S4 cuts full-year net revenue growth guidance

Net revenue over the second quarter was below budget, especially in May and June, in particular.

The digital advertising and marketing firm attributed the softness to the challenging macroeconomic conditions and cautious spending, especially by its tech clients who were very focused on the short-term.

"We continue to see longer sales cycles, particularly for larger transformation projects," the company said.

"Some impact has been seen in each of the Practices, but it is particularly evident in Content."

For the first six months of 2023, S4 said that like-for-like net revenue growth was likely to rise by 5%.

Earnings before interest, taxes, depreciation and amortisation and operating margins were both below target but rose versus the year earlier period.

Looking ahead, full-year like-for-like net revenue growth was seen coming in at 2-4%, versus a previous target for 6-10%.

Guidance for the company's EBITDA margin was also lowered, from 15-16% to 14.5-15.5%.

Net debt at 30 June was put at £115m and seen rising to £180-220m, on the back of expected cash considerations for prior year combinations, before improving significantly in 2024.

"As in prior years, 2023 will again be significantly second half weighted reflecting our seasonality."