S4's Sorrell flags limited progress on revenue, margins amid macro uncertainty (updated)

S4 Capital

04/06/2026 07:34

S4 says market conditions were challenging in the first five months
Expects 2026 revenue within analysts' estimate range
Shares down 2% in early trade
Recasts paragraph 1, adds chairman's quotes in paragraphs 6-7,  adds shares in paragraph 2

    June 4 (Reuters) - S4 Capital's SFOR.L Chairman Martin Sorrell said on Thursday the ad group was making some progress on revenue growth and margin improvement, but it was insufficient as the industry faces a marketing downturn due to global macroeconomic uncertainty.
The company's shares fell 2% to 42p in early trade.
S4 has been cutting costs, reducing headcount and streamlining operations to support margins and reduce debt, amid an industry-wide slowdown, while also banking on opportunities from clients' shift toward AI investments.
Artificial intelligence is reshaping the ad industry by automating content, driving demand for data-driven campaigns, and shifting spending towards AI-led efficiency initiatives - a trend Sorrell had said is here to stay.
Technology clients make up almost half of S4's revenue, and it counts Google parent Alphabet, Amazon, and Meta as customers.
"We are halfway through our AI-driven turnaround, with the more significant half to come," Sorrell said in prepared remarks ahead of S4's annual general meeting on Thursday.
"We are focused on three areas. First, top line growth, where we are making some progress, but not sufficient. Second, on margin improvement, where we are progressing, but not where we ultimately want to be. Finally, improving liquidity, where we have made very significant progress."
S4 said market conditions in the first five months of the year were challenging, but it still continues to forecast 2026 like-for-like net revenue within analysts' expected range of £632 million to £663 million ($848.8 million to $890.5 million).
The company also expects operational EBITDA margin to improve by at least 100 basis points in 2026.

($1 = 0.7445 pounds)

 (Reporting by Nithyashree R B in Bengaluru; Editing by Sonia Cheema and Eileen Soreng)
 ((NithyashreeRB@thomsonreuters.com))