S4 Capital buys from Martin Sorrell, a California data consultancy as advertising guru group profits soar
- 4 Mile Analytics provides data and engineering services to Fortune 500 customers
- Deal significantly expands MediaMonx’s data and digital media capabilities
- The stock price is down 40% from its September 2021 peak
S4 Capital, the advertising agency run by former WPP chief Sir Martin Sorrell, followed up on its 2021 deal spree with a merger of its subsidiary Media Monks and California-based data consultancy 4 Mile Analytics.
S4 announced the deal along with a trading update, which revealed that performance in the first 11 months of its fiscal year was solid and that the company far outperformed its previous guidance with 40 percent total earnings growth.
The company told investors Wednesday that the deal “significantly expands Media Monx’s data and digital media capabilities, broadening its customer base.”
Sir Martin Sorrell hailed “the next growth opportunity [S4] in 2022 and beyond”
Santa Cruz-based 4 Mile Analytics provides data analytics, data engineering, data management, software engineering, UX design, and project and product management for a number of Fortune 500 brands.
With about 50 data professionals, 4 Mile Analytics generated approximately $6.5 million in revenue in 2021 and aims to double this year.
It comes on the heels of Media Monks’ merger in November with Italian content marketing agency Miyagi, which added 70 employees to S4’s roster and celebrated its eleventh deal in several months.
Nick Vogler, Founder and CEO, welcomed the prospect of “the tremendous opportunities to deliver the broader group offerings to our clients and provide more opportunities for our team.”
Tyler Betz, Global Executive Vice President of Data at Media Monks, added: “We’ve seen incredibly strong demand for data analytics and engineering expertise from our customers. Nick and his team at 4 Mile Analytics will bring additional expertise, scale and clients to one of the fastest expanding service areas.
S4 Capital also revealed operating profit margins improved “significantly” in the second half of the fiscal year.
The company’s revenue more than doubled in the third quarter of 2021 after it acquired “huge” clients.
Digital marketing, which S4 specializes in, has accelerated during the pandemic with more companies advertising online rather than in print and on television.
Income rose 106 per cent to £178 million during the period, better than previous forecasts, while total profit rose 92 per cent to £144.4 million.
Recent customer additions include social media giant Facebook and computer maker HP. Existing customers include Google, Amazon, Burberry and Netflix.
S4 shares stayed near their September peak at nearly 40%
Sir Martin Sorrell praised “the growth opportunity that lies ahead in 2022 and beyond,” adding that S4 budgets have been set at 25 percent gross profit/net revenue growth similarly modeled “in line with the three-year plan, which seeks to double The company is sized organically and aims to improve operating EBITDA margin to previous levels.
Shares of S4 rose 5.7 percent by midday Wednesday to 560 pence, but slipped slightly to 555 pence this morning.
Shares have been down about 40 percent since their September peak, spurred by concerns about falling profit margins.
Analysts at Peel Hunt said the stock’s rating downgrade was “exaggerated, with shares now trading at just 28x in fiscal year 22E.”
“We believe continued performance confirmation will support the stock price.”
Analysts gave the S4 a buy rating with a target price of 950p.