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UK's S4 Capital Q3 revenue falls 6.4% on client caution

By Reuters News


Overview

  • UK digital advertising firm's Q3 net revenue fell 6.4% yr/yr amid cautious client spending

  • Company cites ongoing macroeconomic uncertainty and client caution as reasons for revenue decline

  • Net debt improved to £76 mln, better than anticipated


Outlook

  • Company expects 2026 like-for-like net revenue down high-single digits, below prior guidance

  • Company sees 2026 operational EBITDA at £85 mln, margin to rise to 13.7%

  • Company expects 2026 adjusted basic EPS above analyst consensus of 6.1p


Result Drivers

  • CLIENT CAUTION - Co said clients remained cautious due to volatile macroeconomic conditions and rising geopolitical risks

  • TECH CLIENTS SHIFT SPENDING - Co said technology clients shifted spending toward AI infrastructure, reducing operational marketing budgets

  • LONGER SALES CYCLES - Co said Technology Services practice was affected by longer sales cycles and macroeconomic headwinds


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q3 Revenue

GBP 173.50 mln

Q3 Billings

GBP 430 mln


Analyst Coverage

  • The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

  • The average consensus recommendation for the advertising & marketing peer group is "buy"

  • Wall Street's median 12-month price target for S4 Capital PLC is GBp48.00, about 10.4% below its October 27 closing price of GBp53.60

  • The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 5 three months ago


Reuters Recommended Reads

  • Oct 27 - Reckitt lowers annual guidance on manufacturing struggles in North America

  • Oct 27 - Sweden's Storytel Q3 sales rise 16% as subscribers grow

  • Oct 26 - Trading platform Plus500 Q3 revenue rises on customer growth


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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