S4 Capital has posted its results for the 2024 calendar year, exceeding analyst expectations despite a reported revenue decline of 13.6%, or 11.0% like-for-like, to £754.6 million (A$1.55 billion). The advertising company signaled confidence in its cashflow by announcing its first ever dividend of 1p per share, sending shares up 5.64% overnight.

The company's operational EBITDA for 2024 stood at £87.8 million (A$181 million), reflecting a decline of 6.3% on a reported basis and 0.6% like-for-like. Despite the revenue drop, S4 Capital's operational EBITDA margin improved to 11.6%, an increase of 90 basis points from 2023, attributed to stringent cost control measures.

Executive Chairman of S4 Capital, Sir Martin Sorrell, said: "Our performance in 2024 reflected the impact of challenging global macroeconomic conditions, continued high interest rates and some underperformance, when compared to our addressable markets. Technology clients prioritised capital expenditure over operating expenditure, such as marketing and our Technology Services Practice was affected by a reduction in one of our larger relationships.

"Despite this, the Company reduced its cost base significantly, increased its operating margins and reduced its net debt markedly. Our liquidity and cash flow was much improved and net debt was below the lower end of our target range due to our focus on working capital and cost control."

The company's net debt at the end of 2024 was reported at £142.9 million (A$294 million), coming in under the targeted range of £150 million to £190 million. This reduction in net debt is indicative of a strategic focus on cash flow and cost management. Additionally, S4 Capital recorded a non-cash impairment charge net of tax amounting to £280 million (A$576 million), reflecting current trading conditions and the medium-term outlook.

The company indicated that its strategy remained focused on digital advertising and marketing services, with a significant emphasis on AI-driven opportunities. As part of its strategic realignment, S4 Capital is restructuring its operations into two primary practices: Marketing Services and Technology Services.

For the year 2024, S4 Capital reported an operating loss of £302.8 million, which includes the non-cash impairment charge. The company faced a reduction in revenue from technology clients, who are reportedly prioritising capital expenditure on AI over marketing spend. Nevertheless, the net revenue from technology clients increased to 45% in 2024, up from 43% in 2023.

The workforce at S4 Capital, referred to as 'Monks', decreased by 7% to approximately 7,150 by the end of 2024. The Content Practice within the company reported an operational EBITDA of £48.7 million, up 25.2% from the previous year, with an improved margin of 10.2%.

The Data & Digital Media Practice reported an operational EBITDA of £46.0 million, an increase of 37.3% from 2023, with a margin of 23.9%. However, the Technology Services Practice experienced a significant decline, with an operational EBITDA of £11.5 million, down 73.5% from 2023, and a margin of 13.3%.

Geographically, S4 Capital's Americas region accounted for 78% of the net revenue, EMEA contributed 16%, and Asia-Pacific 6%. The company secured new business from clients including General Motors, Marriott, and Burger King, leveraging its AI capabilities.

The balance sheet of S4 Capital shows net assets of £577.5 million as of December 31, 2024, a decrease from £891.9 million in 2023.