S4 Capital cuts earnings margin forecast, shares slide

In an update for the three months to 30 September, the advertising company said net revenue was down 10% on a like-for-basis, reflecting lower activity in content and data & digital media.

Given the slower-than-expected trading in Q3 and current client activity levels, it expects LFL net revenue for 2023 to be below the prior year, and an operational EBITDA margin of around 10% to 11%, down from previous guidance of 12% to 13.5%.

Executive chairman Martin Sorrell said trading in the third quarter was "difficult, reflecting the global macroeconomic conditions".

He highlighted continued client caution to commit and extended sales cycles, particularly for larger projects and to some extent clients in the technology sector.

"Despite the slowdown in Q3, we continue to see year to date growth from our top clients with like-for-like revenue growth at our top 20 clients up 2.9% and at the top 50 up 4.6%," he said.

"We expect, as usual, Q4 profitability to be the strongest quarter of the year - stimulated by the usual seasonal levels of client activity and the Artificial Intelligence initiatives and use cases we are developing with our clients, along with the actions taken on cost management."