S4 Capital plc (SCPPF) Q2 2024 Earnings Call Transcript

S4 Capital plc (OTCPK:SCPPF) Q2 2024 Earnings Conference Call September 19, 2024 8:00 AM ET

Company Participants

Martin Sorrell – Executive Chairman
Mary Basterfield – Chief Financial Officer
Scott Spirit – Chief Growth Officer
Jean-Benoit Bertie – Chief Operating Officer

Conference Call Participants

Tom Singlehurst – Citi
Dina Abu-Rahmeh – Morgan Stanley
Joe Spooner – HSBC

Martin Sorrell

Good morning, everybody. Thanks for joining us. I’m in New York, and I’m joined by Mary Basterfield, by Scott Spirit and Jean-Benoit Berty, who are all in London.

So, we have a presentation on the first half. There are seven sections to it, it’s on our website. The first, Mary will give us a summary of the results. Scott will run us through market momentum, client analysis and artificial intelligence. And then I’ll come back with a summary and outlook, and we’ll have Q&A after that. There’s an appendix also with certain other information that supports the presentation.

So, with that, Mary, would you take us through the results, please?

Mary Basterfield

Thank you, Martin. Good morning, and thank you for joining us today. I’d like to start with the financial highlights. Reported net revenue for the half year was down 16% to GBP376 million or 14% on a like-for-like basis. Global macroeconomic uncertainty, together with continued high interest rates, resulted in ongoing caution, especially among our large tech clients. Net revenue was also significantly impacted by expected lower transformation activity from one of our larger Technology Services clients.

Given this lower net revenue in Technology Services, operational EBITDA was GBP30 million, down 8% like-for-like and 18% reported. We continue to exercise tight cost discipline, including headcount and discretionary costs. The number of months has reduced by 1,000 or 12% compared to this time last year and is now around 7,550. Operational EBITDA margin was 8%, in line with the first half