Member Info for GoCPI

Keep posting more. FearFul. Anything that makes the stock price jump 3% after you sell is irritably fine by me. ROFL...

P.S: Is it difficult being thin-skinned and seeking attention all the time? Asking for a friend!!

Good lord, that 3% up move from the time FearFul sold up, has been hit. Missiles incoming, mind your head!!

"Goodbye NOFEAR. Sorry you're prematurely leaving Capita but wish you good luck. Please don't revert back into SavageKeyboard mode. "

Crikey, if there's one thing I can predict with certainty, and its even better than my medium term price prognostications, it's that FearFul will be back as soon as CPI drop say 4 or 5% below his sell price. Guaranteed. He's an attention seeking (many know this) Gambling addict and if CPI does up 3% or so up from here, he'll come back with a host of negative articles/posts as to why CPI should be below 19. ROFL..

I suppose a bit of comedy never harmed anyone!!

Poor dsymons is doing his best to try to help GLG and Actusray get some returns on their shorts. First it was that MS looked off his game on the call - it was friggin 4 AM in NYC when call started. And now missing out on one of the sellside analysts on UK call this morning.

I don't think that the US call is even open to the public.

"A real danger I see is Big Tech spending never coming back. A theme that has continued for far longer than anticipated. It seems Big Tech just wants it all, the whole pie.

How quickly can S4 diversify? 50% of revenues coming from clients that seem hell bent on keeping as much as they can out of of the pie is risky for S4"

I don't disagree there, Jcj. I can't call if marketing spend will come back to growth mode in 2025 for these tech whoppers, will be disappointing if it doesn't. And hence agree on the need to diversify away more from these clients - easier said than done though. However, spend in the tech services division should come back in 2025.

I quoted the tech services EBITDA wrong in the last post - it was circa 10% in H1, down from the low 30% in H1 2023. That was a bummer for both revenues as well as EBITDA.

Here is a list of my negatives and positives, and why S4 will look up as we roll forward to 2025.

Negatives:

- Tech Services division in the doldrums - recovery not happening in 2024

- Shrinking margins in that division - from near 30% to 6% EBITDA margins in H1

- Tech clients still not spending on marketing. Meta's sepnding down 16% in H1, even though revenues are up 24% (quoted by Scott on the call)

- Still missing revenue targets albeit for reasons that is different to rivals. An over-reliance on tech clients and having a largish tech services division.

Positives:

- New non-tech whopper, GM. Spend to increase from 2025 onwards, with a small ramp in H2 24. Also an opportunity to diversify away from reliance on tech clients

- Cost cuts (layoffs) in Tech services division - lower monks count and setting us up better for 2025 when the upturn materialises.

- Net debt dropping more in H2 and as no more payments due on acquisitions, will build more

- Interest on the Euro debt facility (Euribor linked) will drop from H2 onwards as ECB continues to cut interest rates. Already down 50bps from the 2 cuts in H2. Not due till 2028.

- Fed cut gives the confidence needed by US corporates to recommence marketing spend budgets later this year for 2025

Happy to hear others' thoughts too, but the last on the list for me could be the biggest driver for S4 as we moves towards 2025. I have no idea where we'll land in the coming days - knowing silly LSE, I suspect we could drift into the 30s, but all to play for in 2025. The wait endures, unfortunately so...

Poor GLG types like you are doing your best to push a silly narrative here, but look past today's noise - more layoffs in H2 boosting margins and setting S4 up well for 2025 when revenue growth comes back. The uncertainty around when marketing spend from the likes of Meta/Google will come back is a question mark, but the likes of GM's spend will increase from 2025 Q1 a lot more. And the key will be to diversify a bit more away from tech customers.

RWD - I'm obviously disappointed with the results/forecast for H2. And the fact that I added more on the way down from mid-50s to the mid 40s -- buying now would've give me more shares and at a lower average, but hey ho I'm no clairvoyant. I still have some firepower and may look to add more in the coming weeks. Corporates were waiting for the rate cut cycle to commence and possibly clarity on the US elections, but spend should start to normalise in 2025.

The problem child now is the Technology Services division. This is the division that competes against the likes of Accenture/Deloitte on the consulting side of business. Presumably Google has put on hold multiple projects in that area and hence the blowback on us. Y-o-Y EBITDA margins for that practice is down 2300 bps on the back of declining revenue. More cuts coming in that division in H2. Anecdotally, in speaking with people in that sector, 2024 is a washout and 2025 may herald a recovery - I suppose that is what is showing up in the revenue outlook for H2, in addition to the USD - GBP headwinds.

IMO, a lot of the bad news must be priced in on the back of the 30% fall over the past 5 weeks or so. What today's update has confirmed is the fact that there is no real revenue recovery for S4 in 2024 and that's now a 2025 story. The good news is that EBITDA is more or less holding up even with the lower revenue, and on the flip side when the inevitable spend turnaround comes through in 2025 (green shoots in Q4, fingers crossed), we'll be very well positioned to take advantage of this 'growth'.

However, this train is not leaving yet leaving the station in anger.

Jcj - All I can say is, keep the faith, irrespective of what happens tomorrow. If we look past the next 3 months into 2025, if there's no recession (and there's little reason why there should be one), we sustainably move higher next year. Eveeen if there is a big slowdown, the big rate cuts will deliver the capex cost tailwind that our sector needs, maybe with a bit more lag.

We'll get there, and knowing that you've been here for a lot longer than me, I'd say just hold your horses!!!

GL to you and other holders!!!

JG - I'm looking at tomorrow or the day after or even next week, TBH - I'll leave that to the dour penny-pinchers like FearFul. I'm more focused on what these rates cuts can do to the economy 6 months our or longer, and what they can do for companies like ours that are leveraged to economic growth.

Historically speaking, the start of a rate cut cycle feeds into the economy about 6 months out. And that is minimum timeframe that any serious stock multi-bag desiring investor should look out for, IMO. Given the US markets are near all-time highs now, I won't be surprised to see a 5 to 10% draw-down in that market between now and December, but its what happens as we roll into 2025 that I'm more concerned though.

GL, however you play this.

As that's exactly what is needed from the donkeys at the BOE MPC...we'll see tomorrow.

That's what a forward looking central bank should do..and they did exactly that. Kudos, JP and team..

SFOR's trajectory now should be a lot better going into 2025...irrespective of what we get tomorrow. Fabulous.

All said and done, whenever the Fed embarks on a easing cycle, the highest returns are to be had in value shares such as S4 which is trading well below book value. And the kicker this time around is the obvious fact that the Fed is easing not from a position of weakness (recession or a downturn), but one of decent strength in the US economy. This bodes well for capex spend coming back and this includes most of the digital ad-spend projects. For the patient among us (non traders), I believe that there can be a fabulous outcome as S4's value is recognised by the broader market.

If Martin pulls the proverbial rabbit out of the hat tomorrow and at least proposes a dual listing on the NYSE, that's a massive positive for us shareholders. Irrespective of this happening or not, I believe we'll do phenomenally well going into 2025 for the aforementioned reasons.

I suspect that one headwind could be the strong GBP vs the USD. Circa 80% of S4's revenues are in USD and that'll take a hit with Sterling sitting near multi-year highs. I won't be surprised if Mary flags this in the results release tomorrow, but the key for me is how the revenue trajectory for H2 is trending - that'll determine where S4 goes from here. Maybe there's been a leak to the market and hence why we're weak for the past 5 weeks or so, but it's the outlook that's key for us. Fingers crossed.

Me too, Sharefall.

"'Market at all time highs' - true, but I would argue that a good chunk of that is due to the magnificent 7 and their large proportionate weighting upon the S&P."

BrokeNSmoke - That was probably true going into Q3 in the US markets, but since then the Mag 7 haven't gone up in unison in the rally up to all-time highs in the S&P 500 - if anything, the equal-weighted S&P has been outperforming (7% up) the market cap weighted S&P (3% up) which is dominated by the Mag 7. The US market rally is broadening out as rate cuts are coming into focus and therein is the opp for a small cap player like S4.

I'm happy to take the bet that S4 surprises to the upside on Thursday unlike poor old THG - that just can't catch a break.

"Since then the US outlook has deteriorated"

BrokeNSmoke - nope, it hasn't. Not based on the most recent hard economic data anyway. August Retail sales today came in higher than expectations with a upward revision to July's data too. The market is still betting on a 50bps cut tomorrow, although on the back of today's data they may only cut 25 bps. It's probably one of the few times in Fed's history that rates are being cut when the markets are at an all-time high and unemployment is at a historically low rate.

What does this all mean for S4? I'd wager that revenue growth will be seen in H2 even though FY 24 revenues could be lower than FY 23, but 2025 should restart annual growth rates for us as rate cuts take hold and capex spend comes back to favourably impact ad revenues. That's my prognosis and that's why I've bet big here!!

"Wouldn't assume a 50 base point cut will be seen as good for stocks, the US are more likely to see that as a red flag for the economy hence a large cut."

Nope. it's not really a red flag for the economy. Real interest rates (net of inflation) in the US are at a historically high level and isn't good for delivering their maximum employment mandate (which our useless BOE doesn't). Whilst unemployment rates are again historically low at this time, a sustained period of high interest rates could tip the scales in the other direction and I think that the fed recognises this and will cut 50 bps on Wednesday. The CME Fed watch probability for a 50 bps cut is today > 60%, up from a 50-50 probability late last week.

They'll want to give a large cut and settle back to a 25bps cut in the next 2 meetings this year. I'm not sure if the donkeys at the BOE have the ba*lls to cut this week, but maybe if they see the Fed cut 50 bps, they may go down the 25 bps cut route on Thursday - the UK economy desperately needs this to give the economy a bit more boost going into 2025. That's good for CPI.