New age/new era digital marketing model starts to convert at scale
S4 Capital posts significant growth in like-for-like and Pro-forma billings, revenue, gross profit and EBITDA. Martin Sorrell’s S4 Capital announced MediaMonks conditional combination with Jam3Financial.
Highlights
- Billings £653.4 million, up 43.4% reported, up 19.6% like-for-like and Pro-forma billings £768.4 million, up 22.3%.
- Revenue £342.7 million, up 59.3% reported from £215.1 million, like-for-like up 15.2%, Pro-forma up 20.1%.
- Gross profit £295.2 million, up 72.3% reported from £171.3 million, like-for-like up 19.4%, Pro-forma up 23.7%.
- Operational EBITDA**** £62.2 million, up 86.1% reported, like-for-like up 18.3%, pro-forma up 30.6%.
- Operational EBITDA margin 21.1%, up 1.6 margin points on 2019 reported, like-for-like down 0.2 margin points, Pro-forma up 1.2 margin points.
- Operating profit £8.1million versus an operating loss of £3.8 million in 2019. Operating profit is after charging £49.9 million of Adjusting Items relating to acquisitions, amortisation and share-based payments (including £7.4 million in deferred, contingent combination payments tied to continued employment). Pro-forma operating profit of £16.9 million versus an operating loss of £1.2 million in 2019.
- Profit before income tax £3.1 million, after charging adjusting items, versus a loss of £9.2 million in 2019 and Pro-forma profit before income tax of £12.1 million
- Statutory result for the period £3.9 million (loss) after charging adjusting items after taxation versus £10.0 million (loss) in 2019 and Pro-forma result for the period of £1.2 million (loss)
- Adjusted basic net result per share 7.9p versus 5.2p in 2019 and 9.8p Pro-forma
- Basic and diluted net result per share 0.8p (loss) which includes adjusting items after-tax versus 2.7p (loss) in 2019 and Pro-forma adjusted basic net result per share 0.2p (loss)
- Year-end net cash £51.6 million, even after significant combination payments since £113 million net fundraisings in July 2020, reflecting strong liquidity from operations and EBITDA conversion to cash flow from operating activities of 99% versus 74% in 2019
- Good start to 2021 with like-for-like January gross profit well ahead of budget and with budgeted gross profit growth like-for-like for 2021 of 25% divided by Gross Profit.
Strategic and Operational Highlights
- In January, MediaMonks announced a combination with Circus Marketing, a fully integrated digital agency, based in the Americas and Spain (consolidated as from March 2020).
- In May, MightyHive announced a combination with Digodat, a leading Latin American data & analytics consultancy (consolidated as from July).
- In June, MightyHive announced a combination with Lens 10, a leading Australian digital strategy & analytics consultancy (consolidated as from October).
- In July, MightyHive announced a combination with Orca Pacific, a Seattle-based, Amazon-managed service provider (consolidated as from August) and raised £113 million net proceeds from a placing.
- In August, MightyHive announced a combination with BrightBlue Consulting, an award-winning UK-based, data analytics and measurement consultancy (consolidated as from September).
- In September, BMW/MINI announced a new agency partner network in Europe, called THE MARCOM ENGINE which included MediaMonks, which would be “at the heart of the new constellation”. On the same day, MediaMonks announced a combination with Dare.Win, an award-winning, Paris-based, digital creative agency.
- In November, Mondēlez International confirmed that MediaMonks had won its competitive pitch to manage its tech infrastructure and websites globally, plus content production for North America, Latin America, Asia, Middle-East and Africa.
Post-year-end:
- In January 2021, MediaMonks announced combinations with Decoded Advertising, an integrated, creative, technology and media agency, based in New York and also combined with Tomorrow, an award-winning, Shanghai-based, creative agency and with Staud Studios, a high-end creative, production studio, specialising in the automotive industry.
- Also, in January, MightyHive announced a combination with Metric Theory, an integrated performance marketing agency, providing services across search, social and commerce media. Metric Theory and Decoded Advertising were completed on 31 December 2020 after the market was closed. As a result, the balance sheets of both combinations are included in the consolidated balance sheet of the Group.
- In February, MightyHive acquired the assets of Datalicious Australia, a Sydney, Melbourne and Brisbane-based data & analytics company.
- Today, S4Capital announced that it has entered into a conditional agreement in relation to a combination of MediaMonks with highly awarded design and experience agency, Jam3, based in Toronto with offices in Amsterdam, Los Angeles and Uruguay.
- The pace of onboarding both the new BMW/MINI and Mondēlez “Whoppers” has intensified during the first and second quarters of 2021.
- Addition of functional talent teams in fashion and luxury, social media and government communications from leading competitors, the first during 2020 and the last two in 2021.
- Launch of both S4 Fellowship Programme for students from Historically Black Colleges and Universities and in due course, High Schools in the United States and S4 Women Leadership Programme in association with UC Berkeley in California.
- The Group now has approximately 4,400 people in 31 countries, trending towards double where we were this time last year.
- In addition to new client BMW/MINI and the significant broadening of our relationship with Mondēlez, there were major new remits from clients such as Google, Facebook, Amazon, Netflix, Procter & Gamble, T-Mobile, Bayer & HP and major new assignments from Cisco, Embibe, Harley Davidson, PayPal, LA28, Shopify and Verizon amongst others, reflecting the strong tech orientation of the Company’s client base and the growing healthcare and FMCG focus.
- A current pipeline running at a stronger level than last year
Sir Martin Sorrell, Executive Chairman of S4Capital plc said:
“Our second full financial year was again outstandingly successful. Having established brand awareness and secured brand trial in the back end of 2018 and in 2019, we set about converting client relationships at scale and now have five “Whoppers” secure or insight, in line with our ultimate 20 squared objectives, that is 20 clients each generating revenues of over $20 million per annum.
Pride of place for these achievements should go to our (now) over 4,400 people in 31 countries, who have responded unflinchingly to the colossal strain and challenge of the pandemic. Their creativity, adaptability, resilience and hard work have made this success possible and have started to prove the potency of our new age/new era, digital, data-driven, unitary model, which has started to gain significant traction.
The pandemic has, at the same time, accelerated the adoption of digital transformation amongst consumers, across all media and within enterprises and, in turn, stimulated the demand from clients for a digital marketing expertise.
We continued to grow our top line and bottom line at industry leading rates, despite covid-19 and exhibited agility in developing new content revenue streams quickly, such as robotic production, animation and on-line events and driving data & digital marketing net revenues, particularly in the fourth quarter and into this year.
We continued to broaden and deepen our Content and Data & digital media practices through organic growth and by the addition of a further four Content and six Data & digital media companies in 2020 and so far in early 2021. We further integrated our unitary client offering around our Content and Data & digital media practices. We broadened and deepened our client roster.
We embraced the diversity, equity and inclusion and ESG opportunities and challenges with unique black-orientated fellowship and female executive leadership programmes, changed hiring practices and education programmes and made zero carbon commitments targeting 2024. We achieved double $ and £ Unicorn status in terms of stock market value, in only our second full year, while strengthening our balance sheet to take advantage of short-term opportunities.
2021 has started strongly, well in line with our latest three years plan to double organically in three years and we are focused on three objectives for the year – to bed down our two new “Whoppers” and develop and identify five more; to roll-out our unitary branding; and to continue to broaden and deepen our digital client offering by combination.
We believe 2021 and 2022 will be very strong years economically, as the world rebounds from the pandemic and spends and invests the huge pandemic-driven fiscal and monetary stimulus. Digital marketing expenditure is closely correlated, but not dependent on GDP growth, just as traditional media spending used to be in the last century.
”Appointment of Miles Young, a leading, industry-knowledgeable Non-Executive Director, to the Board.