Martin Sorrell-led S4 Capital reported today a 12.7% dip in net revenue for the first six months to 376.1 GBP ($512.1) and a 10% organic net revenue decline.  

Company shares on the London Exchange were down nearly 14% in afternoon trading on news of the earnings report. 

The firm downgraded its full year 2025 net revenue estimate, now saying it will likely decline by mid-single digits on a percentage basis. In May the firm had estimated that net revenues would be roughly flat for the full year. The organic revenue decline is expected to be down roughly the same amount percentagewise.  

Pre-tax profits are expected to be broadly flat for the year.  

Soft client spending in the first half of the year “reflects the continuing impact of volatile global macroeconomic conditions, together with the additional uncertainty around tariffs and their ultimate levels,” S4 stated in its earnings release. “As a result, clients remain generally cautious given the uncertainty, with technology clients, in particular, which account for almost half our revenue, continuing to prioritize capital expenditure on expanding AI capacity.” 

The company does expect improvement in the second half of the year. 

“We are seeing significant opportunities for new business, particularly driven by our AI tools and capability,” the company stated. New business wins so far this year include Asana, Amplifon, Samsung, Square, NCS and Opella.  

The firm also noted expanded remits from General Motors and Amazon, “which will ramp up significantly in the second half of the year.” 

New assignments from T-Mobile and an unnamed U.S. consumer goods brand “will contribute to our second-half performance and over time are expected to be significant relationships for us.”  

“We continue to win multiple exploratory assignments, as clients experiment and explore AI applications and develop AI use cases. AI capability is becoming more central to the agency's way of working and new business efforts. In this regard the company's early adoption of AI and proactive approach to staff training on AI is beginning to pay off.” 

S4 stated that several of its AI products now in use are producing work for clients in days versus weeks or months that it would have taken without AI and at significantly lower cost per project. “As a result, we are now changing our revenue model from a purely, time-based approach to one more based on outputs - i.e. use of assets.” 

The Company has cut its workforce by 9% since June 2024 to approximately 6,900 people.  

“The global macroeconomic environment has become even more challenging in 2025,” stated Sorrell, S4 Capital’s execuitve chairman. “Assessing the impact of US imposed tariffs has been added to the three key risks around US/China relations, Russia/Ukraine and Iran/Middle-East. Clients, therefore, are likely to remain cautious. However, once the levels of tariffs are negotiated and the impacts assessed, we believe clients will become much more selective about the geographies in which they operate in order to find growth and focus on implementing technologies, such as, but not only AI, to drive efficiency in a slower growth, higher inflation and higher interest rate environment. This may be the time when AI-adoption accelerates at scale.” 

The company’s biggest region by revenue, The Americas (79% of the total), reported net revenue 258.2 million GBP, down 12.2% from last year. Organic net revenue was down 9.1%, reflecting lower revenue from one large Technology Services clients. “We saw strong growth in Latin America, reflecting success with our local business.” 

Commenting on the results, industry consulting firm Madison & Wall stated, "to the extent that the company continues to focus its internal priorities around the opportunities that AI may bring agencies, growth should eventually return so long as individual clients don’t continue to cut their spending for other reasons."