Martin Sorrell-led S4 Capital reported an 8.9% drop in net revenue for the first quarter of the year to 149.2 million GBP with an organic revenue decline of 5%. Reported billings were 419.8 million GBP, down 4.9% on an organic basis (which excludes currency and M&A impact).  

Investors sent the company’s stock down 9% in early trading after the release of its Q1 report but the stock recovered most of those losses by early afternoon UK time.  

The firm cited macroeconomic worries amid the Middle East war and continued caution among technology clients that are allocating billions in spending to building artificial intelligence infrastructure.  

All regions declined although S4 noted that the Americas performed stronger than expected with net revenue down 0.5% and is now accounting for 82% of the company's business.  

S4 reiterated guidance of a “slight” dip in organic revenue for full-year 2026 and at least a 1% increase in pre-tax profit margin due to cost-cutting steps taken in 2025.  

“We anticipate that clients will remain cautious in the near term as global GDP growth slows, inflation increases and interest rates stubbornly refuse to fall or even increase,” stated Sorrell, the company’s executive chairman. But he said the firm remains confident in its strategy and business model.  

S4 said that its AI investments are paying off with improved visualization and copywriting productivity, and the delivery of more effective hyper-personalization at scale, and more automated and integrated media planning and buying.  

“We are now producing high quality commercials using AI technologies such as Runway, Luma, Flux, Omniverse (Nvidia), Substance (Adobe) and Unreal,” S4 stated. Those techniques are faster and less expensive than traditional production processes, the firm added.  

“As a result, we are changing our revenue model from a purely, time-based approach to one more based on outputs - i.e. use of assets and subscriptions.” 

On the new business front, the company said it recently won assignments from major auto manufacturers in Japan, South Korea, China and India “as the category establishes itself as an early adopter of AI at scale, in reaction to the existential pressure from Chinese EV's and AV's.” 

More broadly, “We continue to win multiple exploratory assignments and AI film projects, as clients experiment and explore AI applications and develop AI use cases.”