S4 Capital lowers revenue outlook as macro pressures persist

S4 Capital has lowered its revenue forecast for 2026 amid ongoing macroeconomic challenges. The company issued its third quarter trading update on Wednesday, noting a more severe revenue decline than previously reported. Like-for-like net revenue fell 7.3% in Q3, up from 4.4% in Q2 and 5% in Q1. Marketing Services, which generates about 90% of net revenue, saw a 6.2% year-over-year decline, while Technology Services, comprising around 10% of net revenue, dropped by 17.6%.

The company cited volatile economic conditions and hyperscalers' focus on capital expenditures over operating expenses for the weaker performance. S4 Capital now anticipates full-year 2026 like-for-like net revenue growth to decline in the high-single digits, down from its previous guidance of mid-single-digit decline. Operating EBITDA margin is expected to increase by at least 160 basis points, reaching around 13.7%, up from a prior expectation of at least 140 basis points.

The firm maintains that operating EBITDA will remain at roughly £85 million and adjusted basic earnings per share should surpass the current analyst consensus of 6.1 pence. Year-end net debt is projected to fall within the £50 million to £80 million range, as opposed to £76 million in Q3. The company expects to be net debt-free by the following year.

Clients are anticipated to remain cautious near-term, becoming more selective about geographic expansion while focusing on technologies like artificial intelligence, blockchain, and quantum computing to enhance efficiency.