance sheets remain strong, cushioned by the Covid stimulus,” said Sorrell.
“The chickens may well come home to roost in 2023, as interest rates rise further this year to counter the inflation surge. But, digital marketing expenditure remains robust, even in a recession, as, for example, our results in 2020 demonstrated, given its secular growth trend.”
On a like-for-like and pro-forma basis, the Americas grew 29.2%, Europe Middle East and Africa (EMEA) 54.7% and Asia Pacific 40.7%.
Net debt was £48mln at the end of the quarter and is expected to fluctuate between £140-£190mln for the rest of the year as merger payments are made.
S4 said it continues to examine merger opportunities, especially in “high growth functional areas of the three Content, Data&digital media and Technology services practices, with the objective of reaching a 50:25:25 split versus the current pro-forma 70:25:5 split”.
Given the impact of the war in Ukraine on geographic risk profiles, the group is now targeting a geographic split of 60% Americas, 20% EMEA and 20 Asia Pacific, from the prior 40:20:40 objective and current 70:20:10 split.
Shares in the company were up almost 3% to 292p on Monday morning.