S4 Capital Plc · LSE:SFOR
S4 Capital — H1 2024 Earnings Presentation
47 slides from S4 Capital's earnings presentation, Sep 19, 2024
Slide 1: H1 2024 Results
H1 2024 Results 19 September 2024
Slide 2: Contents
Contents 1 Results 5 Summary and Outlook 2 Market Momentum 6 Q&A 3 Client Analysis 7 Appendix 4 Artificial Intelligence S 4Capital plc H1 2024 Results 2
Slide 3: Results
1 Results S 4Capital plc H1 2024 Results 3
Slide 4: H1 financial headlines
H1 financial headlines Net revenue1 Operational EBITDA3 Operational EBITDA Margin3 £376.1m £30.1m 8.0% -15.6% reported -17.5% reported vs. 8.2% prior year reported -13.5% like-for-like2 -8.2% like-for-like vs. 7.5% prior year like-for-like Adjusted operating profit4 Adjusted EPS4 Net debt at 30 June
Slide 5: Income statement
Income statement H1 2024 H1 2023 Change Change £m Restated1 Reported Like-for-Like £m • Net revenue down -13.5% like for like, reflecting Revenue 422.5 517.1 -18.3% -16.2% continued global macroeconomic uncertainty, higher Net revenue 376.1 445.5 -15.6% -13.5% interest rates and client caution parti
Slide 6: Net revenue by practice and geography
Net revenue by practice and geography Change Change £millions H1 2024 H1 2023 Reported Like-for-like • Content had a difficult first half net revenue performance, reflecting ongoing caution and lower activity with some of our Content 234.3 264.7 -11.5% -9.3% larger technology clients in particular D
Slide 7: Operational EBITDA by Practice
Operational EBITDA by Practice Change Change • Content’s operational EBITDA and operational EBITDA £millions H1 2024 H1 2023 Reported Like-for-like margin improved by +165.6% to £16.2m (+450bps to 6.9%) Content 16.2 6.8 +138.2% +165.6% respectively, reflecting the benefit of action taken on costs in
Slide 8: Debt & balance sheet
Debt & balance sheet As at 30 Jun 2024 As at 31 Dec 2023 £millions Restated2 • 2024 H1 net debt £182.9m (versus £206m at Q1 2024) after Non-current assets Intangible assets 1,043.3 1,072.9 combination related payments of £9.7m in the first half Right-of-use assets 42.4 45.8 • Leverage at 2.2x Proper
Slide 9: Cash flow highlights
Cash flow highlights • Capital expenditure is mainly investment in IT infrastructure £millions H1 2024 H1 2023 • Increase in interest paid reflects higher Euribor rates on the term Operational EBITDA 30.1 36.5 loan Capital expenditure1 (4.1) (5.1) • Decrease in tax paid reflects a lower tax base ver
Slide 10: 2024 Guidance
2024 Guidance Net revenue1 2024 Operational EBITDA3 Practice outlook Targeted to be down on prior year2, to a greater Targeted to be broadly similar like-for-like to Content profitability expected to improve due to extent than assumed in May 20232 cost reductions Client caution likely to persist and
Slide 11: Market Momentum
2 Market Momentum S 4Capital S4 Capitalplc plcH1 Q12024 2024Results Trading Update 11 11
Slide 12: 2024 strong growth in digital media, Tech Services flat
2024 strong growth in digital media, Tech Services flat Digital media spend Ad revenue growth – 5 main platforms Digital Transformation Service revenues at peers Growth in 20231 Q2 2024 2023 growth +7.8% +15% +5.2% Projected growth in 20241 2024 forecast2 2024 projected growth3 +6.9% to $552bn +15%
Slide 13: Client Analysis
3 Client Analysis S 4Capital S4 Capitalplc plcH1 Q12024 2024Results Trading Update 13 13
Slide 14: Our Client Portfolio
Our Client Portfolio HY 2024 Client Categories HY 2023 Client Categories • Technology 44% • Technology 44% • FMCG 10% • FMCG 9% • Financial 7% • Financial 13% • Auto 8% • Auto 7% • Retail 5% • Retail 5% • Media & Ent 4% • Media & Ent 4% • Fashion & Lux 8% • Fashion & Lux 5% • Agency 3% • Agency 3% •
Slide 15: An attractive & growing client base
An attractive & growing client base Average revenue by client £m HY 2024 HY 2023 25 No of % of Cumulative No of % of Cumulative £millions clients revenue % clients revenue % >£10m 6 39% 39% 8 45% 45% 20 £5–10m 5 10% 49% 8 12% 56% £1–5m 45 23% 72% 38 18% 74% 15 £0.1–1m 321 22% 94% 353 20% 94% 10 5 0
Slide 16: Artificial Intelligence
4 Artificial Intelligence S 4Capital S4 Capitalplc plcH1 Q12024 2024Results Trading Update 16 16
Slide 17: Monks Proprietary & Confidential
Monks Proprietary & Confidential 1
Slide 18: A superpower for creativity
Monks Proprietary & Confidential 2 Unlocking new experiences NEP Kiki virtual sign language A superpower for creativity. Setting new standards Dove Prompt Playbook Blending worlds BMW x Lil’ Miquela iX2
Slide 19: Monks.Flow joint launch with Adobe
Monks 15 Minutes of Now 3 SALES LAUNCHING PARTNER MONKS.FLOW FIRST IS FIRST Joint Launch Monks.Flow First to implement Brand Model Practice Powered by Adobe Gen Studio STRATEGIC SALES CO-SELLING IN THE REGIONS CREATIVE CLOUD Opening a new sales pipeline through Adobe's Executive Program New Whoppers
Slide 20: None of it matters if we don't change the economics of digital advertising
Proprietary & Confidential 4 None of it matters if we don’t change the economics of digital advertising FACTS & FINDINGS – CMOs Companies need 10-100 times more content than is currently available.
Slide 21: A world-class marketing engine for a world-famous brand: GM
Monks Proprietary & Confidential 5 You recently might have seen A world-class As GM’s global ‘Foundational Agency’, we bring simplicity, consistency, scale and cost savings to how content is created through technology marketing engine for a (Adobe), automation (AI) and best-in-class digital creative
Slide 22: A new model orchestration of tech & talent
Monks Proprietary & Confidential 6 A new model orchestration of tech & talent rapid & real Adweek’s 40+ Cannes AI agency Lion accolades of the year in 2024 Technology: The best talent: to make you faster to deliver outcomes, & create more. with less headcount
Slide 23: Monks.Flow
\Monks Monks.Flow Proprietary & Confidential 7
Slide 24: 10+ applications, infinite workflow customization
Monks AI Brand Solutions Proprietary & Confidential 8 10+ applications, infinite workflow customization
Slide 25: Pathways is the powerful workflow editor inside monks.flow
Monks Monks.Flow Proprietary & Confidential 9 Pathways is the powerful workflow editor inside monks.flow
Slide 26: Supercharging the big 6: Change how work gets done with AI
Supercharging the big 6: Change how work gets done with AI and automation at scale Insights Strategy Creative Adaptation Delivery Performance data content media drive brand relevance and solve speed, scale get more from measurable growth and spend your media
Slide 27: The Impossible Ad
Media.Monks Proprietary & Confidential 11 The Impossible Ad
Slide 28: Slide 28
Slide 29: Delivering supercharged creative and media services, more affordable
Delivering supercharged creative and media services, more affordable for any business. % % % % hours CTR engagement cost of sale
Slide 30: Reveal cultural insights, trend and pattern reporting
data Insights Strategy Creation Adaptation Delivery Performance Reveal cultural insights, trend and pattern reporting Build campaign strategies alongside virtual customers. Conduct virtual focus groups, validate insights, and refine creative. Data-Driven Insights Direct Audience Identify key drivers
Slide 31: Build campaign strategies alongside virtual customers
Insights Strategy Creation Adaptation Delivery Performance Build campaign strategies alongside virtual customers. Conduct virtual focus groups, validate insights, and refine creative. powered by ONE OF THE STRATEGY APPS Use cases Direct Audience Insights Scenario Planning Media Mix Modelling Deep ins
Slide 32: Models deliver over 85% accuracy in predicting consumer behavior
Insights Strategy Creation Adaptation Delivery Performance Our models consistently deliver over 85% accuracy in predicting consumer behavior & preferences. Vanilla LLM 85% Our accuracy is determined by 40% a rigorous testing methodology where we compare the Basic LLMs show the accuracy variables pre
Slide 33: Enhance existing datasets for informed decisions
Insights Strategy Creation Adaptation Delivery Performance Enhance existing datasets, leading to more informed decisions, brand specific answers & better targeting. Off the shelf data Additional data social listening / 1P CRM data / campaign results / customer reviews Get started with one of our data
Slide 34: Accuracy results
Insights Strategy Creation Adaptation Delivery Performance Results Mean Absolute Error = (4% + 10% + 5% + 15% + 5%) / 5 = 7.8% Mean Absolute Error = (15% + 0% + 15%) / 3 = 10% Mean Absolute Error = (23% + 15% + 5%) / 3 = 14.33% 92% 85% 90% accurate accurate accurate
Slide 35: Identify key drivers across product portfolio
Insights Strategy Creation Adaptation Delivery Performance Econometrics can be a powerful Identify key drivers source of insight for C-Suite across product portfolio decision makers. Rapidly model your core and trending business drivers across business, markets, brands and products. Forecast growth
Slide 36: Create and adapt high quality content at speed and scale
content Insights Strategy Creation Adaptation Delivery Performance Create and adapt high quality content at speed and scale. Multicultural moments and audiences demand a scaled content model High fidelity content Create and adapt single source product origination high quality content variations throu
Slide 37: Global roster of AI artist.monks directors
We have a global roster of the finest AI artist.monks directors Leilanni Todd, Caleb Ward, Martin Haerlin, Gerry Martinez, Diego Ante, Ronnie Allman, and many more Visit artist.monks.com to view the full roster.
Slide 38: Deliver and test high-quality content variation for regions and cultures
Insights Strategy Creation Adaptation Delivery Performance Deliver and test high-quality* content variation for regions, cultures and affinity groups *In a recent clien t test run across 6 lan guages, powered by ONE OF MANY CUSTOMIZABLE FLOWS Translate ranked 1st in translation raw output quality ag
Slide 39: Automate content management & boost ad performance
23 media Insights Strategy Creation Adaptation Delivery Performance Automate content management & boost ad performance Intelligent Syndication Integrating media Increasing brand ad placements insights into content quality and consistent versioning
Slide 40: Asset planner Step-by-Step
Media.Monks Monks.Flow Proprietary & Confidential 24 Asset planner Step-by-Step 1. Import / Build your asset plan 2. Connect your asset planner in Monks.Flow to your asset planner Figma plugin 3. Select the assets from your asset 4. Wait for the assets to be finished, adjust where plan you want to cre
Slide 41: Thaca
Thaca
Slide 42: Summary and Outlook
5 Summary and Outlook S 4Capital plc H1 2024 Results 18
Slide 43: Summary and Outlook
Summary and Outlook • H1 profitability as anticipated, £30.1m EBITDA • Rebranded to Monks and we are streamlining all our • H1 net revenue decrease of -13.5% like-for-like, current capabilities into two practices: Marketing reflecting continued global macroeconomic uncertainty Services and Technolog
Slide 44: Q&A
6 Q&A S 4Capital S4 Capitalplc plcH1 Q12024 2024Results Trading Update 20 20
Slide 45: Appendix
7 Appendix S 4Capital S4 Capitalplc plcH1 Q12024 2024Results Trading Update 21 21
Slide 46: Guidance on adjusting items, share count and invested capital
Appendix Guidance on adjusting items Weighted average share count Cash contingent consideration for 2024 Expected weighted average share count for 2024 of Cash contingent consideration payments of Amortisation c.675m1 c.£10m settled in Q1 2024 and c.£50m-£55m Expected weighted average share count fo
Slide 47: Thank you
Thank you S4 Capital plc Q1 2024 Trading Update 23 S4 Capital plc Q1 2024 Trading Update 23