Proactive Investors - S4 Capital PLC (LON:SFOR), the advertising agency founded in 2018 by WPP (LON:WPP) founder Martin Sorrell, reported a 2.1% decline in reported net revenue (4.5% like-for-like), closing at £873.2 million for the year ending December 31, 2023.
The group previously guided to a 4% fall in LFL revenues.
Operational EBITDA followed suit, plummeting by 24.6% to £93.7 million on a reported basis, and an even steeper 36.6% decline like-for-like when excluding the one-off benefit of £9.3 million from the significant devaluation of the Argentinian peso.
But S4's prudent budgeting approach meant other financial targets were achieved.
“Profitability came under pressure due to lower revenue than budgeted and significant cost reductions were made to deliver an operational EBITDA margin of 10.7%, in line with revised targets,” said the group in its earnings statement.
S4 said the margins improved in the second half, though warned that “challenging macroeconomic conditions and client caution likely to persist, despite the prospect of lower interest rates”.
Geographically, the Americas saw a 2.8% decrease in net revenue, accounting for 79% of the total, while EMEA and Asia Pacific regions also faced downturns.
Sorrell commented: "After our first four strong net revenue growth years, we had a difficult 2023 reflecting challenging global macroeconomic conditions, fears of recession and high interest rates.
"This resulted in client caution to commit and extended sales cycles, particularly for larger projects, a difficult year for new business, as well as spend reductions from some regional and smaller client relationships.
"We saw better relative performance and continued resilience in our top 20 and top 50 clients, with our ten largest client relationships strong."