S4 Capital buys California-based data consultancy
Martin Sorrell’s S4 Capital buys California data consultancy as advertising guru’s group profits soar
- 4 Mile Analytics Provides Data and Engineering Services to Fortune 500 Clients
- Deal ‘significantly expands’ Media Monks data and digital media capabilities
- The stock price is down 40% from its peak in September 2021
S4 Capital, the ad agency run by former WPP boss Sir Martin Sorrell, followed up its 2021 deal spree with a merger between its subsidiary Media Monks and California-based data consultancy 4 Mile Analytics.
S4 announced the deal alongside a business update, which revealed that performance in the first 11 months of its fiscal year was strong and the company is well ahead of its previous margin growth guidance. 40% gross.
The company told investors Wednesday that the deal “significantly expands” Media Monks’ data and digital media capabilities and broadens its customer base.
Sir Martin Sorrell hailed “the opportunity for growth before us [S4] in 2022 and beyond’
4 Mile Analytics, based in Santa Cruz, provides data analytics, data engineering, data governance, software engineering, UX design, and project and product management for a number number of Fortune 500 brands.
With around 50 data scientists, 4 Mile Analytics generated revenues of approximately $6.5 million in 2021 and aims to double this year.
It follows Media Monks’ November merger with Italian content marketing agency Miyagi, which added 70 employees to S4’s roster and marked its 11th deal in as many months.
Nick Fogler, Founder and Managing Director, welcomed the prospect of “tremendous opportunities to bring the expanded group’s offerings to our customers and provide even more opportunities for our team”.
Tyler Pietz, Global Executive Vice President for Data at Media Monks, added, “We have seen an incredibly strong demand for data analytics and engineering expertise from our customers. Nick and his team at 4 Mile Analytics will bring additional expertise, scale and customers to one of our fastest growing service areas.
S4 Capital also revealed that operating profit margins improved “significantly” in the second half of its fiscal year.
The company’s revenue more than doubled in the third quarter of 2021 after landing “whopper” customers.
Digital marketing, which S4 specializes in, has accelerated during the pandemic as more businesses advertise online rather than in print and on TV.
Revenue soared 106% to £178m in the period, better than previous expectations, while gross profit jumped 92% to £144.4m.
Recent client additions include social media giant Facebook and computer maker HP. Existing customers include Google, Amazon, Burberry and Netflix.
S4 stocks remain around 40% off their September peak
Sir Martin Sorrell hailed “the growth opportunity ahead of us in 2022 and beyond”, adding that S4 budgets are set at 25% growth in gross profit/net income at constant rate “in line with this three-year plan , which aims to organically double the size of the company and target an improvement in the operating EBITDA margin to return to previous levels”.
S4 shares were up 5.7% at midday Wednesday at 560p, but had fallen slightly to 555p this morning.
Shares remain down about 40% from their September high on concerns over shrinking margins.
Analysts at Peel Hunt said the stock’s downgrade was “overblown, with the stock now trading at just 28x FY22E PE”.
“We believe confirmation of continued performance will support the stock price.”
Analysts have given S4 a buy rating with a target price of 950p.