S4 reports pro-forma growth in APAC, says impact of COVID-19 limited

S4 Capital has reported a 292% increase in revenue to £215.1 million for 2019, up from £54.8 million in 2018. Gross profit is up £171.3 million (361%) from £37.2 million, while billings were £455.8 million, up 671% from the previous year. On a pro-forma basis, Asia Pacific's gross profit rose by 107% and it represented 7% of the total gross profit in 2019. This was up from 4% compared to 2018. So far, its gross profit in January 2020 has shown like-for-like growth of over 30%, the financial statement said. Last year, it bagged new assignments from Google, SoFi, Amazon, Netflix, Facebook, P&G, Nestlé, The Coca Cola Company, AB Inbev, Vodafone, Merck, Shiseido, Akzo Nobel and Ace Hardware. 

Separately, gross profit was up 39% in the Americas, and 27% in Europe, Middle-East and Africa. On a pro-forma basis, the Americas accounted for 71% of gross profit against 72% in 2018. Europe, the Middle-East and Africa represented 22% of gross profit against 24% in 2018. Executive chairman Martin Sorrell (pictured) said its long-term objective is to achieve a geographic distribution of 40% in Asia Pacific, particularly given the likely continuing rise of China and India. S4 Capital also seeks to have a geographic distribution of 40% in the Americas, and 20% in Europe, the Middle-East and Africa.

By practice, on a pro-forma basis, digital content accounted for 73% of gross profit against 76% in 2018.

The data and programmatic practice represented 27% of gross profit against 24% in 2018. Gross profit was up 33% at the content practice and 59% at the data and programmatic practice. Sorrell said S4 Capital's long-term objective is to achieve a practice distribution around two-thirds content and one-third data and programmatic, emphasising the growing importance of digital video. 

In a statement to Marketing, S4 Capital's spokesperson said both MightyHive and MediaMonks contributed significant growth in Asia Pacific.

"To date, the impact of the Coronavirus pandemic has been limited. January seemed unaffected. Our Chinese operations, which are small in the context of our overall operations, were closed most of February, but have now re-opened," Sorrell said. He added that there have been some ripple effects in the US and Europe, and some offices have recently been working from home, as a precaution. As it is difficult to assess the impact of the crisis on the business, Sorrell said it will provide updates accordingly. "The health and wellbeing of our people, clients and stakeholders remains our priority," he added.

According to Sorrel, its first full financial year was "outstandingly successful". The agency not only grew its top and bottom line, but also broadened and deepened our content and data and programmatic practices through organic growth and the addition of six content and three digital media and data companies. In 2019, MediaMonks added Caramel Pictures, BizTech, IMA, Firewood, merged with WhiteBalance in India and Circus in Latin America. That same year, MightyHive added ProgMedia in Latin America, as well as UK-based ConversionWorks and South Korea-based Datalicious. All nine additions are being rebranded over time to the MediaMonks content brand and the MightyHive data and programmatic brand, Sorrell said.

In addition to acquisitions, it also brought on board Scott Spirit as chief growth officer and appointed him to the board. It also appointed three female non-executive directors - Elizabeth Buchanan, Naoko Okumoto, and Margaret Ma Connolly.

"We integrated our client offering around our content and data and programmatic practices. We broadened and deepened our client roster. We achieved $ and £ Unicorn status in terms of stock market value. We have achieved brand awareness and brand trial. We now have to demonstrate that we can achieve significant client conversion at scale, both with existing and new clients," Sorrell said.