Sir Martin Sorrell’s digital marketing giant S4 Capital provided a disappointing update for the second quarter, as its shares plummeted off the back of a tech slowdown.
The company said its net revenue was below budget in the last few months due to the economic climate, with the technology sector hit particularly hard.
Following the disappointing results, its shares plummeted 26 per cent at the open before finally moving to around 18 per cent by 11am.
In the longer term it was more optimistic, saying there were “longer sales cycles”, with its like-for-like net revenue growth expected to be around five per cent for the first half of the year.
It said its “slower top-line growth” meant its earnings margin was also below budget, but was still ahead of the previous year, after recovery from the pandemic.
S4. whose chair is Sir Martin Sorrell, also suggested there may be job losses, saying it would maintain a “disciplined approach to cost management, including headcount and discretionary cost”.
It massively reduced its target of like-for-like net revenue growth to 2-4 per cent down from 6-10 per cent previously.
It added that its earnings margin target had also been downsized to 14.5-15.5 per cent, down from 15-16 per cent.
Looking ahead to the rest of the year, the Sorrell- run firm said technology services “performed well” while its digital and data wing had seen “growth slow” on last year.
It said the net debt as of 30 June was at £115m, and it’s expected to rise by the end of the year to between £180-220m.
It will release its results for the first half of 2022 in September.