Sir Martin Sorrell’s marketing firm S4 Capital has announced tumbling first quarter revenues, as it warned over ongoing cutbacks in tech spend and an “even more challenging” economic backdrop.
The group reported an 11.4% plunge in pro forma net revenues in the three months to March 31.
It kept its full-year guidance unchanged on hopes of a second-half recovery, but shares fell 4% in morning trading on Thursday as the update disclosed the scale of the challenges in its key markets.
Executive chairman Sir Martin said: “Trading in the first quarter reflects the continuing impact of, to say the least, volatile global macroeconomic conditions.
“As a result, clients remain generally cautious, with technology clients, which account for almost half our revenue, in particular, continuing to prioritise capital expenditure on AI over operating expenditure, such as marketing.”
He said the “global macroeconomic environment has become even more challenging in 2025”, given the escalating global trade war sparked by US President Donald Trump, as well as increasing global conflicts.
“However, once the levels of tariffs are negotiated and impacts assessed, we believe clients will become more selective about the geographies in which they operate in order to find growth, and focused on implementing technologies, such as, but not only AI, to drive efficiency in a slower growth, higher inflation and higher interest rate environment,” Sir Martin said.
S4 said it would also “continue to focus on our cost base and will take further action to support profitability, if necessary”.
It cut its workforce by 7%, or 541 roles, to 7,166 last year.
