S4 Capital today reported that full-year 2023 net revenue was down 2.1% to 873.2 million GBP with an organic net revenue decline of 4.5%.   

The Martin Sorrell-led company cited macroeconomic issues, technology sector weakness and budget declines among smaller clients. The firm also cited a “difficult year” in new business development and lower than expected project work during the fourth quarter of the year.  

Pre-tax earnings were down more than a third to 93.7 GBP. The company said it imposed tighter controls on costs and reduced headcount by 13% for the full year.   

S4 shares were down more than 11% in midday trading on the news.   

All regions were down including the Americas (accounting for 79% of the company’s business) where the organic net revenue decline was 2.8%.   

The outlook for 2024 isn’t great. The company did not offer a specific net organic revenue growth target but acknowledged that it is expected to be down versus 2023 albeit “with a broadly similar overall level of operational” pre-tax earnings.   

At the practice level, Technology Services will be challenged more than other areas, the company said, “following a reduction in activity with some key clients.” The company said it expects some general improvement in the second half of the year compared to the first half.   

The company announced the appointment of Jean-Benoit Berty as Chief Operating Officer and a member of the Executive Committee. Previously he was a senior partner at Ernst & Young for 18 years, where he held various leadership roles, including Technology, Media & Telecommunications Leader. He has also spent the past 12 years advising boards and management teams in the advertising and media industry on strategic and operational initiatives.   

Christopher Martin, the previous COO, will now focus 100% on leading the Data & Digital Media practice.   

The company is also streamlining its board, with Martin, Victor Knaap, Wes ter Haar and Scott Spirit stepping down at the conclusion of the next annual general meeting later this year. They will all retain their operating roles at the company and remain on the Execuitve Committee. And ter Haar will become a “Board Observer,” to “support input into our strategy, such as the focus on AI.”  

“Growth rates in digital media and transformation markets remain above those of traditional, analogue markets,” the company stated. We are mainly focused on these two digital markets and are at the heart of developing trends around AI, Quantum Computing, the Metaverse and Blockchain for marketing. We are starting to see traction from our AI initiatives: clients are engaging us for workshops, audits and strategic advice and almost all our presentations and new engagements involve AI in one way or another.”