Good morning, everybody. This is the first of two webcasts. The second one will be at 1:00 P.M. London time, primarily for our U.S. audience. I'm joined by Scott Spirit and by Mary Basterfield. We're going to go through a presentation which we posted on the website at 7:00 A.M. this morning. We'll cover the results in general. Mary will take you through that. Scott will take you through the way we see the market, and how we see clients, and the mergers that we completed in 2021 and early in 2022. We've got Wes ter Haar, who leads the content practice, who's in Amsterdam. He joins us. He'll run through the content practice.
We have Chris Martin, who leads Data & Digital Marketing, actually in Boulder, Colorado, so it's the middle of the night for him, so thanks for getting up in the middle of the night. He'll take us through the Data & Digital Media practice. Then DJ Edgerton is in Paris, actually. Joining us from Paris, and he'll take us through the Technology Services practice. I'll come back and talk about summary and outlook, and then we'll take Q&A. Let's start off with Mary on the results.
Good morning, and thank you for joining us today. I'm delighted to be here to present the results and look forward to meeting those of you I haven't already met in due course. I'd like to start with a summary of our results for the year. Revenue of GBP 687 million. Gross profit net revenue of GBP 560 million. Operational EBITDA of GBP 101 million at a margin of 18%. These are within the range of market estimates, and we have included two tables here to show the range of estimates, consensus, and the level of adjustments that have been made during the audit process. The net impact of the adjustments was not material. Moving on to an explanation of the delay, and then I'll cover the work we are doing to strengthen our finance function and our control environment.
As you are well aware, the audit has been a challenge this year. Our teams have worked hard in collaboration with PwC to finalize it so that we can release the preliminary results. We were delayed in the early part of the process due to resourcing and COVID restrictions in the Netherlands. We subsequently became aware of issues within the content practice. These included control weaknesses, inadequate documentation, and a lack of understanding in the application of the accounting standards, particularly IFRS 15, relating to revenue and cost of sales recognition, issues which were isolated to the legacy Media.Monks business. Despite this and the additional audit work needed, results are within the range of market expectations. Now, having onboarded, one of my first priorities was to strengthen the finance function to support the scale and continued growth of the business.
I have created a new structure for the group team, including increasing my direct reports to cover FP&A, financial control and reporting, finance transformation, treasury, and tax. We have already made a number of senior blue-chip hires, who began joining in February, across both the company and content teams. They include a new group financial controller, a new CFO for the content practice, a new global finance transformation lead, a new group treasurer, and a new global compliance lead. With the senior management in place, we will be making further hires to strengthen their teams in due course. We are also improving our control environment, and in light of what has happened, this work will focus particularly on processes and controls around revenue recognition, IFRS 15, and cost of sales recognition.
We will also build out the company's internal control team and are in the process of securing internal audit provision from a large accounting firm. In addition, we have asked PwC for a full debrief, which will take place during May. This, combined with the new hires and control and process work, which is underway, will ensure we see a substantial improvement by the time of the half-year results. Ultimately, finance should be an effective business partner for our fast-growing entrepreneurial business, and I believe the steps we are taking will achieve this. Moving on to the results themselves. Let's start with the financial highlights. 2021 saw strong momentum in the business continue. Gross profit net revenue for the year was GBP 560 million, up 44% on a like-for-like basis.
This exceeded our expectations of 25% set out at the beginning of the year and is well ahead of underlying market growth. Operational EBITDA was GBP 101 million, a like-for-like increase of 11.9%. Operational EBITDA margin was lower at 18%. This reflects investment in major new business wins, new business activities, and management infrastructure, all of which will support our longer term growth trajectory. Adjusted profit before tax and adjusted earnings per share have both improved significantly, with the latter benefiting from a one-off lower than expected tax charge. We finished the year with net debt of GBP 18 million, as expected, giving us financial flexibility. 2022 has started well, with gross profit net revenue growth in Q1 ahead of full year guidance run rates. Moving to the income statement.
On a reported basis, revenue doubled to GBP 687 million, with like-for-like growth at 52%. Reported gross profit net revenue grew 90%, of which 44% was like-for-like growth. This highlights the strong underlying momentum of the business in addition to significant M&A activity. Reported operating expenses grew 110% as the business continued to grow, both organically and through combinations. This includes investment in new areas of activity where we have determined build is better than buy. In our new Whoppers, which need investment phased slightly ahead of revenues, and in management infrastructure. All of these will drive or support future growth. Reported operational EBITDA grew 62% to GBP 101 million, or 11.9% on a like-for-like basis.
I have given you a breakdown of adjusting items in the table on the left-hand side. You can see that GBP 84 million is investment in value creating M&A and future growth. While a further GBP 40 million relates to amortization of acquired intangibles, again, related to combinations. Finally, the increase in net finance expense is driven by the term loan, which was put in place in August 2021 to finance the greater scale and ambition of the group. This provides us with long-term secure financing. Looking next at our three different practice areas, Content, Data & Digital Media, and Technology Services. My comments here are all on a like-for-like basis. Content grew strongly, up 47% as we outperformed the market. This was driven by our land and expand strategy and four new Whoppers.
In other words, clients which generate revenue above $20 million, taking the total to six ahead of our 2021 target. As I mentioned earlier, we have invested in growth, both in ramping up new Whoppers, especially Mondelēz and BMW, and in service areas such as social, media, and the metaverse. This is reflected in the Content practice's operational EBITDA margin. Data & Digital Media grew 35%, also ahead of the market, with strong growth from the media activation business, and delivered an operational EBITDA margin of 33%. Technology Services, which includes three and a half months from the combination with Zemoga in September, delivered very significant growth, with gross profit up 79% and a healthy operational EBITDA margin of around 40%. From a regional perspective, we had strong growth across the globe.
While the Americas remains our biggest region, EMEA was the fastest growing and became 21% of the geographical mix in 2021. Moving on to the next slide briefly, you can see that we continue to maintain a strong balance sheet. As I mentioned earlier, we refinanced in August 2021 to support the scale of the business. The facilities summarized here provide us with significant financial flexibility for further growth and M&A. Moving to cash flow on the next slide. We generated free cash flow of GBP 67 million before working capital changes in 2021. In terms of working capital, we saw an outflow of GBP 33 million in the year, which reflects the growth of our business, and particularly development and expansion of our Whoppers. Free cash flow was GBP 33 million. The majority of CapEx was invested in IT infrastructure.
Interest paid represents the term loan for the latter part of the year, while higher cash tax reflects our increased scale. The cash spend on combinations was GBP 102 million, taking net debt to GBP 18 million, within the expected range, and the net debt to operational EBITDA ratio to 0.2 x. Now, before I conclude, I thought it would be useful to provide some guidance for 2022. Pro forma gross profit for 2021, including all combinations announced to date, is around GBP 610 million. In 2022, we expect to deliver another year of strong growth with an increase in gross profit net revenue of 25%, driven both by strong structural market dynamics and our continued outperformance of the market. Our first quarter run rate is ahead of this guidance.
On EBITDA margin, as indicated, we expect a steady improvement in 2022. As you would anticipate for a strongly growing business, and as you will have seen in prior years, the year will continue to be weighted to the second half. We expect net finance expense of around GBP 16 million, as the term loan will be in place for the full financial year. Our current monthly net debt balances are fluctuating between GBP 30 million and GBP 70 million, reflecting significant recent growth and recent combination payments. We anticipate cash contingent consideration in 2022 of around GBP 55 million, covering previously announced combinations. In summary, 2022 has started well, and we are expecting another year of strong growth. With that, I will pass to Scott for the market and client update.
Great. Thank you very much, Mary. I'm gonna cover three sections, our addressable markets, our clients, and our mergers. I think the theme you'll see running through all of these slides is why we feel so much confidence in our ability to continue achieving our growth plan, and to achieve the guidance both in the short term and the medium and long term that Mary just outlined. If we start with the broader market opportunity, I think it's really important to remember that we operate in multiple addressable markets. Everyone tends to focus on the media spend, or more precisely, the digital media spend projections, and this is now a $430 billion market, which grew almost 30% last year. Of course, they are important. They have a big impact across our business.
There are plenty of other rich seams of opportunity for us too, and I've highlighted some of them here on this slide. Our data practice is aligned with the growth in data analytics, a $230 billion market, and they're also closely linked to the continued success of companies like Salesforce and Adobe in the marketing technology sector, which is worth over $50 billion and growing at 17% CAGR. There's admittedly a lot of hype right now around the metaverse, but we see the reality, and that it's driving significant revenues and growth for our content business. Some analysts predict it's potentially a $1 trillion future market, and VR and AR headset sales, which are the on-ramp to the metaverse, are predicted to continue growing at 35% for the next few years.
The digital transformation market, which powers growth in our tech services practice, is arguably the largest in dollar terms, with IDC projecting spends of almost $7 trillion between 2020 and 2023. From a market share or share of wallet opportunity, Ad Age published their annual list of top 25 agency groups, and this includes companies like Accenture Interactive, EPAM, and Deloitte. Total revenue in 2020 was $113 billion. S4 made our inaugural appearance on the list last year in 25th place with a 0.4% share. As far as we're concerned, we have 99.6% market share gains available to us. If we delve a little deeper into these markets and the projected growth going forward, I think you'll see again why we're so comfortable with both our 2022 and more longer term guidance.
Media spend has recovered from its COVID-induced decline in 2020. As you'll see here, digital spend continues to grow at significantly higher levels. In fact, MoffettNathanson projects that between now and 2025, over 97% of the dollar increase in total media spend will come from digital. It's also worth noting that the projections for digital spend in North America are significantly higher than the global projections. Remember that 65% of our revenue is from the Americas, so we're well suited towards that. Morgan Stanley recently revised their projections for digital growth based on the current macro concerns around issues like the war in Ukraine, inflation, and supply chain issues. They trimmed the 2022 forecast by 1%-2%, but they left the U.S. growth figures and their projections for 2023 unchanged.
Overall digital transformation spend growth continues to be strong, and within those specific areas, such as revenue growth at the three key cloud platforms, is running at 30%+. Likewise at the two key marketing technology companies, Salesforce and Adobe. When you look at what this means for service providers, then you'll see the holdcos are projected to grow at less than half the overall media spend, and this illustrates their continued overexposure to traditional media and the fact that they are losing share. Our growth has been far more in line with the tech services companies, and we would expect that to continue. Another key driver of our growth, and something which gives us confidence in the future, is our client relationships themselves. These four charts are based on our 2020 and 2021 reported revenues.
The first chart here shows that almost half of our revenues continue to come from the high growth tech sector. We've also seen in 2021 growth in FMCG and auto sectors, and that was largely driven by our Mondelēz and BMW wins in late 2020. As you are aware, one of the core strategic advantages of S4 Capital is that our unified structure allows clients to access our services in a completely integrated way. We've seen increased traction this year in servicing clients across content, Data & Digital Media, and Technology Services, particularly among our largest client relationships. As you can see, 56% of our top 50 clients were taking services from us from more than one practice area, and that's up more than double from 26% last year. For the top 100 clients, it's a similar trend, up from 20% to 39%.
Our goal to build scaled relationships with our largest clients also saw significant progress in 2021, with average reported revenue from our top 10, top 20, and top 50 cohorts all growing around 90% year-over-year. The final table here further illustrates the growth in our client relationships. We doubled the number of clients above GBP 10 million and more than doubled our clients in the GBP 5 million-GBP 10 million and GBP 1 million-GBP 5 million segments. We now have 90 clients with over GBP 1 million. This is just 42 in 2021. All of this growth is driven by the fact that 2021 was an incredibly strong year for new business. Now, this chart provides some detail on our top 100 clients who represent 72% of our total reported revenue.
If you look at the revenue received from our top 100 clients in 2021, then 46% is represented by the amount of revenue we had received from that same client list in 2020. An additional 43% is represented by growth in our existing client portfolio. Much of that from our highly successful land and expand strategy, and some of it from our pitch wins, such as Mondelēz and BMW MINI. 9% came from new clients that we welcomed to the company via mergers such as Jam3, Decoded, Cashmere, and Zemoga. Finally, 3% came from entirely new client relationships, which we expect to be significant growth drivers for us in 2022 and beyond. Our 20 squared strategy is to build 20 scale client relationships worth over $20 million per year in revenue.
We ended 2020 with two of them and budgeted to reach five in 2021. We actually exceeded that target and entered 2022 with six Whopper clients. We have identified the next 19 potential Whoppers from a broad range of categories, although technology continues to dominate. We anticipate adding an additional up to five Whoppers this year and are already making excellent progress. In 2021, we welcomed 10 mergers to S4, expanding our colleagues, capabilities, geographies, and client base. Tomorrow expanded our presence in China, and we certainly send our best to our colleagues in Shanghai, who continue to deliver despite tough circumstances. Staud, our pitch partner for BMW, kicked off our German presence in a market which had an excellent 2021. Datalicious was an asset deal expanding our data capabilities and clients in Asia.
Jam3 is one of the most awarded digital creative agencies and joined us in March and has had a meaningful impact on many of our top client relationships. Raccoon increased our performance media capabilities, taking us to a leadership position in Brazil and increasingly delivering hub services for the broader LATAM and U.S. markets. Destined in July and Maverick Digital in December expanded our Salesforce capabilities, where we're seeing increasing demand from clients and are set to have a marquee year in 2022. We also raised a term loan and expanded our revolver in July, giving us additional firepower to fund our expansion. September saw us welcome Cashmere, a highly creative agency with a strategy to provide culturally relevant creative to clients, which is in high demand in the industry as we rightly place more focus on diversity, equity, and inclusion.
Zemoga was our first merger in the Technology Services practice area and based on the thesis that marketing and technology are increasingly combining and clients are looking for integrated partners. You'll hear more from DJ later on the early success we've had in this area. Finally, Miyagi joined us in November to expand our content capabilities to Italy. In early 2022, we announced the merger with 4 Mile Analytics, a high growth consulting business built around Google's Looker platform. Integration has and continues to be a key focus for us, and I'm glad to report we continue to make excellent progress in this area. M&A is an important strategy for us to expand our capabilities, our talent, our clients, and our geographical coverage.
We continue to have a strong pipeline of deals and strong interest from some of the best entrepreneurs in the industry to become part of the disruptive company we are building. Our 50% cash, 50% equity deal structure is key to the successful integration and incentivization of these deals. While we would not want to issue equity at the current stock price, there is continued interest to complete deals even at the pre-disturbed price. The final and most important secret to our growth is the amazing group of talented individuals I get to call my colleagues. We now number over 8,400 people in 33 markets across the world.
2021 was a year of incredible growth and success, and while we enter 2022 with the war in Ukraine, the macroeconomic headwinds of inflation and rising interest rates, and of course, the recent challenges of our delayed results and share price decline, I can comfortably assure you our growth opportunity ahead of us remains very significant, as does all of our determination to win and have fun doing it. With that, I pass you to Wes, who will update you on our 2021 in the Content Practice.
Thank you, Scott. Very excited to run through this update. If we go to our first slide. This is really a bit of a recap of 2021. When I think about 2021, it was really about proving a point, and to an extent, maybe the point. We've built a very disruptive model. We believe clients need a new age, new era partner. I think 2021 really showed that that is working. We talked about our growth just now. This isn't just our growth, it's also the growth of our role and remit within our key clients, much more strategic, much more upper funnel. We're still winning, to Scott's earlier point, a lot of new clients and Whoppers in the process. We're proving that the model is working and is needed.
If you then roll it back, I think now this year, we can see that we're the most disruptive, fastest moving player in our industry. It's a very exciting opportunity for all of us that we're just focused on delivering on. If you look at last year, challenging because we embedded two Whoppers from scratch, but I think a foundational year for us as a business to show that we are able to do so. Of course, the year before that was really landing the plane on the first integrations between content, data, and digital media. Keep doubling down on our mission. 2021 was really about unified, single P&L. We launched a unified brand. Both of those things combined means we're doing things legacy networks and traditional holding companies just cannot do.
I think it uniquely positions us for more growth because we are a real change agent within our industry, also for talent and of course, for our clients. We've been striding way ahead of our goals. Something that I'm personally very proud of is at that level of growth, the quality of the work, we can see that reflected in the wins and the really high-profile work that our team releases every single month. I think lots of progress in things that are important for us as a business, but also for our talent. It's sustainability, for instance, I think is a key part there. We made excellent progress in achieving goals and becoming one of the very best places in our industry to work, building a truly iconic brand and of course, sinking our teeth into more Whoppers.
The question then, of course, becomes what is next? Of course, more building of capabilities, more integration. I think an important point to note here, it isn't our goal to be a highly specialized, partner in one or two spaces. It really is this concept of a partner of record. Our clients need to turn up seamlessly for their customers in a continuously more complex environment, and we are showing that we're the ideal partner to help them do so. If we go to the next slide, we always talk about three things. One of them is changing the work. In 2021, you can see us moving at the very front lines of culture. Of course, 2021, very much still the pandemic's ups and downs, and you see that in the work.
Few examples, lovely Valentine's Day date night experience we did for DoorDash in the States with Boyz II Men, live streaming meets interaction on platforms like Twitch. Brand launch for JUST Egg in South Korea, where we played with the friction of social distancing, and we're able to personalize that at scale to great results. A personal favorite, MONDOGENIUS for Moncler, which is honestly a first- of- its- kind mix of fashion, dance, art installation, visited by more than 300 million people. At least reached more than 300 million people. Beautiful piece of work. If you go to the next slide. Personal excitement. I think one of the fun things that we get to do is help design and define the next wave of interactions and channels and creativity.
Last six to nine months, lots of focus on metaverse, lots of focus on Web 3.0. Our team doesn't just talk about these things, we are at the very front lines of making these things. Few examples from Netflix. We translated one of their original shows to Roblox, made it possible to explore spaces, meet characters, solve mysteries. We actually just launched another really beautiful piece of work in Roblox that in less than a week, has more than 6 million visits already. It's showing that these spaces are growing. Another example is the work we did for the 25th anniversary of Pokémon, where we had a virtual concert with Post Malone. Best in class work, picked up a Gold Lion at Cannes in the Entertainment categories.
We have a lot more work happening in this space, and there should be some really fun stuff coming out very, very quickly. ComplexLand, which really is, I think, a really strong use case of this sort of ownable metaverse space where for Complex, we're combining gaming, fashion, and commerce to really drive incremental revenue for a business. I think that sort of combination of not just doing the work that's more at the PR level and the award level, but also the work that meaningfully impacts businesses is really where we see a lot of our progress in this space. Go to the next slide. It's about changing the work, but it's also about changing who does the work.
Want to call out our film team, film production team, run globally by all-female leadership, and they're really changing the dial and changing the metrics on diversity. In front of the camera, yes, very important, but also behind the camera in the director chair. I think we're truly best- in- class when it comes to helping our clients really focus on that because it is key. It's a very monolithic industry otherwise. The second point is celebrating our talent and really tapping into their side hustles and passion points and combining people across the globe to work together on these things. We have a grassroots program called Printpunks, which launched a few months ago, and we're seeing amazing things happen, which really plays into the last point here.
We have lots of amazing, smart, and talented people across the globe, but we are also hiring a lot of new type of talent. It isn't all just ex-agency people. That talent joins and then gets the chance to innovate what we do as a business and also scale their superpowers. We go to the next slide. We're also changing what the world does, right? Our work wins, and it actually works. It impacts business results. Our industry loves awards maybe a little too much, but it's interesting to look through those wins and understand what's happening with what we're building 'cause we're seeing things come together that nobody else can really show you. A really interesting trio of wins to make that case. We picked up Webby Production Company of the Year for the second year running, right?
We have some of the world's very best makers, which is key to a lot of what's happening, for instance, in the Web3 and in our metaverse space at the moment. We hit the Ad Age A-List for the very first time. It reflects our growing strategic importance to our clients and our partner of record roles. We were also AdExchanger's Programmatic Power Player, at least one of them. That showcases excellence in production, creative and data and digital media like nobody else really is. Of course, the work we do actually works. We want to be on the hook for results. I think looking at our client portfolio, eight of the ten most innovative companies are scalable clients of our teams.
We're building some of the most valued digital brands in the ecosystem, and we're doing that, and we're getting the opportunity to do that because we are driving results. Then, of course, the question is what's next? Last slide before I hand it over to Chris. I think if you are aiming to win a decade, you need to define what that decade stands for. The previous decade was the decade of digital transformation. What we're seeing happen right now is the actual transformation of digital, what it means, the value it has for consumers, and we're defining how concepts of ownership, community, place, identity, experience are evolving in real time and what that actually means for brands. Metaverse got called out earlier by Scott as well. Staking a bigger claim, I call this moment in time the space race, right?
We want to show that the eye-catching work that's happening is happening via our teams, but it's also building out thought leadership, because metaverse is really just a reflection of something that's happening, and our thought leadership is truly best in class from Making the Metaverse report is really worth a read. Also, our content shows, like Meet Me in the Metaverse series are doing really well. If you then look at that level of thought leadership, have to call out the Social.Monks who are really on a tear. I think pretty much a defining partner in social and social innovation globally, and really pushing out a steady drumbeat of insights around the globe to help our clients alternatively turn up in all of the existing spaces, but also what's next. Monks+ is really our promise to clients.
It is the way into our fully integrated end-to-end services, and more and more, it is moving us away from being known as a specialist in a specific area to this model of a partner of record where we can help our clients solve some of their biggest business challenges and take advantage of some of the biggest opportunities out there. Very exciting times. I raced through that, so we have some time left at the end as well, and I'm gonna hand over to Chris.
Thanks, Wes. In 2021, for our Data & Digital Media practice, it was a year of foundations. At Media.Monks, we are building an integrated marketing foundation for CIOs and CMOs navigating technology, consumer behavior trends through the next decade of inevitable changes, challenges, and opportunities. As I've mentioned before in previous updates, our disruptive offering is taking advantage of the following long-term trends that we're seeing in the industry. First, we see a tremendous and accelerating shift from a scaled paid media world, and you know this as TV, radio, print, and even certain parts of the digital ecosystem, to a new framework of fragmented consumer journey moments that marketers must take advantage of, that are spread over evolving digital experiences, a lot of which Wes just walked you through. Brands must navigate this new journey.
The second trend is in data, consumer privacy expectations, privacy regulation, and consumer behavior changes driven by those trends, and the scale afforded by cloud technologies. Those are all shifting the data landscape from a third-party data marketplace to a zero and first-party data ownership and governance and value exchange moment marketplace. Third, we see integration of our clients' marketing intelligence and direct consumer relationships, and that data being leveraged to drive overall digital transformation of modern enterprise. Brands are getting digitally closer to their customers. Together, these three trends and these very disruptive technology trends intersect exactly at our offerings in data foundations for the enterprise, and are focused now on the transformation of digital and enabling all of those new types of experiences that are replacing media into the modern enterprise data supply chain.
To build a strong foundation for our clients against these trends, we're building a strong Technology Services base, which DJ is gonna walk you through later. We've now completed our global analytics footprint, what I consider. Building a strong data infrastructure and data visualization to power marketing activation and connect all of those together to power marketing platforms, that is the differentiated model that is being powered by Data & Digital Media. I'm happy to update that our analytics footprint is now complete with the mergers of Lens10 and Datalicious that are fully integrated into the Media.Monks catalog and portfolio. Our global analytics footprint is powering our nascent capabilities in data visualization, which is why we added 4 Mile to the portfolio.
4 Mile, of course, has a strong foundation of business intelligence and, more importantly, data visualization, which makes sense of all the data that the modern enterprise is collecting and turning it into active, activatable moments that decision-makers need to manage the modern enterprise. In 2020, we also updated you that we were heading into building a CRM practice, meaning that we did not have one in 2020. In 2021, we merged with a company named Maverick, a company named Destined, both in the Salesforce Marketing Cloud space.
I'm happy to report that we are now ranked number four in Salesforce marketing service partners across the globe, driving, I believe over 400 or 500 Salesforce certifications, as well as one of the largest ACV or annual contract value drivers in the marketing service space for Salesforce. Literally building it from scratch in just a year and coming onto the scene and continuing that strong momentum, putting those Salesforce practices into our largest clients globally. We have also built out three Salesforce practice hubs. You know, Salesforce implementation is incredibly underserved. You can see their rapid trajectory and growth across the globe.
We are now able to fulfill implementations out of Karachi, Buenos Aires, and São Carlos, with already 100 people on the ground activated and working on clients, and we expect that to at least triple in the next year, that service delivery base. I'd finally like to call your attention to our powerhouse of a mid-market growth and challenger brand-focused go-to-market offering, which combines the capabilities of Orca Pacific, Metric Theory, and Raccoon, which are now fully integrated into the Media.Monks brands as the Performance Monks. This very high- margin and high-growth part of our business gives us access to rapid innovation across a wide-ranging industry verticals and access to scale of talent, as well as access to high growth potential brands before they graduate to our unified global offerings.
We can now give our local hero clients access to our global footprint and participate in one of the fastest-growing segments of global economies, mid-market growth and challenger brands, which require a very unique set of marketing capabilities in a partner. Turning the page on the next slide to 2022, we started off the year right with a complete integration of all prior companies in Data & Digital Media into the following go-to markets. Commerce Monks, Customer Relationship Monks, an AOR offering to disruptively displace existing AOR relationships that are potentially legacy in large Whopper brands. Our Automation Monks, which are focusing on enterprise, agency, and citizen automation of our entire workforce and offerings to clients. Performance Monks, which I just walked you through. Each of these go-to markets has momentum in expanding into our current Whoppers.
We are a fully integrated solution now in Data & Digital Media that we can wrap together with our content and our technology partners into our largest global clients, as a consolidated solution or as standalone or individual go-to markets. Foundationally, the DDM practices have driven the creation of three Whoppers already in 2022, and our focus is, of course, expanding all of our other 40+ Whopportunities into a much larger Data & Digital Media footprint, and we believe we have just scratched the surface. The growth that you're currently seeing, we have a lot more to go.
With that, I reaffirm that we are very bullish on 2022 and our continued disruption of the status quo, taking share from the incumbents in the agency and consulting landscape, and participating in the growth of the sectors that we service. I'll hand it now to DJ so we can hear a little bit more about our technology foundations.
Thank you, Chris. I appreciate that. Obviously we're just as much as excited, if not more so, than you with the six-plus months that we've had. We have seen an enormous amount of activity and growth in what we are providing our clients, both new clients since the merger and clients that we had prior to the merger. That growth was pretty strong overall. Over 2020 and 2021, we ended with just slightly north of 440 full-time staff across our offices.
One of the things that I think is important to mention is that the existing customers that we have, the majority of them have grown their engagements with us, including we expanded a multi-year engagement with a major retailer that we are hoping will be a Whopper sooner rather than later. We are not just putting bodies in seats for our customers. We are helping them with their research, with their strategic goals in building what we see as a trend in the industry and with our clients, which is helping them do the insourcing, building out teams that do more than just sit knee to knee with their employees, but also help drive the strategic work that we're doing on the technology side.
We did that recently with a major telco in building out a fintech research and a business development group for them. We expanded already our multi-year relationship with another retail e-comm client, providing advanced, not just engineering support, but advanced product innovation and development. Another example that we're going beyond just bodies in seats and helping our customers, you know, deliver on their strategic goals. We built and launched an advanced LATAM streaming platform for a global content distributor. I'm sorry. We're known for our work in the OTT space, and the fact that we are going beyond the U.S. borders and now doing this in other countries is very, very exciting for us because the work we've done in the U.S. markets has gained a lot of attention.
We strengthened a lot of our top client relationships as preferred vendor, expanding through business units. This is really important with some of our larger customers who we focused in 2020 and 2021 in delivering for a single business unit. With the several years of successful work for those customers, they've made introductions not only for the tech services space or TechMonks, but also to something that I think is very exciting to the other pillars within Media.Monks. The response that we have gotten from the merger, overwhelming client support, very attentive to expanding what we do as a unified group for those customers, and there's lots of examples that we're gonna be able to illustrate in the coming year of that.
Obviously the merger was successful, but in many ways, I think it's important to keep in mind that, you know, these are slippery slopes sometimes when a group is brought in, we have seen nothing but a complete support, not only on the customer side, but also on the employee side. We are continuing to attract the top talent because of our position as a disruptor, and we are maintaining our position as the place to work, especially in the Indian region, which I'm very, very proud of.
With that, I think a lot of that is because of the integration efforts that Media.Monks puts in place to make sure that what we have that was attractive for the merger in the first place continues as we you know pollinate within the organization and expand both organically and through additional mergers. Next slide. We've had some new client wins, which I think is important to keep in mind. One of those is we won some business that we were going after prior to the merger and post-merger. We're happy to say that we did win that piece of business for a major technology client that was already a Media.Monks client. That's very exciting.
We have had a lot of multi-pillar collaboration wins with some retailers, Bed Bath & Beyond, Morningstar. Strong potential, you know, for a major e-commerce retailer to become, you know, a larger part of what we're doing and the Whoppers that we're looking to do. I'm hoping that we play a very important role in delivering on the six Whoppers that we hope to deliver in 2022 as Mary and Scott mentioned. The integration efforts are going very successfully. Internal teams are collaborating beyond expectation.
The support that we have from clients is great, and I think that as we continue to settle ourselves post-merger and continue to look at the marketplace, because of our desire to expand, not only organically, but through additional mergers, it's just gonna help us feed this incredibly strong demand for tech services. Although there are a lot of challenges in all the economies, especially with what's going on with some of the countries like Ukraine, which can make it very difficult, we're seeing an uptick in demand that we did not expect, and we're delivering on it and very excited at what 2022 is going to provide us from an opportunity point of view.
With that, I will hand it back to Scott and Mary. Thanks very much.
Thank you, DJ. Thanks, Wes, and I thank Chris again for getting up in the middle of the night. Just finally a summary and an outlook. Continued strength in Q4 of 2021 and a strong overall year in broadly the range of expectations at the revenue level, at the gross profit net revenue level and EBITDA level. I want to make it quite clear, as we have done in the RNS and in the presentation, that the delay in producing our 2021 results was both unacceptable and embarrassing to all of us. We've planned and implemented, and in the course of implementing, significant changes in our financial control, in our risk and governance structure, and in our resources at three levels.
At the board level, at the company level, that's the S4 level, and at the practice level. Those, as I said, are being implemented and planned, and that's in an attempt to try and ensure this never happens again, and that we return as soon as possible to a normal financial calendar. Just to add, it's been a difficult period for the company, obviously, the last two months. It's been difficult obviously for Mary, entering the fray, at this difficult time. It's been difficult actually to detail up until now the aspects of the audit that have been causing concern. But I think we've now laid out for you, and we'll take questions obviously on that.
We've laid out for you where the adjustments, the net adjustments have taken place, and as you've seen, they were less than 1% at the revenue level, less than 1.5% at the gross profit and net revenue level, and less than 4% at the EBITDA level. On a brighter note, we secured six Whoppers, as we call them, and 19 more have been identified for the three-year planning period for 2022 to 2024. Up to five of those are in sight for 2022. We hope there will be further developments along those lines as we go through the year. At the same time, the expansion of 2021 obviously caused stresses and strains, and we continue to focus very heavily on integration of all the combinations.
You heard from Wes and from Chris and DJ, the extent to which we're implementing that. We've had a good start to 2022 with like-for-like Q1 gross profit and net revenue ahead of guidance. Remind you that guidance is 25% for this year, which is where we started last year. There's a healthy merger pipeline. Scott and his team have a number of merger candidates, although we wouldn't issue stock in our classic 50/50 combination of cash and stock at current levels. Those opportunities exist in content, Data & Digital Media, and Technology Services. We certainly, obviously in the listed market seen, valuations come down. Hasn't quite permeated into the private equity and VC markets, but we anticipate that valuations will come down in those markets as well.
There's also been very strong progress in our ESG objectives, as you'll see from the RNS statement, and you'll see in our annual report, which will be published on May 14. The 2022 focus we have a number of objectives. First, to continue to develop our six existing Whoppers and to develop, secure five more this year. To integrate our three practices and to integrate our three geographies even more effectively. To deepen and diversity and climate change agenda. To continue and broaden, deepen our client offering through our combinations. Finally, of course, to strengthen our financial control, our risk, our governance infrastructure to try to ensure that there is no delay in our financial results ever again. With that as a summary, we'll hand over for Q&A.
If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Julien Roch from Barclays. Please go ahead.
Yes. Good morning, everybody. Thank you for taking my question. The first one is, can you be a bit more specific on the accounting issues? 'Cause in the presentation you say lack of detailed documentation, but lack of documentation is different from changing the numbers. Martin, you said that the adjustment was less than 1% on revenue, 1.5% on gross profit, 4% on EBITDA level. I assume you're talking about the 2020 restatement, but if you could, you know, explain a bit more what happened as the first question.
No, no, there was no 2020 restatement, Julien. Just because you're talking about the adjustments to 2020. No 2020. Mary, do you want to-
Oh, so you
Shall we just deal with that one first?
Yeah.
Yeah.
Hi, Julien. Initially we had delays with COVID, and we had lockdown and staffing issues in the Netherlands. As work progressed, weaknesses were found in the control environment in the content division. Particularly, the controls and processes around revenue recognition and cost of sales recognition, and a lack of understanding of the accounting standards, so IFRS 15. What this meant was that more audit work was required. Reviews were also done by group management at that point, and that led to a number of adjustments. A couple of points I think it's important to note. These issues are primarily around cutoff and timing between the accounting periods, so 2021 and 2022. There was no impact on cash. We made a set of adjustments.
The magnitude is called out in the presentation. Ultimately, worked collaboratively with PwC to complete the audit and allow us to release the prelims.
Okay. Very clear. As it is cut off and timing and there's no cash impact, then the numbers we lost versus your expectation, we'll get back at one point 'cause it's just the timing versus what the client pays you. Is that correct?
Yes.
Thank you. The second question is steady improvement in EBITDA margin. What does that mean? More than 18%, but are we going back straight to 20%, or even the 2022, which was the previous guidance?
Well,
Uh, and then the-
Yeah. Do you want us to do-
Yeah.
One at a time, Julien, if we can. On margin-
Okay.
We've indicated a steady improvement. As you know, we've got a planning period of three years, so we're looking to recoup our margins to historic levels over that three-year period that goes from 2022 to 2024. We're basically saying for 2022, we're looking for a steady improvement. The base for 2022 is now 18%. Which was in line with expectations, the range of expectations. But the adjustment in terms of the audit was from 18.6% to 18.0%. Do you wanna add anything to that?
I think you've covered most of it. I mean, we're expecting improvement over the three-year period from 2022 to 2024 back to prior levels. As Martin said, we are expecting steady improvement in 2022 towards that goal.
Just a follow-up on that. Prior level, what does that mean? Because you achieve about 20%, but your historical target was 20%-22%. Is prior level 20% or 22%?
At this stage, Julien, what we'll say is looking for steady improvement from where we were last year, and we'll see how we progress through the year. I think that can be inter-
Okay.
... interpreted by analysts in various ways. We'll give guidance as to where we think it's appropriate or not, but we're looking for a steady improvement.
Okay. Last question is on M&A. You say strong pipeline but would not issue stock at current level.
Right.
Are you willing to pay more in cash to get the deal done? You know, would you be willing to do 100% cash in the next couple of months if the share price doesn't go up?
Yeah.
At what level are you willing to reissue shares?
Well, the answer to your question is in terms of altering the structure, no. We felt all the way along that the best way, the best model is, as Scott said in his notes, on a 50/50 basis. I mean, the level that we're looking at is, let's say, pre the delay announcement level, which was around the VWAPs at that time were around GBP 4.25-GBP 4.35. That was the rough level. Do you wanna add what you-
Yeah. I mean, I think you've covered it. We wouldn't change that structure. We think it's absolutely fundamental to have that 50/50 structure. We wouldn't issue stock at this level. We think it's, you know, severely undervalued. We were prepared to do deals pre the sort of accounting delay, and as Martin said, that was at a VWAP of about GBP 4.25, and I think the stock price at the time was about GBP 4.50.
Sorry, another follow-up. Apologies to the other analysts. Just to be clear, if the share price doesn't go back to pre-accounting shenanigan, i.e., about GBP 4.30, there's no deal.
No.
You know.
Not necessarily.
If the share price never moves.
Not necessarily, Julien. We wouldn't issue stock. If we're in discussions with various parties and if they're open to it and doing deals at those kind of price levels, then we'd be willing to progress deals.
Yeah. I think.
Okay.
Also to your question, Julien, which is obviously a key one. I mean, our organic growth rates, as we've said, we've given guidance for this year of 25%. The 2024 plan calls for doubling organically of the company, which mathematically is a 25% growth rate. We think the markets are growing somewhere between 15%-20% in terms of digital marketing and indeed digital transformation, depending on which segments you look at. Organic growth, you know, we think are going to give us what we need to do. If you compare our, it's fashionable now to look at two-year stacks and three-year stacks. If you look at the two-year stacks of 63% and three-year of 100%, that compares. We don't compare ourselves to the hold cos.
The hold cos are struggling to get to 3% compound, either on two-year stacks or three-year stacks. Organic growth continues to provide us with, I think, the key, and you heard that from Wes, and you heard that from Chris, and you heard that from DJ in each of the three practices we operate in. Our view is that in terms of growth, organic growth and growth through merger are both important. You know, given where we are at the moment, I guess the priority will be organic growth.
Okay, great. Thank you very much. I'll finish with not a question, but a request. Could we have the numbers of the pie chart on page 15, which is your revenue by industry, because you've been only given three industries. That's a request, not a question.
Yeah, sure.
Apologies to the other analysts who I've taken so much time. Thank you very much.
All right. Thank you, Julien.
Thank you.
Thank you.
The next question comes from the line of Tom Singlehurst from Citi. Please go ahead.
Good morning. Yeah. Thank you for taking the questions. Tom here from Citi. I've got a couple of questions, actually. One very formulaic, I suppose. Why have we not got the full 1Q numbers at this stage, and when can we expect them?
Well, I think we've said in the RNS, they'll be by the end of May. We've had a lot of focus on the audit, and we'll come to the Q1 by the end of May. Do you wanna comment on that at all?
Yeah. The teams have been fully focused on closing out the audits, enabling us to release the prelim results for 2021. Immediately now, we will shift our focus to finalizing the Q1 numbers, and get them out before the end of May.
Got it. Perfect. The second question. I suppose, you know, obviously we in financial markets have been very focused on this sort of process issue around results. As you've explained it sounds like it is a process issue, which is obviously very encouraging. I'm just interested in whether this has had any fallout sort of more broadly within the organization, either operationally, i.e., you know, affecting your ability to onboard clients, or in terms of attracting talent organically to the platform, actually hiring people. Because I guess your growth aspirations are, you know, very reliant on making sure that you continue to grow the workforce and-
Yeah.
... convince-
Yeah. Well, if you-
This is the best place to work.
If you look at the communities with which we operate, from a client point of view, it's very difficult. I mean, I think when we talk to Wes or Chris or DJ about impact on clients, it's difficult. Clients often don't say exactly what they have in mind, so it's impossible to say with certainty as to whether it affected a client. You know, for example, if somebody was considering us for an assignment, whether they took us off the list of potentials because of what's going on. But to our knowledge, and we meet as a key management group that talks also, people in the company talk together every week on a Wednesday. There's been little or no impact in that community.
In terms of our people internally, obviously, as Mary said, it's taken a lot of time and a lot of effort to bring matters to a conclusion whether you regard them, Tom, as being process or not. I think, you know, it has taken time and attention, you know, from the people on this call as well as others. It's again, I think when you see gyrations in the share price and the value of the company to the extent that we've seen, it must have. You know, it would be naïve to expect to say that there hasn't been any impact, and we have to settle that down as we move forward from this.
In the other communities in which we operate, obviously with shareowners, 40% of the company is owned by people who work in the company or associated with the company, and therefore it's had an impact on their net worth and at least in terms of market valuations. Again, we have to see how that works through. I mean, in terms of capital raising, we raised the last raise that we made was at around, I think, 315p. If you look at the major mergers that took place, they were done at prices lower than even current market prices. We'll have to see how that pans out.
It would be naïve or disingenuous to say that this can't have had some impact at some point in time to any or all of those communities. We now have to rebuild confidence and rebuild trust in what we've done over this. In a way, to be blunt with you know, we're starting again. Not from where we started at the very beginning, which was zero. We're starting again to build that trust and confidence, having gone through what we described in the RNS as an unacceptable event.
That's very clear. To focus on more positive things, you've talked very eloquently about the sort of land and expand opportunities. I'm just wondering whether there are any sort of big sort of pitch processes that you would draw our attention to as being significant.
I think, you know, that's an important question in relation. We use the word land and expand. Certainly in my vocabulary, we have two ways of really expanding. There may be others. One is pitch, which we don't like for the obvious reasons, and the other is land and expand, which we do like. We find we are much more comfortable building a relationship with clients through.
For example, one example yesterday here in the U.K., conversation with the CMO of a leading company who outlined four or five areas that he was concerned about, and where I think in each of the four or five areas we felt, either through Content, two practices involved actually initially, Content and Data & Digital Media, that we could make a contribution in any or all of those areas. We'll see how that conversation develops, but it's a good example of where we take on board a project and add projects rather than get involved in high-profile pitches that end up on Citi's new business tables, but actually turn into procurement fests. We would much rather build confidence and relationship through what you describe as land and expand rather than big pitches.
Now we participated in a number of big, big pitches, and we basically try and figure out where we think we have chances of winning, good chances of winning. In most, if not all cases, we do end up doing well. I mean, Wes, do you wanna just comment on how you see, just in relation to Tom's question?
Yeah. I heard you saying we don't like pitches. I personally do quite like pitches. But that's maybe just being in the industry for too long. I think our land and expand existing client relationships, expanding broadly across our capabilities and our countries and then strengthening and deepening our relationships is clearly the easiest way for us to grow, and it's where you will see a lot of growth come from again this year. We strategically place our bets when it comes to pitching. Some of the pitches are bread and butter, where we know we are truly best in class, and it makes a lot of sense for us to scale. There are also pitches where sales to an extent become strategy.
By winning some of them, you open up new areas of industry, new opportunities for the business. We're a high win rate machine when it comes to pitches, but it's more strategic and tactical, instead of just drinking from a fire hose.
Chris, do you wanna comment on it at all, how you see it in Data & Digital Media?
I think from Data & Digital Media, we have much more of a bottoms-up, water under the door approach with clients. We'll begin with a small data foundational consulting program where we will provide a roadmap for a client, help a change agent solicit internal transformational projects, and then we'll expand from that consulting and sales base or technology base up through into a technology offering or a content offering to expand the relationship. I think Mondelēz is an amazing example of that as a client where we had a strong data foundation relationship and then we were able to activate that and create a technology product in other areas to the organization.
For us, it's not about the big pitches, it's about the small pitch that becomes a Whopper in two years as we slowly help transform the organization from the inside out. We have a different entry point than potentially a, you know, a cattle call pitch where all the agencies come together or the big technology services companies. We have a slightly different approach and angle, we can take advantage of it.
Okay. DJ, do you wanna add to that?
Absolutely, Sir Martin. As I'm sure everybody knows, with Technology Services, pitches aren't necessarily something that is standard in the industry, but rather RFP responses. What we have seen and continue to see is that we will get involved in about 20% of our new businesses from RFP requests or responses to RFPs, but the rest of them are CIOs and CTOs asking or making recommendations for us on a project basis. Then that becomes, when successfully delivered, a longer term agreement with larger teams.
The beauty of what we have going on now is when you can, you know, put on the back end of a pitch that Wes may be doing or Chris may be doing the fact that we can actually build, deliver, and maintain this, just makes us an even more attractive, solution for our customers. We see the same trends still.
Okay. Thanks. Tom, any other questions?
No, that's great. Thank you very much.
Okay. Very good.
The next question comes from the line of Alexander Liu from Fair Oaks Capital. Please go ahead.
Hi, thanks for the presentation today. Got a couple of questions. The first one is, were there any early indications from PwC that the earnings would be delayed? Second one is regards to how, you know, you recognize, well, how you apply IFRS 15. Is that mainly regards to the longer-term projects? Because you have the short-term ones, which are one-six months, and then the longer-term ones. I'm assuming that the cutoff between 2020 to 2021 was probably more likely to do with the long-term, longer-term projects. Thanks.
Okay. Do you want Mary, do you wanna answer?
Yeah, of course. As I said, you know, obviously in terms of the delays to the results process, you know, initially we had the delays with COVID resourcing and restrictions in the Netherlands. It was after that that the issues in Content became apparent. On the thirtieth of March, what really came out there was that PwC had determined that they needed to do more audit work, including, you know, kind of testing, reviews and documentation. On the point about IFRS 15 and longer-term projects. One of the reasons that these issues have arisen this year is obviously the business has grown significantly, but we are contracting with clients in more complicated ways, and particularly some of the very big clients will have contracts which span several projects.
IFRS 15 is applied to any project which spans the end of the year. The contracts that have been considered as part of these reviews and this process would include both large contracts and smaller project-based contracts.
Does that answer what you wanted?
Yeah, just perhaps want to follow up on that. On the application of IFRS 15. I just wanted some clarification on this. Is how you recognize revenue over time purely done on the expenses incurred by, you know, in terms of your labor costs, and is that basically how you recognize your revenue? I'm assuming like that was all applied accordingly with IFRS 15.
I won't go into a vast amount of detail on the accounting standard, but in summary, IFRS 15 has a five-stage process. They include things like, you know, the existence of a contract, the confirmation of the transfer of benefit from the service provider to the client, the identification of the deliverables under the contract, and then the identification of the passage of those deliverables between the service provider and the client. There are very complicated judgments associated with some of those elements, and some of them are determined using what you might call the output method, which is, to give a basic example, something we've produced, and we can demonstrate we have transferred it to the client.
Some of them are based on input variables, which would then lead you to time applied. It's a very complicated area. I think we're not the only company that has issues with this. We're obviously doing a lot of work now to ensure that our processes and controls around IFRS 15 are robust and in good shape going forward.
Any more on that?
No.
Okay.
The next question comes from the line of Omar Sheikh from Morgan Stanley. Please go ahead.
Morning, everyone. I've got a couple of questions. Starting with where we just left off, maybe for Mary. You know, kind of a big focus for investors really is on how we move forward from this. You've highlighted the changes that you're making to the finance function. Could you maybe talk a little bit about the processes that you're changing and the people that you're bringing in. Maybe you know, how big is the finance function. If you could give us some color on how big the finance function is, both at the company level and at the practice level. You know, how big do you think it needs to be?
Also what sort of systems do you think you might need to introduce and over what time period and what sort of investment might be required? That's kind of very multi-pronged first question. I've got a follow-up. Maybe if you want to.
Processes, people and systems. Yeah.
Yes. Thanks, Omar. From a process perspective, that really is about us being very thorough and very organized in terms of how we run our IFRS 15 assessments, and ensuring that we have the right levels of controls, both at a practice level but also at a group level. In terms of putting that in place, that work is already underway. We will see, you know, that process operate firstly for the Q1 results, but secondly for the half year results. When I talk a little bit about the people that I've been bringing in. We've made several senior blue chip hires, both across the Content practice and in the company teams. We have a new group financial controller.
We have a new CFO for the Content practice, who started on the first of February. She is doing a lot of work with the team there and has also brought in IFRS expertise, which is helpful. In terms of the size of the team, I don't expect we will dramatically need to increase the size of the team. Some of this is about training and robust processes as opposed to adding a lot more people. In terms of systems, as you would expect for a company which has grown, you know, as we have, we have several finance systems. Over the medium term, we will be looking to migrate to a more consolidated approach. The systems piece was not part of the issue here. This is about process and controls and understanding really.
Great. You mentioned July as being the point at which you'll have to give us more information, but are you saying that that's when you will be 100% confident that this won't happen again?
I'm not sure we've actually mentioned July. What I've mentioned is the half-year results, and by that I mean the half-year results announcement in September. There is, you know, a fair bit of work to do. The aim is to have the significant proportion of it complete by that point. Obviously, you know, we have a responsibility to be properly prepared for the half-year review by PwC. We're obviously going to be working very closely with them through that process. Lots of the work is already underway.
Yeah, just to be clear, Omar, I mean, in the presentation, we say ongoing work to strengthen team processes and controls, which is your question, and significant work to be completed pre-half year results announcement. So it's really signaling that, you know, there's a lot of work to be done, and a lot of things to be completed in the context of the three areas that you mentioned, processes, people, and systems.
Okay, great. That's very clear. Just secondly, I wanna just move on to the guide for 2022. 25% organic or total revenue growth you're expecting for this year. If you look at the client mix, it's always been, you know, one of the things that have attracted people to the story. You know, obviously, over the last few months, there's been quite a lot of change among, you know, within your clients. Could you maybe talk about, you know, client demand from tech companies, what the macro issues, headwinds are doing to that level of demand, and whether, you know, you'd regard 25% as being conservative at this point or realistic? Thanks.
Well, just on 25%, we've indicated that in the first couple of months of the year, we're ahead of guidance. That's what we've said. I think on tech demand, it's clearly you see the numbers that have been published. I mean, the tech companies and the major tech companies have published their Q1s. If you look at where we have the major relationships, they continue to grow at significant levels. Now, obviously the comparisons they have to last year get tougher as you go into Q2, where you see very significant growth last year. Again, you know, when we're talking about two-year stacks and three-year stacks for ourselves, which are levels of 63% and 100%+ . We are talking about very high rates of organic growth.
When Scott went through the addressable markets, you know, when we look at the forecasts, and the forecasts do vary, but directionally, they're pretty much consistent. You have this stark contrast between analog and digital. You've got advertising as a proportion of GDP increasing, for example, in the United States. It went from 2% to 1% a few years ago. It bottomed at 1% and grew to 1.25%. So-called industry experts or analysts talk about it going back to 1.75%. The driver, as Scott indicated, is purely digital.
I think, you know, when one looks at Google's results, for example, for Q1, which I think search was up 24% and overall ad revenues are up 20%, we're a smaller factor, as Scott pointed out as well, so we should grow at faster rates than the industry. I feel for two reasons. One, GDP growth this year is probably gonna be around 3% globally. At the beginning of the year, it was about 4%-5%. Next year I think will be tougher, as we've indicated in the statement. Again, the prognosis for digital expansion continues to be good.
I mean, if there's anything that we've seen in the last, and maybe Wes can comment on this as well, like if there's anything we've seen particularly around content, it is, clients moving money to so-called lower funnel work, which is more activation and more performance oriented. That may have started to happen and, you know, certainly I think in Snap and Pinterest results, that's been specifically mentioned. I mean, Wes, do you wanna comment on what you see clients doing? Let's sort of focus on the content area for a minute. It's about 60% of our business. Just what you see in relation to activation, lower funnel, et cetera.
Yeah, I definitely think there's a bit more immediacy to conversion at the moment, and I think Chris and myself have been pushing the Performance Monks story a lot, which is growing in leaps and bounds. I think that's a great reflection of where a lot of the industry energy is going. The reality from our perspective, there's of course a lot happening, but most of those trends are still gonna push people into digital spaces to find their customers, find conversion, find net new business, create incrementals. It isn't that different in pipeline and feeling of growth than we went through the last few years. We haven't seen much changes except maybe for people just putting their money in spaces where we're also very strong, like hardcore performance.
Chris, you're on the front lines of performance. I think that reflects what we're seeing.
Yeah. If you're talking about measurable outcomes in marketing, that is the safe haven, you know, kind of like the U.S. dollar when there's shaky economic waters. The safe haven marketing, of course, is in that performance area. You'll see a lot of big projects, headcounts, other budget reallocations from one area of our business into another area of our business, which is part of the reason why we approach the market with portfolio theory. You know, if you're looking at the FAANGs saying that they're going to start maybe limiting staff, forcing folks back home, especially on the marketing side of the house, where budgets might get pulled, it'll really get redirected into other areas of our support foundation. In some cases, some clients are gonna ask us for more help.
In other cases, they're gonna reduce budgets. Overall, we're not seeing a major shift in the outlook from our largest tech clients right now on the marketing front. I think that's my summary for what's happening.
Okay.
Brilliant. That's really great color. Thanks very much.
Okay.
The next question comes from the line of Alex Apostolides from Barings. Please go ahead.
Hi, good morning. Just firstly on the audit. Has PwC actually signed off on the 2021 financials, and i.e., the impact being under 1% of revenue, under 0.5% of, at the gross profit level, under 4% of EBITDA level? They've confirmed that they're okay with that and that there's no impact on cash. Secondly, have they expressed a willingness to continue to work with you to audit you?
Let's deal with the one question at a time, please. Mary, do you want to just start?
Yeah. PwC are required to consent to our release of the prelims. They will sign the audit opinion next week as we prepare to release the full annual report and financial statements. As you will know, in order for them to release the prelims, they need to be completely comfortable with the numbers. That's where we are from an audit perspective. Therefore, they have agreed the adjustments. They have also agreed that there is no impact on cash.
Sorry to cut you off. Do you wanna carry on?
Yeah, I just wanna clarify that point. You mentioned they need to be completely comfortable with the numbers. So are they at this point comfortable? Are we waiting for something else to change? I'm just trying to understand, is there anything that can change between now and next week? Then I just have two follow-ups.
No, the answer is no. Yeah.
Great. Yeah. No, that's clear. Separately, just on staff inflation, what are you seeing now on that front, particularly in the U.S.? Obviously, these are high demand professions. Is that a headwind at all to your margin guidance? You know, you mentioned that steady increase, but I wanted a bit more information there.
Yeah.
Just one last question, which I'll ask right after.
Yeah. That's fine. On staffing, you know, we have seen, as we've discussed on previous calls, the industry has seen churn rates of 25%-30%. Great reshuffle or great reorganization, whatever you want to call it. We have seen inflation in wage rates, but we did make the point, historically that that is nothing new in the digital sphere. Increasing wage rates have always been there for, in the digital area. If anything, what we've seen is leveling up, which is to be welcomed, you know, in terms of gender and diversity. But it is, I think inflation in wage rates continues.
Having said that, valuations have come down, and we are starting to see some adjustments, I think particularly from the tech companies and how they see. But maybe Wes and Chris and DJ can talk a little bit about that as to what you see, 'cause we talk about it every week in the management calls that we do. Wes, Chris, do you wanna talk, and DJ, do you wanna talk about it?
Yeah. I think to your point, it's part of running a business in this industry. It was a buyer's market for a while in the first sort of full year of COVID, where we were able to bring in a lot of amazing talent. I think we were one of the only ones that were actively growing our talent base at that moment in our industry. I think a lot of companies then had to react aggressively to the bounce back and inflated the salaries because of that. I think we've been relatively good at holding the line. We are now also seeing very active messaging from big industry players on changes to their hiring policy. I think Meta announced a hiring freeze yesterday. We're seeing some messaging from Netflix.
It goes up and down, and we, I think, have been historically good at b ringing in the right talent, cultivating from internal and holding the line when it makes sense is just part of what we need to do as a management team. That's my main take on it.
Okay. Chris?
With new information coming out in the last quarter around staffing, essentially second half slowdowns, et cetera, I am mostly seeing less pressure on retention and job hopping. Folks are starting to hunker down. Your top quality talent who is probably already in place, they're not likely to jump somewhere else. Then your mid to low quality that wants to work remote, they're the folks that are gonna be moving around the most or the most likely to be scooped up by disruptive companies that are okay with work remote. For the most part, I haven't seen too much disruptive activity within our own business around staffing. Clients are less likely to poach now.
It's just gonna be an easier supply side conversation second half. That's what we're anticipating.
DJ?
Yep, absolutely. We see that clients are paying more too for the talent, so the importance of culture in maintaining a low level of churn. You know, we have been fortunate enough to have a significantly lower attrition rate than our competitors, and we think that has a lot to do with the fact that the opportunities, the disruption that we're doing, is not necessarily available to the talent out there in other organizations. I do think that the importance of how we do our business and how we treat our staff across the board has a lot to do with our successful retention and attraction to date.
I think that that's a very, very important component of how we're gonna be able to scale, especially if we're gonna focus on organically in the near term.
Just to add one thing. Well, a couple of things. As a result of the war, which looks as though it will sadly continue for a significant period of time, and even if there was a bad peace negotiated between Ukrainians and Russia, it's likely that tensions in Central Eastern Europe are gonna continue. What we're seeing is significant changes in regional patterns. You would see sort of risk off, if you like, to put it that way, in Central Eastern Europe. You would see risk on in Asia, maybe with some variation in terms of the attitude to China because of the question mark over China's approach to Taiwan. You'd certainly see risk on in India, Indonesia, Malaysia, Vietnam and other countries.
You'd probably see risk on in Middle East because of the transfer of wealth through increased oil prices and energy prices. Maybe in some parts of Africa, although that's more difficult. Then DJ's business with Zemoga, heavy risk on in terms of South America and North America. I think North America and South America will continue to grow very significantly. That's one thing. The other thing is the technology companies become more important as a result of the war. When people talk about defense budgets, they're not just talking about missiles and military personnel and investment in those areas. They're talking about investment in technology too, either offensively or defensively, cyber being a classic case. The importance of strong tech companies and a strong tech infrastructure or ecosystem, both in the West and the East, becomes really important.
I think we're gonna see some changes in the demand for labor, depending, you know, on where you're talking about.
Great. Just lastly, longer term projects as a percentage of revenue, can you give us a sense? I presume the impact of staff inflation would be more acute there as opposed to the short-term projects where you can renegotiate faster. Can you give us a split between the two? That was all I had. Appreciate your time.
Yeah, I don't think we have the split on that, but you know, it's a smaller proportion of our business. I mean, we can try and work some numbers for you and send you a view. I mean, it is true to say that longer term contracts have become more of a feature of our business in 2021, but in terms of proportion, it still would be a low proportion of our business. I mean, you're talking about probably I can think of three or four clients where we had longer term contracts. The answer to your question depends on what pricing flexibility you have in them. I mean, if obviously if you've got long-term contracts with fixed pricing, that's an issue. If you've got longer term contracts with some pricing flexibility built into them.
We'll come back to you on that.
Thank you.
The next question comes from the line of Joe Spooner from HSBC. Please go ahead.
Morning. Just to go back to the accounting issue. I think you've touched on this in a couple of ways, but just to avoid any doubt. You haven't restated the 2020 numbers, so this is something that happened in 2021. Can you just I mean, I guess immediately you kinda think that, you know, could this issue have arisen in one of the acquisitions that was made in 2021? Is that why there hadn't been a restatement?
Hello, Joe. Thanks for the question. The issues were isolated to the legacy Media.Monks business and not associated with any of the recent acquisitions. As you quite rightly point out, there is no restatement to the 2020 numbers. There are a couple of factors I think that contributed to the issues we faced. Firstly, the business has grown very quickly. Secondly, the nature of the work that we are doing with our clients and the way we are contracting for it has become more complicated and therefore required more judgment and understanding of IFRS 15. Then finally, there was some staff turnover within the Content practice's finance team during 2021, which, you know, hasn't helped. All the pieces that we're putting in place will address these issues going forward.
The issue is isolated both to the legacy Media.Monks business and secondly to 2021.
Very clear. Thank you. Just on headcount plans. I think the statement talks about 8,400 employees currently. How are you thinking about headcount plans for the rest of the year? Are you looking to kind of moderate that to allow the margin to now come through? Thanks.
Well, obviously, headcount control is critical. You know, balancing headcount expansion with revenue expansion or net revenue expansion to be more accurate, gross profit expansion is critical. I mean, personnel costs or people costs are about depending around 60%-65% of revenue. The answer to your question is there will be. You know, there is and will be greater focus on that in order to secure margin expansion.
Perfect. Thank you very much.
Mm-hmm.
The next question comes from the line of Steve Liechti from Numis. Please go ahead.
Morning, everybody. I'll keep mine to two. Just on going back to margin. If you go into the numbers and unpick the different verticals, DDM and tech services margins are very strong, so it really does go back to the content business. You know, rolling back to 2019, the margin got up to 23%. You've just done about 13%, and what, 13.6%. I understand the fact that you need to staff up for these big contracts and things like that, but the way that business is working and the sort of business that it's doing, with that growth, there's no structural reason, or is there any structural reason from your perspective why that margin can't get back to 20%-25%, you know, at a relatively more steady state growth?
There's nothing fundamental that's changed in that business in the way that it goes to market? That's the first question.
I don't think it's fundamental or structural. In a way, it relates back to the previous question, with Joe's question about headcount. It's a question about balancing headcount growth with revenue growth. At the end of the day, you know, our business is not rocket science. It's about balancing two things, probably. One is people, and one is property. You know, property. As everybody knows, COVID-19 got people to focus more on that, and probably we're exiting COVID-19 or hoping to exit COVID-19 with smaller property footprints and more flexibility in the workplace, which is probably good news from a cost point of view. It's really a question of balance. I don't think there's anything structural. I mean, Wes, do you wanna.
If that's a question directed straight at you. Is there anything structurally wrong with your practice?
Yeah. No. Also, if you refer back to some of these sessions earlier, we were very clear that we saw what was happening in the last year and a half as a massive land grab moment. We invested ahead of growth from a revenue perspective because we saw it as a massive industry shakeup. I think that's been clearly reflected in the growth of the business, the growth of our Whopper client list and scroll to overview clients in general. We doubled down on getting as much and more than our fair share of what was happening in that shift. I think we successfully did so, and we did so while also reinventing the business at scale, if you look at our implementation of two Whoppers from scratch.
When we talk about this year, it's still gonna be high growth when you look at it through the lens of the industry as a whole, but we talk a lot about stabilization. We talk a lot about structure. We know how to run a high margin business. We also know when we have to take our opportunities. I think we did that really well. There's a mindset shift for us, and I think we're confident that we will deliver on that. We will, I think, always, at least in these periods, make active decisions to invest where it makes sense for the business. This year, margin recovery, stability, and structure is very much top of our list.
Yeah. To be fair also, Steve, which is something that Wes and I and others talk about a lot, there are costs when you are running one P&L. Assigning costs to one practice or the other may not be totally accurate. To be fair, there may be some subsidizing of the Content by DDM, as we call it, and Technology Services. There is a little bit of that, to be fair. Directionally, you know, it wouldn't alter the direction of the numbers that you pointed out.
Great. Thank you. Then the last one is in fiscal 2021, we had 44% like-for-like growth. Obviously, much bigger reported growth, but working capital outflow of GBP 33 million. If I'm forecasting 25% like-for-like growth but no further real acquisitions.
Yeah.
You know, apart from the catch up, should I think of working capital outflow at around half the level of 2021, and is this business again sort of structurally gonna have a working capital outflow as it grows at that sort of, let's say 15%-20%?
Yeah. Go ahead, Mary.
I think as you think about 2022, obviously we expect to continue our strong growth. I would expect with that some working capital outflow. It will be driven primarily by the mix of the business. At this point it's actually relatively difficult to call. I also believe that we have an opportunity to improve our cash management a little bit. I will be asking the finance team and actually our new group treasurer to focus on that over the next six months or so, which I think will help. In summary, I would expect some working capital outflow. Potentially depending on which Whoppers we expand and how the client base grows, it's quite hard to call for the full year at the moment.
Great. Thank you.
Okay. We got more.
The next question that comes from the line of Matthew Walker from Credit Suisse. Please go ahead.
Thanks a lot. Can you hear me okay?
Yep.
Yeah.
Fine. Yeah.
The first question was on the audit. Did PwC actually look back at prior periods for Media.Monks to check there hadn't been the same problem? Did they look at the other areas as well like, you know, the recent acquisitions and the data practice as well? That's the first question.
Yeah. Just Matthew, let's deal with that one first then.
Yes.
Yeah.
PwC are comfortable with the 2020 numbers, as stated in the prelims, and obviously they've signed off the release of the prelims. In terms of how the audit is scoped, as in any audit of any company, the auditors will determine which of the entities of the company are within full scope, which are within a more reduced scope. In terms of the audit that PwC performed, they covered about 75% of the business, that included Data & Digital Media. It included Technology Services, and obviously Content. Given the process we've been through, PwC obviously had the opportunity to decide should they wish to look at additional areas, and they didn't feel that it was necessary to extend beyond the work that they've done.
Okay, fine. Thank you. Just going back to the question on margin and the historical level somewhere between 22%-24%, I guess more like 24%. When you look at the margin in 2019, it was about 19.5%, and then it went up to 2020, it was about 21%. I guess the question is, you know, for the target, just to define a bit more closely what historical.
Yeah.
Margin you're talking about.
Yeah.
Is it the 2019 level of 19.5%, or is it the 2020 level of 21%?
The historic level we're talking about is 21%, 22%, Matthew.
Thank you for that. Then the final question maybe to help. I don't know if this might or may not help with expectation of management. When you look at the consensus for this year for 2022, you know, it's something close to sort of GBP 800 million for gross profit and GBP 170 million for EBITDA. Obviously that reflects the fact that quite a lot of analysts, not all of them, but you know, put M&A into their numbers.
Yeah.
At this stage, you know, given your comments on M&A, would you be encouraging the analysts to sort of strip out M&A impact for this year apart from the ones that you've already done? Basically strip out-
Mm-hmm.
... future M&A from the numbers. Otherwise
Yeah.
You know, you run the risk of-
Sure.
Coming in a bit.
Sure.
Obviously it's a decision for the analysts themselves, but I just.
Sure. Yeah.
Trying to think about that.
Yeah. Scott. Yeah.
I think actually the consensus is gross profit GBP 790 million and EBITDA GBP 157 million. I think when you look at some of the third-party consensus figures out there, they're wrong because they don't incorporate all the analysts. We have 10 analysts that cover us. I think most of them take in five or six. It's not correct. And as you point out.
Yeah.
Some of the analysts do look at it from a purely organic perspective and some look at it from an organic plus M&A perspective. I think obviously our preference would be. You know, I think M&A is an important part of our strategy, so I can understand why people want to look at M&A and look at the impact of that and try and model that out. I think, yeah, our preference is that if you are gonna do that, you know, you make that clear in the report and look at it from an organic and then plus an M&A perspective.
Thank you. Very good. Thanks a lot.
Okay. I think that's. Have we got anything else? No. Okay. Thank you everybody for joining us this morning. Thanks again, Wes and Chris and DJ, and we have another call at 1:00 P.M., primarily aimed at the U.S. and indeed elsewhere. Anybody who wants to join us for that, you're welcome. We look forward to talking to people again at 1:00 P.M. London time, 8:00 A.M. New York time. Thanks.