S4 Capital AGM Trading Update

S4 Capital released their AGM trading statement this morning and it demonstrates how the Agency group continues to perform extremely strongly (disclosure: I own S4 shares). Key points:

1.      Raising of the FY guidance again – S4 is now targeting 35% like for like gross profit (or net revenue) growth in 2021 vs 30% post-Q1 and 25% at the beginning of the year;

2.      Growth has accelerated – four months gross revenues was up near 84% vs 71% for Q1, which suggests April’s net profit growth of over 100%. While this is not an organic number, it is clear the organic growth has been very strong. S4 states like for like growth accelerated “markedly” in April. The strength is continuing – May is indicated to be similar to April and June is “robust”, although it is probably too early to say if June will be similar to April or May;

3.      Strong confidence in meeting their targets for the 2021-3 plan and that S4 will deliver a “strong” EBITDA margin, suggesting revenue growth is translating to profit growth;

4.      The acquisitions will very much continue – S4 is arranging a $350m+ term loan for further expansion. This should not surprise but it does suggest the S4 bandwagon will not stop;

5.      More “whoppers” to come – S4 believes it will get to 8 out of its target of 20 whoppers by Year End, with far more to come, with a further seven identified as having potential to become whoppers;

6.      Moving forwards, the group will go to market under the S4 flag, as opposed to the MediaMonks / MightyHive names, that suggests a more coordinated approach moving forwards.

It is remarkable to think that S4 Capital has been built up, in such a short amount of time, to be a company that would be within the top 150 FTSE companies if it had a Premium listing. It is worth noting on that point that, if the Hill Review’s proposals on allowing firms with a dual shareholder structure to achieve a Premium listing, then S4 Capital could easily break into the FTSE100 over the medium-term on its current trajectory.