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1. Company Snapshot

1.a. Company Description

S4 Capital plc, together with its subsidiaries, operates as a digital advertising and marketing services company in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.It operates through three segments: Content, Data & Digital Media, and Technology Services.The company offers contents, campaigns, and assets for paid, social, and earned media, such as digital platforms and apps, as well as brand activations.


It also provides campaign management analytics, creative production and ad serving, platform and systems integration and transition, and training and education services.In addition, the company offers digital transformation services in delivering digital product design, engineering services, and delivery services.S4 Capital plc is headquartered in London, the United Kingdom.

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1.b. Last Insights on SFOR

S4 Capital's recent performance was driven by a resilient operational core operating profit forecast, despite a downgrade in annual revenue expectations. The company's ability to maintain its full-year like-for-like core operating profit forecast suggests a strong underlying business. Additionally, the UK market's potential for penny stocks, as highlighted in recent articles, presents opportunities for growth and affordability. Furthermore, business chiefs' warnings against an "anti-growth" wealth tax may alleviate concerns about the company's future prospects.

1.c. Company Highlights

2. S4 Capital Earnings Report Analysis

S4 Capital’s 2024 financial results reflect a challenging year marked by revenue declines and margin improvements, with strategic initiatives aimed at driving future growth. The company reported net revenue of £755 million, a 11% decrease on a like-for-like basis, driven by macroeconomic pressures and reduced spending from technology clients. Despite the revenue decline, operational EBITDA improved to £88 million, with a margin of 11.6%, reflecting a 120 basis point improvement compared to the previous year. Adjusted earnings per share came in at 5.2 pence, while net debt stood at £143 million, below the target range, with leverage at 1.6 times. The board proposed a first dividend of 1 pence per share, signaling confidence in the company’s financial stability.

Publication Date: Mar -24

📋 Highlights
  • Revenue Decline Amid Economic Challenges:: Net revenue fell 11% year-over-year due to macroeconomic pressures, high interest rates, and reduced spending from technology clients, particularly in the technology services division.
  • Margin Improvement and EBITDA Performance:: Operational EBITDA reached £88 million with a margin of 11.6%, reflecting a 120 basis point improvement, driven by cost management and margin gains in content, data, and digital media practices.
  • Free Cash Flow Recovery:: Free cash flow improved to £38 million in 2024 from £14 million in 2023, supported by working capital management and restructuring efforts.
  • AI-Driven Strategic Transformation:: The company is investing in AI innovations, such as the Monks.Flow platform, to drive efficiency, enhance billability, and capture growth opportunities in the digital and AI-driven media landscape.
  • Industry Shift Toward Digital and AI:: The media planning and buying industry is transitioning from a people-based cost-plus model to an asset-based approach, favoring technology-driven solutions and efficiency over traditional workforce structures.

Financial Performance and Strategic Adjustments

Looking ahead, S4 Capital anticipates net revenue and operational EBITDA for 2025 to remain broadly similar to 2024, with a focus on cost management and operational efficiency. The company aims to rebuild growth foundations by streamlining operations, enhancing billability, and addressing underperforming accounts. As Scott Spirit, Group Chief Executive, noted, “We are focused on delivering sustainable growth by leveraging our expertise in AI and data-driven solutions to meet evolving client needs.”

Strategic Initiatives and Industry Context

Henry Cowling, Chief Financial Officer, highlighted the company’s focus on leveraging AI to enhance efficiency and drive growth. Partnerships with technology leaders like Nvidia are enabling S4 Capital to deliver personalized content creation at scale, positioning it as a leader in the evolving digital advertising landscape. The industry is undergoing significant transformation, with a shift from traditional people-based models to digital and AI-driven approaches, creating opportunities for agile companies like S4 Capital.

Valuation and Outlook

Analysts estimate a 5.9% revenue growth for 2025, signaling optimism about the company’s ability to stabilize its financial performance and capitalize on emerging opportunities in the digital advertising space. With a strong balance sheet and a clear strategic roadmap, S4 Capital is well-positioned to navigate the evolving media landscape and deliver sustainable growth in the medium term.

3. NewsRoom

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S4 Capital shares hit new low on profit alert

Nov -24

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S4 Capital's Monks Technology Services and Hydrolix Partner to Deliver Real-Time Observability for Media and Entertainment Companies Modernizing Infrastructure

Nov -18

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Sir Martin Sorrell: Elon Musk's valuation will get to $10 trillion

Nov -04

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S4 Capital's Monks Launches White Paper "Owning the Answer: The Marketer's Playbook for AEO, GEO and the AI Search Era"

Oct -30

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S4 Capital's Monks Drives Real-Time Brand Engagement with New Agentic Monks.Flow Culture Intelligence Solution

Oct -08

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UK Market: NIOX Group And Two Other Stocks Estimated Below Intrinsic Value

Sep -29

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Hunting And 2 Other UK Penny Stocks Worth Watching

Sep -26

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S4 Capital First Half 2025 Earnings: UK£0.033 loss per share (vs UK£0.02 loss in 1H 2024)

Sep -16

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.09%)

6. Segments

Content

Expected Growth: 10.47%

S4 Capital plc's 10.47% growth is driven by increasing demand for digital marketing services, expansion into new markets, strategic acquisitions, and a strong track record of delivering innovative solutions to clients. The company's focus on digital transformation, data analytics, and content creation has enabled it to capitalize on the growing need for businesses to adapt to a digital-first world.

Data & Digital Media

Expected Growth: 10.88%

S4 Capital plc's Data & Digital Media segment growth of 10.88% is driven by increasing demand for digital marketing services, expansion into new markets, and strategic acquisitions. The company's focus on digital transformation, data analytics, and content creation also contributes to its growth. Additionally, the rise of e-commerce and social media has led to increased spending on digital advertising, further fueling the segment's growth.

Technology Services

Expected Growth: 14.43%

S4 Capital plc's Technology Services segment growth of 14.43% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity services. The company's focus on data-driven marketing and digital media buying also contributes to growth. Additionally, strategic acquisitions and partnerships have expanded the company's capabilities and reach, further fueling growth.

7. Detailed Products

Digital Transformation

S4 Capital plc offers digital transformation services that help businesses adapt to the rapidly changing digital landscape. This includes strategy development, technology implementation, and organizational change management.

Content Creation

S4 Capital plc provides content creation services that help businesses develop engaging and effective content across various channels. This includes video production, photography, and copywriting.

Media Planning and Buying

S4 Capital plc offers media planning and buying services that help businesses reach their target audience through effective media strategies. This includes media planning, buying, and optimization.

Data and Analytics

S4 Capital plc provides data and analytics services that help businesses make data-driven decisions. This includes data strategy, analytics, and reporting.

Technology and Engineering

S4 Capital plc offers technology and engineering services that help businesses develop and implement technology solutions. This includes software development, system integration, and technology consulting.

Digital Media

S4 Capital plc provides digital media services that help businesses develop and execute digital media strategies. This includes digital media planning, buying, and optimization.

8. S4 Capital plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for S4 Capital plc is moderate due to the presence of established players in the digital marketing industry, but the company's focus on digital transformation and technology-enabled services reduces the likelihood of substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low for S4 Capital plc due to the company's strong relationships with its clients and its ability to provide customized digital marketing solutions.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for S4 Capital plc due to the presence of multiple suppliers in the digital marketing industry, but the company's scale and global presence reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is high for S4 Capital plc due to the low barriers to entry in the digital marketing industry, but the company's strong brand reputation and established client base reduce the threat of new entrants.

Intensity Of Rivalry

The intensity of rivalry is high for S4 Capital plc due to the presence of established players in the digital marketing industry, but the company's focus on innovation and technology-enabled services helps to differentiate it from its competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.86%
Debt Cost 8.44%
Equity Weight 72.14%
Equity Cost 8.44%
WACC 8.44%
Leverage 38.61%

11. Quality Control: S4 Capital plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Nexxen

A-Score: 5.2/10

Value: 9.4

Growth: 6.3

Quality: 7.8

Yield: 0.0

Momentum: 6.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
4imprint

A-Score: 4.9/10

Value: 6.0

Growth: 8.9

Quality: 7.6

Yield: 3.8

Momentum: 0.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
M&C Saatchi

A-Score: 3.6/10

Value: 5.5

Growth: 4.3

Quality: 4.8

Yield: 0.6

Momentum: 0.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
S4 Capital

A-Score: 3.5/10

Value: 10.0

Growth: 2.8

Quality: 3.8

Yield: 3.8

Momentum: 0.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
YouGov

A-Score: 3.4/10

Value: 5.2

Growth: 4.9

Quality: 3.9

Yield: 3.8

Momentum: 1.5

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Ascential

A-Score: 3.3/10

Value: 5.0

Growth: 0.7

Quality: 3.7

Yield: 5.0

Momentum: 4.0

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.17$

Current Price

0.17$

Potential

-0.00%

Expected Cash-Flows