LONDON, Sept 13 (Reuters) - Martin Sorrell's S4 Capital
marked its third birthday with a third increase to its
profit forecast this year, driven by major brands and tech
platforms using the digital-only advertising group to target
customers during the pandemic.
Shares in the British company, however, fell 6% after it
reported an operating loss of 16.1 million pounds in the first
half ($22.25 million) compared with a profit of 1.3 million
pounds last year, due to acquisition payments, reflecting its
rapid rate of growth.
It said gross profit had jumped from an increase of 33% in
the first quarter to 66% in the second as clients including
Alphabet's Google, Facebook, HP, Netflix
, Burberry and Amazon Fashion booked more work.
Built by Sorrell, the founder of the world's biggest
advertising company WPP, S4 is a purely digital group
that uses data analysis and technology to place ads on the best
sites, at the best time of the day, to influence spending
It has benefited as major groups switched their operations
online during the pandemic. It now expects gross profit to rise
by 40% this year, the third time it has increased its forecast
from an original target of 25%.
"Half of our growth is coming from organic and half is
coming from deals, so it's very good, we're doubling our
headcount," Sorrell told Reuters.
Sorrell founded S4 after he left WPP in 2018, and the group
has a mid-term target of doubling organically over the 2021-23
period. It now has a market value of 4.5 billion pounds ($6.2
billion) after its shares rose by 103% in the last year.
Analysts at Jefferies said S4 benefited from the rapidly
growing digital and tech advertising spend and that the company
would track global digital transformation generally.
"In the backdrop of this and other advertising market
eco-system changes (eg death of third party cookies), digital
marketing and data consultancy have never been more relevant,"
they said in a note.
($1 = 0.7242 pounds)
($1 = 0.7237 pounds)
(Reporting by Kate Holton; editing by Guy Faulconbridge and