(Reuters) – Martin Sorrell’s ad group S4 Capital issued a profit warning on Thursday and forecast a low double-digit decline in its annual like-for-like net revenue after a tough third quarter due to underperformance from content and tech clients.
Shares of S4 Capital slumped as much as 17% to a record low in early trade.
This is the second revenue warning in less than two months from S4, which derives almost half of its business from the technology sector.
The company, which reported a 15.2% drop in the third-quarter net revenue, forecast its full-year operational core profit to be slightly down from last year’s levels.
In September, S4 revised its forecast, stating that its like-for-like net revenue would decline more than initially anticipated in May, though it did not specify the exact amount at that time.
“In light of the continued net revenue softness, we have maintained the heightened focus on cost reduction,” said Chairman Sorrell, who founded S4 after leaving rival WPP in 2018.
Some technology clients have continued to tighten their marketing spend due to a challenging broader economic environment and elevated interested rates, Sorrell said.
S4, however, said that new business activity continued at significant levels and there was a particular focus on AI-driven hyper-personalisation at scale.
The group expects its full-year profit to be weighted towards the fourth quarter.
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips)
