14th Nov 2022 15:40
(Alliance News) - S4 Capital PLC on Monday confirmed its earnings target for 2022, amid strong revenue growth in the third quarter, saying its digital focus is in line with ad market trends.
"Despite the current macro political and economic gloom and slowing tech growth, our top-line momentum has been more than maintained in the third quarter and remains relatively strong into the fourth quarter," said Executive Chair Martin Sorrell.
Revenue in the three months that ended September 30 climbed 68% to GBP300.1 million from GBP178.4 million a year before. Gross profit jumped by 73% to GBP249.9 million from GBP144.4 million.
S4 Capital said it continues to trade in line with its top-line objective for 2022 of 25% like-for-like growth in gross profit, as well as its target for operational earnings before interest, tax, depreciation and amortisation of around GBP120 million.
In 2021, gross profit was GBP560.2 million, or GBP609.1 million on a proforma basis, while operational Ebitda was GBP101.0 million, or GBP113.0 million on a proforma basis.
S4 Capital said it continues to convert new clients, with "ten whoppers now in sight". The company uses the term 'whopper' for major clients billing over USD20 million in revenue. It had six of these at the time of its 2021 results in May.
S4 Capital shares were up 5.2% at 221.20 pence on Monday afternoon in London. The stock is down 35% over the past 12 months.
Jefferies raised its price target for S4 Capital to 250.00p from 170.00p, rating the shares a 'buy'.
"We see the pandemic as a positive catalyst for digital transformation, with market pressures a potential outsourcing opportunity. With increased confidence in numbers for the current year, we raise our price target to 250p," the investment bank said.
Jefferies said a brake on hiring, introduced by S4 Capital at mid-year seems to have had the desired effect on earnings.
By Tom Waite; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
S4 Cap.