Member Info for RunS4

Cheers Nige.

"When I watched the interview I was surprised to hear SMS say "net debt even better than the market thinks" Has he accidentally slipped up and let the cat out of the bag."

This may well be the case and probably is the trigger for the run-up from 29 to these levels this week. Previous guidance was for net debt free next year and we know historically that it's Q4 when net debt levels drop appreciably - we have 2024 and 2025 to go by as clear guides. However, we've also significantly cut headcount since Q3 last year and I can only suspect that's now coming home to help us along. When, and it's not an if, the AI capex cycle bubble bursts, I suggest that's when we'd see a return to sustainable growth.

Even without this growth tailwind, we could be net debt free by the end of H1 next year and that could be a solid tail-wind for us.

All to play for here and we have a 6% yield to boot!!

The trader buyers are back in town!!! Keep at it chaps.

"I calculate the FCF yield is now at 43%!!! Even assuming zero topline growth, with interest costs at zero and 13% margin S4 will be printing 90m plus FCF in 2028."

These points from RWD show how ridiculously valued we are, but that's the name of the game sadly on this shallow shiite market. £200M market cap is mind-boggling, but I suppose Martin realises that the only way to get the valuations higher is to get growth back on the agenda. Even if S4 refinances €125M of the soon to be outstanding €250M gross debt in 2028 and I wouldn't want to second guess which way the CFO might go, we're financially in a great shape and don't deserve to be at these levels and hence why this is still a good buying opp at these levels with a solid 6% yield staring at us in the face from this FY onwards backed by rapidly reducing gross and net debt.

I'm with RWD that there won't be a substantial rerate until the growth issue is solved - we may get spikes like we did in April to get this to mid 40s from the teens, but that was a first step in the market taking bankruptcy off the table.

@NigeCo - Good points, IMO, but suffice to say that a valuation approaching 10X or 20X is predicated on a couple of things - 1. Sustainable revenue growth coming back at S4 and 2. that valuation metric indicates a buy out metric rather than a stock market valuation metric which is wildly difficult to pin down. For real uptick in the SP, growth needs to be back on the agenda and until then we'll be range bound - we've gone down today below my hypothetical 30p to 50p trading range, albeit for a few minutes, but that tells you if there is market weakness we can in the near term get anchored in the 20s.

Great buying opp, IMO and I wouldn't say this when we were in the 40s based on our current information, if only for the high dividends to accrue whilst we wait for a revenue turnaround. I've always said not to get carried away by pumping targets that come out just as soon as we're in a SP upturn for them to go quiet after they've sold and the price normalises downwards!! The key indicator is growth and until then the 200p SP prognostications are what they are - noise!!!

The sooner the AI capex bubble bursts, the quicker the business turns around -- that's my strong conviction!!

"WTF is the UT doing at 30p when the bid is >31p?"

Shallow shiite market - simples, IMO.WHen there's no buying support, Graff/MildLaddie and their couple of mates can easily move this a lot of next to no volume!!

It looks like someone desperately wants to take the SP down below 30p on this shallow shiite stock exchange, and they may well be succeeding. We've had a circa 40% wipeout from 48p to 30p on virtually no news other than no growth and that's all that matters on this godforsaken market. That 30p bottom end of my predicted trading range channel may well be breached in the coming days with the current low volume price action, but gives me/us an opportunity to add more at a circa 7% dividend yield.

RWD - We know S4 is winning non-tech clients -- they've already called out the 2 CPG global customers that were won in Q4. Ramp up time of new wins can be slow and ostensibly not of the scale needed to replace/increase revenues to the extent need to generate YOY rev growth. The panacea to our all of our strifes/evils is return to solid growth in the US and not that is broad-based and not majority driven by AI-capex spend. If that falls in place, growth will follow. It's not much more complicated than that!!

Wrong read, Pencil. I'm not a shareholder in ACN but what's happening is that the fashionable thing to do now is to use the AI is killing the services industries growth (we're also included in this bracket) narrative and pin the slowdown in growth in the consulting services sectors including ours, driven in 2026 by dumbo's Iran war, on the AI is killing services theme. That's BS!!

In case you forget, Accenture has a good sized marketing services division that sits in a similar space to us - Accenture Song. But when global growth slows, consulting services whether its marketing services like us or tech services firms like ACN and plenty more, will slow down too. It just doesn;'t help that too much capital is heading to AI capex and benificiaries are the likes of chip makers and memory providers - how else can you explain Western Digital going from 60 bucks to 750 inside a year OR Sandisk from under $50 to $2150 on THursday. Mind boggling - cut through through the Wall Street narrative around this being sustainable, and you'll know once that bubble bursts, the markets will return to steady growers and dividend providers!!! That's us and ACN, and other consulting services providers who ALL use AI to augment their services.

CH - the reality, for me, is between what pumpers would like you believe i.e. this going to £2 soon (with no current justification) and views like yours (or worse) that no (current) growth means we're condemned to an eternity of damnation. The reality may be a lot more nuanced than that!!

We're cutting high-cost labour where possible, and given the cutbacks in the BMW account backed by their very recent profit warning and the cutback starts to makes sense now, I can see us cutting a lot of more high cost Europe headcount and focus a hell of a lot more in the Americas (North and South). Cash flow becomes a lot better. Growth will eventually come back when the global economy normalises after the recent self-inflicted dumbo trumpo inflation bout from Iran - to me that's still a 2027 story. The sooner the AI capex bubble bursts., the better it is for everyone. We can't really compare Accenture and other consulting firms/outsourcers' travails to ours as a leading indicator - we've been taking the brunt of the tech spend downturn from 2022 onwards. AI is just a sweeping excuse for the market to mark down valuation of companies such as those, but once the AI capex bubble bursts, where do you think the market will pivot to? I'd wager it's us/ad services firms/outsourcers/tech consulting firms.

It'll be slow grind, but we at least can look forward to a solid 2p dividend being paid out from this year on and await the recovery, in 2027 IMO.

Don't get me started on markets being rational !!! They never are and that's what gives us the opportunity to buy them shares at tripe valuations - I blame this to a large extent on an exchange which has lost most meaning as a European powerhouse when the all-knowing people of this country decided that Brexit was the best thing for us since well, sliced bread.

I don't care about chaps on here going on about recent underperformance - It just gives me (and others who look beyond near term revenue declines) an opportunity to buy in on the cheap. 5.4% dividend yield and greater than 30% FCF yield - can't see too many businesses throw out that much cash backed by fairly low levels of debt. Still accumulating and putting my money where my mouth is!!

Good luck longs.

6% yield - adding some at around these levels!!!

As I'd written previously, revenue growth is needed for us to break out of this range bound trade - albeit range bound at a higher base curently. Bull case valuation is 88p - hmm, we know what these sell-side analysts are like. They'll be chasing their tails to push target price higher once growth materialises, but that's currently looking like a 2027 story.

@1pencil - the tea leaves, I suggest, are very obvious to see. The pumping targets for S4 on this board aside, what will truly move the needle for S4 to outperform and break out to £1+ highs, even if it means that we have to endure a short term bubble burst when the AI Capex cycle eventually breaks, is just that - the AI capex bubble needs to burst. This BS capex spend will not result in the ROI that the hyperscalers and every other dumbo are hoping to earn.

That's the only scenario when capital moves from Capex to Opex, and that's what it'll truly take to marketing spend to come back robustly in the US. And that's will take us to multi-year highs!!! That's my strong opinion. ;-)

It's definitely rate hike worries in the US with the 'strong' employment report today and throw in the fact that chip stocks are overextended.

When will we get to 'overextended' status is a big question and the easy answer is when we get to sustainable revenue growth. 2027 anyone? Baby steps and I'll take a clean, sustained close above 50p first before dreaming of 100p, let alone 200.

Cheers, TargetPractice. I may differ a little bit on whether FUTR is a better investment than S4 ;-) - Geographical revenue spread and management quality being a couple of factors, but FUTR does offer a fabulous opportunity at these levels!! Over the medium to long term, multi-bagging from these levels should be a no-brainer - if only one has a bit of patience!!

I'm adding more here at these levels.

Future has been on my radar for 12 to 18 months, but never ventured in earnest, but at this juncture I find this a compelling investment opportunity. I occasionally check out posts on this message board and do find some important updates/views from knowledgeable posters. And of course, the usual gripes about the CEO and how he isn't cut out for this and views about how the market is just about the perfect discounting mechanism and just because the market says FUTR is valued at £3, then that's what we need to live with. The reality couldn't be further!!! The London Stock Exchange is freakin shallow and a small trade of a few thousand trades can violently move the stock price around. And the obvious thing is that revenue growth is the only metric that matters and everything else be damned. FCF yields of >30% is common place - SFOR and FUTR are prime examples of this complete lack of focus on this very important metric for shareholder returns.

I noted @ByeHi had built a good long position of circa 0.4% in FUTR - good on you. I built a similar position in SFOR, took a little profit there recently after the run-up from 16p to 40s in a few weeks, and was waiting for a good investment when the fall back in April to the 3s in FUTR presented me with one. I'll be slowly adding even more at the current levels as I do believe it is vastly undervalued on any sensible metric there can be for a business that's throwing off copious amounts of cash and where debt isn't really a concern!!!

Good luck holders and don't let impatient ones on here put you off!! The stock market is a great wealth transfer mechanism from the impatient to the patient and that never isn't more true of a business where sensible valuation metrics have fallen by the wayside.

NigeCo - cheers. I suppose my point is even more fundamental and that is that the S4 SP should've never gone into the teens, ever. You're talking about circa 40% FCF yield at that level and that's outrageous. Only on the silliest/shallowest stock markets on the planet (planet Glow notwithstanding) will we ever get that kind of valuation for a company helmed by someone like SMS. It dis allow value investors to scrape shares at that bottom, but plenty would've suffered too!!

And you're starting to see that kind of valuation for companies like Future PLC, although the quality of management there isn't quite of S4's calibre.

"Just waiting on revenue to return to growth, latest analyst forecasts for revenue growth is 2027, then we are off to the races."

100% with you on this, Nige. The first bump up in YOY revenue for a certain quarter will give this silly market a lot more certainty around growth. The focus on dividends from this year onwards is a massive plus. In the meantime, the likes of Glowacki from planet Glow, or no clue lse2000, or MildLaddie -- they look to get people panicky and try to get their trading profits.

There seems to be underlying support that won't let S4 get much above a 5.5% yield - i.e. not let it go down much!!

That's about par for this shiite stock exchange with a sole focus on 'revenue growth' as the defining metric for valuing stocks.

All good in that update, IMO, and nothing that was a suprise. We'll probably see a decent clip increase in QOQ revenues from Q1, but YOY growth may still be a quarter or two away and that could be the angst.

Focus on getting costs lower more is still there and net debt free in 2027 was stated. All good, IMO, and the traders need to shake themselves out I suppose - whilst we wait with a >5% yield for 2026 and onwards.

GL..

Good read in the link below - The big strategy consulting firms are pivoting to outcome based delivery vs billable headcount. Marketing HoldCos are still behind the curve - not S4 though. Martin and Co saw the writing on the wall early doors and slowly pivoted to Outcomes based billing/revenues as one of the first in our industry. And AI is the key enabler for all these massive changes afoot. Kudos to the top management at S4 and hopefully the revenue turnaround will be upon us sooner than later in 2026.

https://www.linkedin.com/posts/ivanfernandes1_first-mckinsey-now-booz-allen-the-consulting-share-7465039822307426306-_a7Y