- Digital advertising group says it maintained momentum in the third quarter
- Reiterates full-year earnings forecast
- Stocks rise up to 9%
LONDON, Nov 14 (Reuters) – Martin Sorrell said his digital advertising group S4 Capital (SFOR.L) maintained momentum in a third quarter marked by disappointing results from major platforms including Alphabet’s Google (GOOGL.O) and Facebook Meta (META.O). read more read more
“The outlook for Alphabet, Meta, Amazon in particular, and for TikTok is not as good as it was – there has been a slowdown in growth – but it continues to be quite strong,” he said. he told Reuters on Monday.
“And on the other side, in technology services and digital transformation, most predictions are around 20-25% growth over the next four or five years, so we think we’re well positioned to leverage those two things.”
S4, launched by Sorrell in 2018 after leaving the world’s largest advertising group, WPP, said like-for-like gross profit/net revenue increased more than 29% in the three months to the end of September, the now on track for 25% growth for the year.
It said it would produce operating base revenue of around 120 million pounds ($142 million) this year, in line with a reduced forecast in July, reflecting the costs of a hiring spree.
S4 shares rose 9% to 229 pence in early trades, the highest level since the summer downgrade.
Sorrell said Twitter and Snap, which each make up about 1% of the digital ad market, weren’t a good indicator for the industry.
He said advertisers were suspending spending on Twitter while they waited to hear how new owner Elon Musk would moderate content.
Musk had three main issues, Sorrell said, including ad revenue and content moderation, the loss of good people in recent layoffs, and opportunity costs for his other businesses like Tesla (TSLA.O) and SpaceX.
“But it doesn’t pay to bet against him,” he said. “So I think he will make it in the end, but it’s going to be very bumpy.
“At this time, most customers are suspending their activities because they are concerned about extreme content and content moderation on the site.”
($1 = 0.8467 pounds)
Reporting by Paul Sandle; Editing by Kate Holton and Emelia Sithole-Matarise
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