S4 Capital Plc · LSE:SFOR
S4 Capital — H1 2022 Earnings Presentation
33 slides from S4 Capital's earnings presentation, September 2022
Slide 1: H1 2022 Results
H1 2022 Results September 2022
Slide 2: Contents
Contents 01 Results 02 Client & Market Momentum 03 Mergers 04 Content Practice 05 Data & Digital Media Practice 06 Technology Services Practice 07 Summary and Outlook 08 Q&A 2
Slide 3: Results
Results 01 3
Slide 4: Financial Highlights
Chapter 01 - Results Financial Highlights Gross Profit/ Net Operational EBITDA2 EBITDA Margin2 Revenue £375.3m £30.1m 8.0% +27.8% like-for-like1 - 41.2% like-for-like vs 17.4% prior year like-for-like Q1 35%, Q2 23% Two year stacks Q1 67% Q2 88% Three year stacks Q1 86% Q2 95% Adjusted PBT3 Adjusted
Slide 5: Update on Finance team and process improvements
Chapter 01 - Results Update on Finance team and process improvements ⁄ Full debrief with PwC completed in May, actions underway to address areas for improvement ⁄ Half year process smoother ⁄ Strengthened team working well ⁄ Significant work undertaken on IFRS 15, revenue and cost of sales recognitio
Slide 6: Income Statement
Chapter 01 - Results Income Statement ⁄ Strong gross profit/net revenue growth continues ⁄ Like-for-like growth well ahead of underlying market ⁄ Operational EBITDA of £30.1 million with margin of 8%, lower than expected due to costs running ahead of gross profit/net revenue growth ⁄ Adjusting items p
Slide 7: Growth by Practice
Chapter 01 - Results Growth by Practice ⁄ Strong topline growth continued across all practices and regions, led by Technology Services ⁄ Content and DDM Operational EBITDA lower than expected. DDM margins exceptionally high in 2021. Actions in hand to address costs ⁄ Technology Services includes The
Slide 8: Cashflow Highlights
Chapter 01 - Results Cashflow Highlights ⁄ Capital expenditure includes fit out of new unitary offices in Buenos Aires, New Delhi, and London and investment in IT infrastructure ⁄ Cash interest paid relates to the July 2021 term loan ⁄ Improving working capital management (H1 2022 change in working capi
Slide 9: 2022 Guidance
Chapter 01 - Results 2022 Guidance Continued strong Cost management H2 EBITDA Margin3 topline momentum Expecting gross profit/net Brake on hiring and controls on 8.0% Expecting a significantly stronger second half performance with a revenue growth of 25% discretionary costs vs weighting 17.4% prior to
Slide 10: Client & Market Momentum
Client & Market Momentum 02 10
Slide 11: 20² Client Strategy (Whoppers)
Chapter 02 - Client & Market Momentum 20² Client Strategy (Whoppers) Potential 2020 2021 2022 Next 14* 6 1 1 2 1 1 (Confirmed) (Run Rate) 2 (Potential)
Slide 12: Our client portfolio
Chapter 02 - Client & Market Momentum Our client portfolio H1 2022 Revenue H1 2021 Revenue 12 Based on 100% of S4 Capital H1 2021 land H1 2022 reported Revenue
Slide 13: An attractive and expanding client base
Chapter 02 - Client & Market Momentum An attractive and expanding client base 2022 HY 2021 HY No of % of Cumulative No of % of Cumulative Clients Revenue % Revenue Clients Revenue % Revenue Above £10m 5 34% 34% 2 18% 18% £5-£10m 6 11% 45% 5 20% 38% £1-£5m 51 23% 67% 30 20% 59% £0.1-£1m 394 24% 91% 2
Slide 14: 2023 Continued Strong Addressable Market Growth
Chapter 02 - Client & Market Momentum 2023 Continued Strong Addressable Market Growth Strong Digital Media Top 8 Platforms Growth US Digital Spend Will EBITDA Margin3 Spend Continues Accelerates Grow Quicker Analogue spend projected to be flat 8.0% in 2023 but Digital spend will grow Digital spend in
Slide 15: Our Clients Continue to be the Foundation of Growth
Chapter 02 - Client & Market Momentum Our Clients Continue to be the Foundation of Growth
Slide 16: Mergers
Mergers 03 16
Slide 17: Mergers in H1 2022
Chapter 03 - Mergers Mergers in H1 2022 DDM Tech Services Content 4 Mile Analytics is a leader in TheoremOne is a leader in agile, XX Artists is an data analytics, data engineering, full-stack, innovation, engineering award-winning Social Media data governance, software and design and helps major Ma
Slide 18: Content Practice
Content Practice 04 18
Slide 19: CONTENT | H1 Highlights
Chapter 04 - Content Practice CONTENT | H1 Highlights We’re expanding our existing Whoppers and minting new ones, while landing new bluechip logos across the globe for future growth to Forrester confirms our strong offering, deliver on our 20x20 goals. strong performance, strong strategy st in With b
Slide 20: CONTENT | H1 Highlights
Chapter 04 - Content Practice CONTENT | H1 Highlights The biggest Roblox Total Visitors 6.5 experience to date for Logitech Million And we’re not just helping clients deliver the now but also be leaders in what’s next Launching the Vault, a full-blown NFT primary marketplace, for Gucci Post Malone’s
Slide 21: Data & Digital Media Practice
Chapter 05 - Data & Digital Media Practice 05 Data & Digital Media Practice 21
Slide 22: MEDIA | H1 Highlights
Chapter 05 - Data & Digital Media Practice MEDIA | H1 Highlights Road to Whopper Status with New AORs Expanded Capabilities applying our digital-first, disruptive approach to all media formats with full-service media capabilities Enterprise Beauty Brand AdWeek, 2022 r missio n! out ou Proving ● 120%
Slide 23: DATA & CONSULTING | H1 Highlights
Chapter 05 - Data & Digital Media Practice DATA & CONSULTING | H1 Highlights Land & Expand New Logos Pitching Data Foundations pitch w. partner Media & Data cross-sells Strategic Partnerships ● Co-build partner for AWS + Ads ● Building our Strategic Cloud + use cases (CPG client targets) Marketing P
Slide 24: CRM | H1 Highlights
Chapter 05 - Data & Digital Media Practice CRM | H1 Highlights LATAM Hub launch & EMEA footprint in progress Pilot Cross-Capability Selling & Delivery New logo! Increase in Marketing Cloud Footprint & New embedded team + content + Capabilities - Commerce / Web3 Footprint Data & Consulting cross-sell
Slide 25: Technology Services
Technology Services 06 25
Slide 26: Zemoga.monks | H1 Highlights
Tech Services Zemoga.monks | H1 Highlights Major Brick & Mortar Brand engages us to build large dedicated Land & Expand ecommerce Expanded Services into new business units… digital Transformation Doubling engagement revenue over 2021 team in Colombia WHOPPER STATUS PENDING! (inches away) Still Top P
Slide 27: TheoremOne.monks | H1 Highlights
Tech Services w Adding ne TheoremOne.monks | H1 Highlights whoppers And adding new clients TheoremOne was named one of the fastest growing companies 393 With a new Chief Growth Team Officer recruited from Cognizant Members 325 Team Well Regarded Members Start of End of H1 2022 2022
Slide 28: Summary & Outlook
Summary & Outlook 07 28
Slide 29: Summary & Outlook
Chapter 07 - Summary & Outlook / Strong topline growth in H12022, ahead of full year target Summary & / Further client conversion at scale and progress towards our 20² goal Outlook / Good progress in post-audit finance and process upgrades, work continues / Actions taken to balance and control cost b
Slide 30: Q&A
Q&A 08 30
Slide 31: Appendix – Additional Information
Chapter 01 - Results Appendix – Additional Information Share Consideration Committed Invested Capital ● Deferred share issuance of c.7 million shares on considerations in ● Invested capital2 to date c. £1.0 billion 2022, c.8 million in 2023 and c.36 million in 2024, totalling c.51 million shares ● E
Slide 32: Appendix - Balance Sheet
Chapter 01 - Results Appendix - Balance Sheet ⁄ Improving balance sheet showing better working capital ⁄ RCF remains undrawn ⁄ H1 net debt £135.5 million, with leverage at 1.2x
Slide 33: Appendix – Reconciliation to EBITDA
Chapter 01 - Results Appendix – Reconciliation to EBITDA