S4 Capital sees triple-digit increase in APAC gross profit amidst expansion plans

S4 Capital recorded a 152.4% increase in gross profit in Asia Pacific to about US$7.4 million for the first half of 2019 ended 30 June 2019 (H1 2019). The region formed 8% of the total gross profit reported which was approximately US$86.56 million, a 44.0% increase from the same period last year.

Meanwhile, Americas saw a 42.9% gross profit increase to US$58.48 million, while EMEA posted a 27.1% increase in gross profit to US$20.72 million in H1 2019. overall, S4 amassed a revenue of about US$108.48 million, up 41.6% from the same period in 2018. Its billings were also up 44.4% to about US$227.18 million.

According to the financial statement, there has been strong individual content practice and programmatic practice client development in FMCG, pharmaceutical, media, financial services, telecommunications, hospitality, retail, sport and technology. S4's content practice revenue jumped 31.0% to about US$77.62 million, garnering a profit of about US$55.74 million. Meanwhile, programmatic practice revenues were up 77.8% to about US$30.82 million, recording a gross profit of approximately US$30.77 million.

S4's content practice entered into an agreement to merge with BizTech, a global Adobe platform developer, based in Australia and New Zealand, with offices in Canada, Russia and Kazakhstan. The company said that the transaction strengthens the content practice’s marketing cloud expertise and expands its geographical footprint. In April this year, the same division bought the assets of Caramel Pictures, a robotic food and drink studio, in Amsterdam. Caramel works with FMCG companies such as The Coca-Cola Company, Danone, Nestlé and Unilever.

During the same month, S4's programmatic practice also added ProgMedia, a São Paolo-based, Latin American digital media planning and buying company, with capabilities in Mexico and Argentina, as well as Brazil. Its clients include iFood, an online food delivery service throughout Latin America and Serasa Consumidor, the Experian-owned Brazilian credit research firm. Subsequent to the half-year end the content practice added IMA, an Amsterdam-based influencer marketing company, also with an office in New York. Clients include Pernod Ricard, Under Armour, Beiersdorf, Diesel, Microsoft, Heineken, Samsonite and Booking.com

According to the financial statement, all four transactions are expected to be about US$43.12 million. "The merger pipeline is extremely strong in both content and programmatic, as well as first party data and consulting," it added.

High profile client wins for S4 during the first half of 2019 included Procter & Gamble, Nestlé, Coca-Cola, Sprint, Bayer, ASICS, Vodafone NZ, SoFi and Lavazza. Significant development continues at Google, HP, Netflix, Uber, Merck, Mondelēz, Electrolux, Blue Nile and Nationwide, amongst others, the statement added.

It added that the first office integration of MediaMonks and MightyHive was successfully implemented in Singapore and further integrations are being planned in London and New York, dependent on the expiration dates of existing leases. In addition to that, the financial statement noted that cross-functional geographic co-operation "has been significant".

S4 continues to "invest heavily" in human capital, gearing up for greater expansion in H2 2019 as a result of strong client demand and geographic expansion. According to the financial statement, this will support even stronger anticipated revenues and gross profit growth in the second half of 2019, which have already been signaled in the very strong results for July.

Sir Martin Sorrell (pictured), executive chairman of S 4Capital said the results confirm the "power and relevance of" the faster, better, cheaper, digital-only unitary advertising model, with first party data fuelling content and programmatic.

"Now the task is to build significant scale organically, by broadening and deepening existing and new client relationships and adding resources through merger and acquisition. Your company is being increasingly involved in significant industry reviews," he explained.

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