S4 Capital posts 19.4% like-for-like gross margin increase as it engulfs Jam3



Martin Sorrell’s S4 Capital wowed the markets with a 60% jump in revenue to £ 342.7million in its second full year of trading, which equates to a 15.2% increase at constant scope. The former WPP chief called the preliminary results for 2020 an “exceptional achievement” and said 2021 has started well with gross profit growth on a like-for-like basis for the coming year which is expected to be 25%.

S4 results in figures

  • S4’s preliminary results for 2020 are a pleasant read for investors, with gross profit of £ 295.2million – an impressive 72% increase from the previous year.

  • This is in addition to an 86% increase in operating EBITDA to £ 62.2 million, an increase of 18% on a comparable basis. Billings reached £ 653.4 million and pro forma billings were £ 768.4 million.

  • The numbers offer ample reward for a slack period of brand awareness until 2019, as the fledgling company set out to convert customer relationships into tangible revenue.

  • That patience has now paid off, with Sorrell claiming to have secured, or about to sign, five “whoppers” – a term he uses to refer to top clients who generate more than $ 20 million in revenue per year.

  • Unhappy with the progress made so far, Sorrell has set himself a target of getting no less than 20 “whoppers” as part of S4’s “20 squared” goal.

  • The results are all the more impressive as we rule out the impacts of Covid-19, S4 Capital being able to reverse the trend by pushing a series of mergers like the one between MediaMonks and Circus Marketing.

More jumps and a new fusion

  • Drawing on the key drivers of this rapturous growth, Sorrell said, “We have continued to grow our revenue and bottom line at the highest rates in the industry, despite Covid-19, and have demonstrated agility to rapidly develop new sources of content revenue, such as robotic production, animation and online events and generate net data and digital marketing revenue, particularly in the fourth quarter and this year. “

  • Growth was also driven by multiple mergers and acquisitions, such as data and digital media specialists MightyHive and Digodat, Lens 10, Orca Pacific and BrightBlue Consulting.

  • Looking ahead, Sorrell watches for more riches on the horizon with a rapacious appetite for other short-term opportunities that remain untouched.

  • Sorrell continued, “2021 is off to a good start, in line with our last three-year organic doubling plan, and we are focused on three goals for the year – identifying our two new ‘whoppers’ and developing and identifying five more; deploy our unified brand image; and continue to broaden and deepen our digital customer offering by combination. We believe 2021 and 2022 will be very strong years economically as the world bounces back from the pandemic and spends and invests the huge fiscal and monetary stimulus brought on by the pandemic. “

  • The latest example of S4’s meteoric evolution comes courtesy of digital agency Jam3, which is set to merge with MediaMonks to further strengthen its creative and content chops.

  • Founded in 2004, Jam3 employs 150 people in four international offices and has an enviable client list including Facebook, Adidas and Levi’s.

  • These join seven new customers added to S4’s books in 2020, namely BMW / Mini, Cisco, PayPal, Embibe, Pokemon, Harley Davidson and St Jude’s Children Hospital.

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