Good morning, everybody. Martin Sorrell, and I'm here in Shoreditch. I'm here at the Media Monks office in Shoreditch, having trouble across London three times this morning. Anyway, apologies for the early early start, but we we clashed with with another company, so we brought the the presentation through earlier. We have this presentation to analysts and share owners in The UK and Europe and Asia, and and we'll be doing another another call, another webinar at 01:00 with with US analysts.
So thanks for joining us this morning. And I'm joined by Simona, who's the the CFO of of MediaMonks, and she's she's in Amsterdam. I got Wes, one of the founders of MediaMonks, also in in Amsterdam. Peter Rademacher, our CFO in Amsterdam. Emma is in San Francisco at some god awful time, so apologies, Emma, for dragging you out of bed at this time, but thank you for being with us.
And talking about being out of bed, even worse, poor Chris Martin is in Boulder, Colorado, and, our sympathies with the families in Boulder as well, Chris. And, thankfully, none of our people or their families were involved in that. And last but not least, Scott's spirit in Singapore. So, we we have a big crew here today. So we've got a presentation.
There are a ton of elements to it. We'll start off with the results, which Peter will take you through. Then Scott will talk a little bit about the market, client momentum, mergers and integration. And Wes will chime in on the content practice. Chris will talk about data and digital, the media practice, and cookies.
And then we'll talk about environment, society, and governance, with Ima and with Simona. So and then I'll come back briefly for a summary and outlook, and then we'll take your q and a. So I'll probably take about an hour on the presentation. Over to you, Peter.
Thank you, Mr. Martin, and good morning to all who have joined us today in this call. I'm very proud to present to you our financial achievements of 2020. Clearly, '20 has been a year that nobody could have predicted what happened with the pandemic when we started. And, of course, also our group was impacted by the pandemic as we presented earlier to you in our trading updates and a half year statements.
But we have been able to grow quite significantly as we responded quickly with our creativity, our adaptability, resilience and the hard work of all our people. And that makes us basically look back at a very good performance in 2020. Early in the year, we already indicated that we would expect to grow with double digit like for like growth, supported by a strong order backlog. And we realized a high double digit growth, which I will show you in this slide. And next to that, with a lot of focus on liquidity and working capital, we maintained a very strong balance sheet and a very strong black cash flow during 2020.
And if you look at the numbers, then the billings were 653,400,000.0 and on a pro form a basis, $768,000,000. Billings is our revenue, including our pass through costs, especially related to our media, data and digital media practice. Our revenue was 342,700,000.0, 59% up from CHF $250,000,000 last year. Like for like revenue was up 15% and on a pro form a basis, 20% up. Our gross profit, our most important measure, was CHF 295,200,000.0, up 72% from a reported base and a like for like 19% up and on a pro form a base, 24.
Our operational EBITDA was 62,200,000.0, up 86% and on a like for like basis 18% up and on a performer basis 31% up. Operational EBITDA margin, 21.1%, that's EBITDA margin as a percentage of gross profit, 1.6 margin points up on 2019 and a like for like, 21.2% and a pro form a 23.1%. Our operating profit was 8,100,000.0 versus an operating loss last year of CHF 3,800,000.0 in 2019. Our operating profit is after charging approximately EUR 15,000,000, 49,900,000.0 to previous size of adjusting items, which are relating to acquisitions, amortizations and share based payments. And that includes EUR 7,400,000.0 charge of deferred and contingent considerations tied to continued employment.
This latter charge is basically the result of our deal structures in our M and A activities. In our deals, we include protective covenants, and one of these is continued employment during the period of contingent consideration. And in align with the IFRS rules, this means that contingent considerations needs to be included as personnel expenses and not treated as goodwill or intangibles. So that hits us in the second half. Our results before income tax was EUR 3,100,000.0, which includes these adjustment items versus a loss of EUR 9,200,000.0 in 2019 and a pro form a result before income tax of EUR 12,100,000.0.
The result for the period was EUR 3,900,000.0 loss, which includes again the adjusting items after taxation versus EUR 10,000,000 loss in 2019 and a pro form a loss of CHF 1,200,000.0. Our basic and diluted net result was a 0.8 loss versus CHF 2.7 loss last year in 2019. And on a pro form a basis, that would have been a zero point loss. Our adjusted basic net result per share was 7.9%, coming from 5.2p 7.9p versus 5.2p last year. Our year end net cash, almost EUR 52,000,000 after the significant combination payments since the raise that we did in July 2020 of EUR 113,000,000 net.
And finally, a very good start to 2021 in 2021 with January gross profit well ahead of our budget. So if you go to the next slide, then you see our gross profit growth by quarter. What you see is in 2020, then we started, as you know, clearly remember from our trading updates, Q1 was 19%. In Q2, we realized a growth of 7% on a like for like basis. In Q3, it was 23% and Q4 resulted in a 27% growth on a like for like basis on the gross profit.
And especially, content showed a growth of 24% in that specific quarter. And and data and digital media increased with 35% compared to like for like last year, which means that in the first half, we had 12% growth and in the second half, 25% growth. We typically encounter seasonality, which means lower first half than second half. And in this particular case, first half was even lower as we presented in Q2 when the pandemic hit. But in all months, we have showed growth and the trough, as we indicated earlier, was still April with 3%, but again, in each and every month.
In the reported EBITDA by half year, which is on the slide in with the stack diagrams, you see that 86% growth on a reported basis, like I mentioned, and 19.4% on a like for like basis. In the first half, we clearly had a lower EBITDA margin, as we mentioned, while we maintained the fabric, especially during the pandemic. And in the second half of the year 2020, we realized 25.8% when we were firing up all cylinders. So this year or in 2020, I would say that the seasonality was even more impacted, especially in Q2 again by the pandemic. And then in the next slide, a couple of these items I've already addressed in my summary of results, so I won't address everyone in every position individually.
But here you have the like for like and the pro form a. And again, to remind everybody, like for like is basically a restated 2019, which includes the existing and combined businesses for the same months as included in 2020 and on a constant currency basis. And on pro form a, that as if all businesses were combined as from January 1 from that particular year. And what we saw, what you see here in this sheet, which we also indicated earlier, is that basically our gross profit grew faster than our revenue as a result of a change in mix of productions, especially in the content practice. So less out of pocket cost, more internal people at work, which creates a higher growth in gross profit compared to revenue.
On the next slide, again, some of the numbers all to guide you through with our adjusting items and our numbers that I presented in again, in the first slide. EBITDA, maybe to point out or to highlight. Adjusted items are excluded, of course, from our operational EBITDA if we measure our operational EBITDA. And these costs mainly relate to EUR 16,000,000 of acquisition related expenses, EUR 12,000,000 of share based compensation and approximately EUR 23,000,000 of amortization of intangibles. So if you take these out, that means that we ended up with EUR 62,200,000.0 EBITDA, which you see see on the left hand side of this page, which was the 21.1% EBITDA margin, again, as gross profit.
And before central cost, our EBITDA was EUR 68,300,000.0, which basically means that our practices in total delivered an EBITDA margin on their gross profit business of approximately 23. Finally, in these slides with these lot of numbers, the next one, we had during the year, which you see on the left hand bottom side, EUR $493,000,000 weighted average numbers of shares compared to EUR $368,000,000 last year, which with our net result of EUR 3,900,000.0 loss, that meant EUR 0.8 loss per share this year versus EUR 2.7 loss last year. And basic adjusted basic net results per share was 7,900,000.0, which is 53% up compared to last year, where it was EUR 5,200,000.0. And on a pro form a basis, our EPS our basic or adjusted basic net result per share was 9.8p versus 7.5p in the previous year. Our balance sheet, as I indicated, we maintained a very strong balance sheet during the year.
Of course, we raised EUR 113,000,000 net cash in the equity placing in July, But a very strong focus again on liquidity, which I'll come back in the next slide. But if you look at our balance sheet, we are now at approximately EUR 1,200,000,000.0 net assets or total assets, must say, sorry, and EUR 700,000,000 of net assets. And the increase in total assets is mainly driven by the fact that mainly driven by a combination of our M and A activities, as you will see in our value of intangibles that we're carrying around CHF 800,000,000. Our net cash position, 52,000,000 rounded, 142,000,000 cash on our balance sheet and at the same time, our long term loan of CHF 44,800,000.0 and our drawdown of our results of 45,000,000, which then delivers the CHF 52,000,000 net cash. And finally, what you also see in our balance sheet, some increase in contingent considerations, again, as a result of our M and A activities where we typically have an initial payment of around 60 percent, 70% of the total consideration and then the remaining part is depending on the performance of the specific unit, which creates our contingent consideration.
So these were the sort of the plus things I wanted to highlight on our balance sheet. And in our cash flow, which has been very strong, what you can see, because we realized 61,700,000.0 in the net cash flow from operational activities, which is basically a conversion of 99% of our EBITDA, which was million. So a lot of focus on liquidity, working capital from the practices. Simon is in the call, MediumWorks, fourth half as data and digital media practice did. So both practices were very much focused on that, and we hardly encountered any write offs on our receivable positions.
And our cash flow from financing activities, again, the equity placing, so EUR 145,000,000 cash flow from finance activities, 130,000,000 was the result of equity placing and a further drawdown of our revolvers, which created ultimately for us a net cash position of EUR 142,000,000. My final two slides, pro form a gross profit and operational EBITDA by practice. The content practice accounts for 72% of total against last year where it was 70%, and again, this is on a pro form a basis. Data and Digital Media, 28% contribution this year versus 30% in 2019. And the Content Practice operational EBITDA was million, which results in a 22.5% EBITDA margin over gross profit on a pro form a basis, where Data and Digital Media practice delivers on a pro form a basis a 31,600,000.0, which is a 30.3% EBITDA margin as percentage of gross profit.
And my final slide, pro form a gross profit by geography. Americas, 73% of total, 25% up compared to last year. EMEA, 18% of the total, 11% up compared to twenty nineteen. And Asia Pacific, 9% up 9% of total, sorry, and 44% up compared to last year. So that concludes my summary of the financial highlights.
So over to you, Scott.
Thanks very much, Peter. Good morning, everyone. So I wanted to kick off today with a chart on how we see the total addressable market because I think understanding this is key to understanding why we believe we can continue to achieve these aggressive market leading growth figures. So when most of you think of S4, you'd probably zoom in on the middle column bottom row. These are MoffettNathanson's projections for digital advertising.
They have it at USD $340,000,000,000 this year, growing at 17% year on year and representing 58% of total media spend. Now this is clearly an important metric or market for us. It has a fairly direct correlation with our digital media practice, certainly relevant also to our data and content practices, too. However, it's far from the full story. Even within this figure, there are portions of the digital advertising market growing significantly quicker.
So Pixel eight estimates that Connected TV and over the top TV spend grew 122% last year. And it's also far from representative of the full scope of our addressable markets. So in content, as you'll see later, we work in virtual events. That's a $94,000,000,000 market growing at over 23% annually for the next seven years, and obviously, COVID has accelerated that. We've done AR and VR work for brands like Facebook, Snap, Verizon and the NBA.
And Gartner predicts 15% of companies with over $1,000,000,000 in sales will use AR in new monetizable business models going forward. We provide systems integration around marketing technology from companies such as Adobe and Salesforce. That's a $94,000,000,000 market projected to grow at over 17% annually in the next seven years. Our data practice operates in the broader data and analytics market, and that's worth GBP 123,000,000,000 and set to grow at almost 15% annually in the next four years. IDC projects digital transformation investment will total GBP 6,800,000,000,000.0 over the next three years.
So these are just some of the markets we operate in and have exposure to. There are plenty more. They represent hundreds of billions of dollars of spend, and they're all growing very significant rates in the right direction. So that's why we consider S4 to be essentially a pure play digital royalty on digital transformation and marketing. And then moving on to the next slide, please.
So growth is at the heart of what we do at Sfour, and our core offer is to help our clients grow, too. It's important to understand that we have two client bases at Sfour, what we call growth clients, which is what Google and Facebook often refer to as their torso clients. These are midsized companies, and for us at Sfour, they're often early stage companies with a digital focus. So that might be in fintech, direct to consumer or e commerce. They're usually looking to scale rapidly and require a flexible and agile marketing partner like S4 to support them in digital media, data and creative.
They're the enterprise clients of the future. And we look at enterprise clients as either Fortune 500 or the international equivalent. They normally have broad, sophisticated marketing requirements and large marketing budgets to the point where we believe many of these clients have the potential to become WAPAs, meaning that they have the capacity to spend CHF 20,000,000 plus with S4 across our practice areas. Both of these client sectors play an important role in S4's own growth story. Next slide, please.
We've a stated 20 squared objective to develop 20 clients with $20,000,000 plus of revenue. And in 2020, and I realize that's a lot of 20s, we had two. Although we come into 2021 with our budgets projecting five, and that's Google, an NDA tech company, Mondelez, BMW MINI and Facebook. We've identified what we feel are likely the next 10 to grow organically to whopper status. And as you can see, we expect to maintain our significant tech exposure, with five of them from that sector, two telcos and one each in FMCG, pharma and financial services.
Next slide, please. Now that we have two full years of operational data, we can start to offer a lot more disclosure around our client base, which we hope investors will find helpful in understanding our growth story and the opportunity ahead of us, and it should also provide some useful KPIs against which we can measure our progress going forward. So these charts are based on reported revenue for 2020 and 2019. The first chart breaks down our revenues by client industry segment. Technology is our dominant sector with 53% of revenue by FCG at 9%, agencies at 8% and most of the others around 3%, 45% or less.
We believe this exposure to tech clients like Google, Amazon, Netflix, Facebook, HP, Microsoft, Snap, PayPal, Adobe and others is a competitive advantage for us, given their higher growth rates and above average investments in digital marketing. Remember, many of these clients are also our partners as we go to market with them, providing services around their technology products. Recent wins such as Mondelez and BMW MINI illustrate the opportunities we have with our model across other sectors. But despite continued success here, we anticipate tech will continue to be the major industry segment for us. The next chart to the right illustrates the success we've had in expanding our relationships with clients across our three service offerings: data, content, digital media.
In 2019, 14% of our top 59 of our top 100 clients engaged with us across more than one service. This has grown to 26% of our top 5020% of our top 100 in 2020. The bottom left chart shows an average client size in the top ten, twenty and top 50 client cohorts. And as you can see, the 2020 figures are double or close to double the 2019 figures. We've significantly grown and upscaled our largest client relationships over the course of 2020.
The bottom right chart gives further detail on this. You can see we've doubled the number of clients above GBP 5,000,000 as we make progress towards our 20 squared goal. You can also see a significant increase of clients in the GBP 100,000 to GBP 1,000,000 range. This is a result of priming the pump for larger clients with our successful land and expand strategy and also a strong performance in what I described earlier as the growth clients segment. Next slide, please.
2020 was a noteworthy year for new business at S4. Our new business comes from three main sources, and this chart seeks to illustrate their relative scale and importance. Looking at our top 100 clients in 2020, which is around 75% of our revenue, you can see that 50% of that revenue is represented by what we earned from those clients in 2019, those landed clients. 34% of the revenue came from organically expanding our relationships with those clients in 2020. 7% of revenues came from new clients we absorbed via mergers.
And 9% of revenues came from net new clients we won over the course of the year. You can see some of the clients in these categories on the right, all of which provide us strong foundations for expansion in 2021. Next slide, please. Now on to mergers. Despite the disruption of COVID-nineteen, our merger activity continued apace in 2020, with eight deals completed in the year as per the time line you can see here.
Circus, Dare. Win, Decoded advertising expanded our content practice in Latin America, The U. S, France and Spain. DiggerDat, Lens ten and Brightblue contributed to the global expansion of our data practice. Orca brought us significant Amazon and e commerce marketplace capabilities and Metric Theory broadened our media offering from programmatic to performance.
In July, we raised GBP 113,000,000 as a merger war chest. And thanks to the efforts of Peter and all of his colleagues and their management of our cash position, we still have significant firepower at our disposal and a healthy pipeline of deals for 2021, with four announced already, including the creative powerhouse JAM3, which we announced today. The figures on this chart illustrate the gross profit and EBITDA contributions as per the investment memorandum of the deals completed in 2020 and the total potential enterprise value, including any deferred payments. Move on to the next slide, please. Now the success of our M and A strategy is highly reliant on our ability to integrate the companies.
We fundamentally believe in integration. It's key to our model of offering an integrated service to clients, of offering broad rewarding career paths to our talent and offering a differentiated and superior business model to our investors. It's something we take very seriously, and we spent 2020 putting in the hard miles on integration. We've aligned the tooling, so we have a single view of our customers via Salesforce, a single view of our talent via Workday, a single platform for communicating via G Suite, Slack, a single platform for knowledge sharing by Highspot. And we started the process of aligning our finances on NetSuite.
We've worked to align our compensation and benefits, our recruitment and diversity efforts, more of which you'll hear about later from Ima. We brought together capabilities like growth, marketing, IT and real estate to have company wide approaches. These platforms allow the mergers to plug into these services in what we call an API system, leaving us and the management of those mergers to focus our efforts on the positive synergies around revenue generation and growth. These are the building blocks, the foundation of our unitary structure, and we'll soon be rolling out a single go to market brand for the company. Next slide.
So it's been a year of unprecedented growth for us at S4. And as a result, I can now count myself as one of almost 4,400 colleagues in 31 markets around the world, and there's plenty more to come. With that, I hand things over to Wes in Amsterdam, who's going to give you an update on our content practice. Over to you, Wes.
Cool. Thanks, Scott, and hey, everyone. We're going to spend about ten minutes talking about content. We'll start with an introduction. When I think and talk about 2020, this was the year that we had to prove a point.
And we did so by growing and scaling our strategic role and remit with key clients, more whoppers for this managed to win new whoppers in highly competitive industry pitches and we also grew our team during very trying times. So as we wrap up 2020, a year that puts so much into perspective, it also brought into focus our strategy. We are here to win a decade and we do so by helping our clients win theirs. And I think that role and responsibility in our clients' success has also really been instrumental to our own growth and the growth of our team and talent. As Scott's earlier point, 2020 was the year that we doubled down in unitary, integrating our diverse expertise across content, data and media.
And we're doing that at a level that nobody else is willing or able to do. And the concept here is that we're better together and because of that, better than others. It truly is a unique positioning in our industry and sets us up to be a long term change agent. We left the mark in Q4. I think the market in general is hungry for consolidation.
We were able, on top of a very foundational data relationship with Mondelez to build in our content services. That model, that message is resonating. I think an important note here, consolidation isn't just an efficiency and effectiveness play. It's also an engine to innovate marketing media and technology spend for our clients. Then of course, the mind wonders to what is next.
We keep building out our content capabilities. Jan Fri just mentioned an amazing team and also integrating fully with our data and media teams. And because we're doing that, we're becoming a partner of record for brands and businesses that want to turn up seamlessly for their customers. If we go to the next slide, this is a talent driven business. So let's not forget the competitive advantage where many of our competitive cohorts had to ship talent.
We actually were able to point at a soaring headcount, of which we are very proud. If we go to the next slide, this is an interesting one. S4 Capital was named 02/20 as a holding company of the year. We are not a holding company, so Martin and myself had a very spirited conversation with the journalists around that yesterday. But I do think it's remarkable that we've been recognized in such a way.
It's even more remarkable if you look at the broad recognition because it's not just holding company. It's also innovation partner. It's also a very long list of visual crafts and creativity awards. Having all of that available in a single p and l to our clients is truly a unique offering, and it puts us on the front foot when it comes to exciting work. And with that being said, we're gonna tee up a small video that explains the work we're doing with Amazon for the Climate Pledge.
In the wake of a worsening climate crisis, the corporate world is called to action, asked to claim their responsibility collectively. Queue for Climate Pledge, an initiative cofounded by Global Optimism and Amazon for leading companies to work together in achieving the bold goal of net zero carbon by 02/1940, ten years ahead of the Paris Agreement.
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and applauded for their achievements. At its core, the Climate Pledge platform is a directory for change, a center of responsibility. It shows us the history we share and the future we choose. Sounds ambitious? Good.
That's the point.
Great. Thank you. More relevant information when we go through our CSR information later on in this deck. A small story about innovation. We're a future proof partner to our clients.
I mentioned Mondelez earlier. We're also transforming marketing production at scale and we're doing that in close collaboration with Epic, the owners of the Unreal Engine. That technology has disrupted the gaming industry. It's disrupting the film and production industry. We're on the front lines of helping it disrupt the marketing services industry and the marketing production landscape.
We're already doing that together for iconic brands like Oreo. So that is very exciting to see play out in real time. If we go to the next slide, I think worth, mentioning our expanding relationship with Google. I've seen us work in so many different ways where we've partnered with Google to apply immersive technologies in ways that help people make sense of their world, while also deeply embedding with their teams and making sure Google is able to adapt their market approach to ensure business continuity for their own clients. I think that combination has been really powerful and interesting to see play out and, again, speaks to our ability to offer a unitary and integrated team.
If we go to the next slide, Scott mentioned this earlier. A really interesting part of last year, of course, was that we ended up helping define to define, design, develop and deliver a completely new industry, virtual events. And we launched some of the world's biggest brands onto virtual stages, powered completely by our bespoke teams, tools and technology. We call this digital as a destination, and it actually delivers on what I believe the original intent of online marketing and messaging to be. It's personal.
It's tactile. It's experiential. It's emotive, and we're still fully on the hook for conversion and results. We call this virtualization, and it's not just about replacing an in person experience. Really, it's rebuilding it with digital channels and user behaviors at the core.
And, again, we have a short video that will tee up to show you what that looks like. Great. I think we'll talk more about our DE and I practice and promise later on. This to me is really a key shining and shedding light on female led filmmakers. That's been a huge part of our offering.
All of our hits of film are female across the globe. And this isn't just words when the industry's biggest film moment was there, the Super Bowl. Out of 60 spots, only three were directed by women and one of those spots was done by our team. So this is key to us. And to an extent, it's been disappointing to see how slowly the industry has been able to move the needle.
We are moving that needle, and that's something that we're proud of. If we go to the next slide, this is a very interesting space for us owning uncharted territory. We've been able to coin the phrase everywhere commerce, which is really an evolution of e commerce. It's not just about channel specific thinking. It really is elevating physical and mental availability across the digital customer decision journey.
This messaging has resonated with Google. It plays into our deep relationship with MercadoLibre and we've been making sure it is widely seen and talked about across the industry. Which brings me to the very last slide of the content practice update. What is next? We've talked about 2020 being the transformation of transformation, really a second reawakening of digital.
And to me, harking back to the original intent of MediaMonks, insight driven, tactile, meaningful experiences. We're excited to see that really be a huge part of our business this year and expect to be beyond. We're changing the work by changing who does the work. We have what we call our community commitment. The work we do is done by fair reflections of the community where our teams work and for the communities our clients want to sell into.
We keep inventing and reinventing the industry. We actually launched something that we call PR two point o, which is a completely digital native way to look at promoting and protecting brands and businesses in real time. And then, we didn't have the name in here yet, but the announcement of Jan pre this morning, super proud of that team joining. It truly is best in class digital creativity content and experience. And, we have let some of our shared clients know know we were on a call yesterday, and I'll paraphrase the client.
He said, I am, I feel bad for the networks, which I think shows that having this collection of talent really is quite unique. And with that, I'm gonna hand over to Chris.
Thanks, Wes. It's always hard to follow you in content presentations. They are so good. So thank you for consistently raising the bar for the lowly data and engineering teams. So the data and digital media practice of s four executed well in 2020 and navigated a year of growth, acceleration, and unexpected turbulence.
We saw media budgets experience a pullback in q two, which did impact certain sectors of our book of business, travel, retail, hospitality, etcetera. However, what we also saw was some of our digitally oriented brands actually increased investments in certain areas of media, data infrastructure and in housing throughout the year. And finally, in q four, we did see a strong return and, in some cases, an increase of overall media budgets coming back to bring us back to and beyond our pre COVID media volumes. So very encouraging to hear towards the end of the year that we saw that much recovery. Our global data practice only piloted in 2018, remember, flourished organically in 2020, benefiting from a number of positive industry trends and expansion of our capabilities inorganically into growth areas across analytics, data science, and measurement.
We've added a number of global clients to the data roster in the last year, and we've seen success in converting and expanding those major data clients into even larger media and content clients, some of which are becoming our largest whoppers. A key ingredient to the overall s four story is us being able to cross sell, and we're seeing data be a strong anchor for for that conversation with our with our clients. Linear consumption to digital experiences. Next slide. We've been anticipating and watching accelerating shifts of consumer behavior from the traditional consumption of linear media by the consumer across broadcast TV, print radio, and other legacy formats to a world of digitally connected, interactive experiences across very quickly changing formats and fragmented media partners.
The consequences of social distancing has significantly accelerated these trends, and that now creates a much larger market opportunity for s four across content, data, and media. For information on our most notable media work this year, I would invite all of you to learn a little bit more about some of the groundbreaking in housing work and transformations by referring you to our published Harvard Business Case Study, which analyzes the work that we've been doing with Sprint, T Mobile over the last year, as well as celebrating the AdXchanger Awards for our best in housing, both with Sprint and Bayer, two of our marquee clients serviced from our marketing transformations unit. Both clients expanded their relationships with us during 2020, and additional brands and lines of business, are now, using multiple business lines across s four. Mightyhive had a long successful history of building a services ecosystem around the platforms and the future of marketing, and we are already ready for the future that these consumer trends that I just described are bringing to the media industry. And now as a unified s four, we're able to unlock so much more.
And looking forward, and you'll, see with the the mergers that were just completed at the December in 2020, as part of our comprehensive media road map, you'll start to see that s four has begun invest investigate sorry. Excuse me. Investing in integrated media planning as well as media buying capabilities across paid, earned, owned, performance manage performance marketing channels, inclusive of search, social, SEO, ecommerce, and CTV. It's all of the boxes that Scott Spirit walked you through at the beginning of the presentation. We started that journey by merging multi award winning entrepreneurs from Decoded, Orca Pacific, and Metric Theory, each company bringing key capabilities for our quickly expanding media pillar.
Dedicated post merger integration teams were deployed immediately on close in each case, and client cross selling is well underway with synergies already being unlocked. Next slide. Similar to the media pillar, our data pillar is benefiting from some key industry trends. The privacy trends that I'm sure everybody's been reading about are putting pressure on brands to invest heavily in consented first party data collection, ownership, control, and activation by themselves, not via third parties, agencies, or other partners in the ecosystem. That also leads to significant investment into cloud infrastructure to manage the growing value that consumer data collection and activation brings to the enterprise.
With these trends, we recognize the need for a transformative analytics capability across Google and Adobe's main analytics platforms. And in less than two years, which we announced two years ago, we've moved to expand from just a small footprint in The United States in analytics capabilities to a global delivery engine for analytics deployments. In 2020, we rounded out our analytics mergers with Vigodot in Latin America, Lens ten in Asia Pacific, to join our already integrated mergers with ConversionWorks in EMEA and, an established analytics firm in Korea. In 2020, we officially launched a new industry category, an s four offering called the data partner of record or data AOR if you use legacy agency parlance. This category was created to meet the needs of the modern CMO that now must unlock data assets from across the enterprise, connect marketing data to the supply chain, organize consumer data using machine learning and predictive modeling, marketing automation tools, and then finally, activate that data directly into measurable dynamic working media plans.
We are the champion of a client's marketing and advertising data wherever it travels across the the customer journey. As well with predictions of the end of the cookie looming for years, we again were ahead of the game by joining our partners at BrightBlue. BrightBlue was an industry leading pioneer in the world of econometric modeling that when paired with our strong machine learning, business intelligence, visualization, and data science teams, unlock a powerful tool set for the modern digitally savvy CMO. I invite you to learn more about our groundbreaking work in data by referring to published success stories about our client Mondelez, which is available, in the public press. And next slide.
And actually, the next one, I'll be jumping into cookies as the last note here. Google's recent announcement that they are no longer supporting the third party cookie in their ecosystem as of 2022 is not a surprise to s four. We have been working closely with the FANGs on their strategic and tactical reactions to the following impactful pressure that we see in our industry. One, the advancement in the rollout and enforcement of GDPR and CCPA, as well as other privacy regulations around the globe. Two, potential government antitrust challenges for big tech companies.
Three, increasing consumer knowledge and sentiment changes around privacy topics in general. And finally, consumer behavior shifts to digital experiences. All of these shifts are significant and disruptive trends that we are well prepared to take advantage of. One of the defining features of s four Capital is that we are built on a privacy first foundation and a philosophy. If we've been, we've been building a technology augmented services company from the ground up focusing on first party data assets, consented data collection, and a privacy first world.
And we applaud the approach that Google has taken in privacy with these steps, and we are ready to service the brands that need to transform their marketing infrastructure to navigate a cookie less and privacy first world. And with that, I'm pleased to hand it over to Simona and Emma to present our efforts on environmental, social, and corporate governance. Thank you.
Thank you, Chris. Good morning, everybody. I'm really happy to tell you about the progress we made in 2020 on ESG. And our global ESG strategy is, as you can see here, divided into three strategic pillars: zero impact workspaces, sustainable production, diversity and inclusion, where Ema will tell you a lot about in this presentation. And in these three pillars, we focus on specific SDGs, which you can see on the next slide.
As you can see, we don't only focus on our own households, but also on the value chain we are in. Pillar one and two mainly have an environmental focus and pillar three has a social focus. In the value chain, we collaborate with our partners to leverage our impact. We want to be a catalyst for change. If you go to the next slide, you see our 2020 results.
And 2020 is the baseline year where we now have collected data for all Sfour companies. In 2019, we did this for media amongst companies only. So 2020, we made a big step forward. Regarding the CO2 emissions, we take our own emissions and emissions in the value chain. So it relates to Scope one, two and three.
You can see what the impact is on travel relating to our CO2 emissions, seeing the pandemic. We will take this into account in the future and act upon it in our travel policy. The projects for goods and the total hours worked on will be one of the focus areas for 2021 as we want to give back to our communities.
Also, I can tell you that in 2020, we focused on diversity in every aspect of our business. And a result that we can already highlight is a significant closing of the gap in the women to men ratio as we compare the numbers for 2019 and 2020. And in 2021, the focus on diversity will continue as strong. So we can go to the next slide.
Yes. And what you can see here, a few of the 41 for good projects where we worked on. To live moves, we provided digital marketing services. For Havaianas, we created and produced their All of is Welcome campaign for their pride collection. For Wild Aid, we made a sea turtle protection campaign and for 1,000,000 truths in The US, we delivered a content platform.
If we go to the next slide. We take an active look at the outside world and we really want to support external initiatives on ESG as much as we can. Therefore, we have signed the European Green Deal and, where Wesley showed the video about, we signed the Amazon Climate Pledge.
And besides all these environmental initiatives, we have already launched our S4 fellowship program, and we also support other programs like TechRounds in The Netherlands and others like Hag the Hood in The US or Code Like a Girl in Australia. All of these different organizations train IT professionals with a focus on women and cultural diversity. And now next slide.
Yes. As mentioned earlier, we want to be a catalyst for change, and we want to be one of the leaders in sustainability. That is why we want to become a B Corp. By the end of year 2021, we will also join EcoVadis. We want to make transparent to the chain how we perform on ESG.
And last but not least, on our second pillar, we are working towards a sustainable production and procurement manifesto to increase the sustainable performance together with our clients. If we go to the next slide, here you can see our long term ambitions, like the carbon neutral by 2024 and the ambition to join the 1% pledge. And there's much more to come. We go to the next slide.
Yes, and on diversity, we have systematized our diversity goals, and they inform our recruitment practices, any new initiatives like the women leadership program that's starting right now, expanding our ERGs in all the D and I focused client work. In addition, we will start measuring pay to ensure equal pay for equal value, all of it as we build a solid training foundation, training everybody in a code of conduct that has already launched to our population. We will also, at the same time, continue to participate in social forums that promote diversity in all communities where we work. The full CSR report will be released tomorrow. And that concludes our part.
Back to Scott, I think.
Yes, Simona, Emma and Scott, and Chris and Peter and Wes. So just to summarize where we are on the last slide summary and outlook, we we've showed in 2020 very strong gross profit, net revenue, and bottom line growth around 20% in each case or organic. A strong we've had strong cash flow. Cash conversion has been almost a 100% from EBITDA, and balance sheet has been strengthened by the fundraising exercise by the strong liquidity in the business. And we're targeting, as you know, yet again, this is the third three year plan that we've developed, and this one is is the same as the other two in that we're we're aiming to double the size of the company, over the period '21 to '23.
And that mathematically means a 24% compound growth rate of top net revenue, gross profit, and bottom lines. And as you've seen, we had a good start to 2021 with like for like January gross profit well ahead of budget, which, as you know, was around 25% organic growth. We've got a healthy merger pipeline across every every one of our two practices, whether it be data and analytics and digital media or content, and you've seen another another combination today with Jan three. And we've achieved brand awareness and brand trial in 02/2019, and our objective in 2020 was conversion at scale, which we've started to do. And we're starting to be to see from the statistics that you saw from Scott, around client concentration and development that that conversion scale is starting to develop considerable momentum.
We've also shown very strong progress against our ESG objectives, as Ima and Simona have outlined. And we're we're very proud of the the two programs we've initiated, the the fellows program, aimed at historically black universities and high schools, and the s four women leadership program, which has started at University College Berkeley with fifty fifty of our leading women, and will be developed across, the company, in due course. And and finally, the objectives for 2021 are to bed down the whoppers, the five whoppers that we've identified and developed, developed another, 10 actually that, in the whopper pipeline to take a further further to a total of 15, with the we're aiming at. So that's the first objective. The second is to roll out our unitary brand, which has already started to be rolled out in a soft launch.
And finally, to broaden and deepen our service capabilities through further mergers. So more to come on that front too. So with that, we'll open up to questions.
Thank you.
We will now take our first question from Matthew Walker from Credit Suisse.
The first one was, I think way back when you launched, you were indicating that you could provide content services because you were doing it in a very fast but effective manner. You were indicating, in some cases, charging sort of 50% less compared to traditional agencies. How do you assess the to the extent to which the traditional agencies have actually caught up and are now able to provide the same kind of, cheapness but effectiveness in terms of creative services? That's the first question. Second question is how much of your business now comes from what you would consider to be sort of ecommerce slash transformation activity?
I I I saw some press around talking about a combination with Globant. So could you just explain, do you need to add more capabilities in that area? Are you gonna reverse yourself into some sort of ecommerce slash transformation business? And then finally, I think before you were looking at potentially having around 100,000,000 of net cash at the end of the year, obviously, it came in around 50. I think on average in in the third quarter, it was averaging around $87,000,000 Does this mean you will need to raise more equity to make more acquisitions?
Thanks a lot.
Thank Matthew. I mean, on the the first one, it's very difficult to assess whether, you know, the holding companies or other agencies have caught up. When you look at the results, I mean, the simple fact is in 02/2020, we went forward, and the holding companies went backwards. I mean, if I looking at, you know, when we were writing the statement, I was looking back at where we were this time last year. We were about 2,500 people.
With Jan three, we're at 4,600. And I would say, you know, at least half of the growth was organic growth. So we've onboarded about well over a thousand twelve fifty people during the pandemic, which hasn't been easy to do, and another one and a half one and a quarter 1,250 have come through through deals. And if you look at it at face value, it would it would appear that the answer to your first question is that they haven't. You referred to 5050% cheaper.
I don't I don't know where that statistic came from. I think we are more agile. You know, we just recently had a review with one of our largest health care clients and in the the global. And in the evaluation, we came out top of, I think there were four agencies, networks involved. We came out top.
And when you looked at that evaluation, it was very much around the agility that we showed. And so I think the answer is on the basis of the evidence that we can see, both external and internal, there is no closing of that gap that you're referring to. And I think it's very difficult, you know, can't emphasize enough, and Scott and I know this full well, and Michelle Derreich, who's not on this call, know this full well from our experience at WPP. When you reinforce the verticals, you create more fragmentation. I mean, there's a lot of talk about simplification, and on a piece of paper, it might appear that it's simplified, but actually, in reality, it's complicated.
And turning up to presentations with the same T shirt is not the same as providing a seamless unitary brand. And I have to say it is difficult, it's not easy. Wes can attest to that as he's led our efforts in that area. And Chris has been doing a lot of the integration, and he can attest to it. It's not a simple exercise.
You have to work at it and develop it. On the e commerce and transformation, mean, Scott, do you want to talk a little bit about what proportion of our business is e commerce and transformation, and I'll chip in on the Globe Amp thing, as that's my dream.
You're a fantasy M and A ranking, yeah. So on e commerce, it's not really, we don't look at e commerce as a separate business unit, it pretty much touches everything we do. So as you know, our services are around data, around content and around digital media. And across all three of those, it's incredibly important. So we have e commerce clients.
We do a lot of work for Amazon, for MercadoLibre and many others. If you look at a business like Metric Theory, which is a fairly recent deal we did, a huge proportion of their client base is direct to consumer brands who are very focused on selling online. And so a lot of the performance media that we buy is on behalf of e commerce brands. We do systems integration around platforms like Shopify or Magento from Adobe or Salesforce commerce, and a lot of that sits in our content business. And then we do a lot of analytics and measurement for for ecommerce companies as well.
So it you know, it's not something we see as a separate service offering. It really goes across all of our services. And likewise, digital transformation is a very broad everybody has a different definition. I would say a 100% of what we do falls into digital transformation. There are things in digital transformation that we that we don't do, that companies maybe like Globant and others do.
But everything we do, we're a 100% focused on digital, and it would all fall under the the broad definition of of digital transformation, I think.
Yeah. On Globe Ant thing, Matthew, I mean, I love Globe Ant. I'm an unashamed fan. Our 20 squared objective comes from a direct copy of their some of their objectives. They have different objectives, but I've taken the the format.
Just to remind you that WPP have dropped something like a billion dollars of of return. Actually, it is a billion dollars of return by selling the Globant stock at 52, and it now trades at around 200. And, you know, when Scott and I was there, it wasn't easy in terms of working together with Globant, given the structure, but they do approach the business of digital transformation or our industry from a different angle. They approach it from a CIO, CTO, Chief Technology Officer angle, whereas we tend to approach it from a marketing and sales area. And I think there is, you know, undisputable logic to a combination of that nature, and it doesn't have to be Globant, it could be others as well.
And I the other thing I think to say is that we and some of that team is on this call we have a very strong management team, a team which, you know, I've been in the industry for something like forty, forty five years, and I haven't seen as good a stronger team. Maybe in the early days of Sarches, the original Sarches, the team was as strong, but this is a really strong and it has they may not believe it, but it has capacity to do much more in my view, and we're very we're very ambitious. So it's very much in that vein that I made that comment and and also to to signal to you that there are many ways of skinning the cat, that you don't think that we necessarily will go in the direction in the future that we've gone in the past. So that's at the back of that. On net cash, I'm deeply offended by your comment, and I know that Peter will be deeply offended by your comment as well because the cash generation has been extremely strong.
And Peter, do you want to talk a little bit about cash and cash generation and combination payments as to what leads us to what we thought, unlike you Matthew, was a superior cash position, not an inferior one?
I can hardly speak so much better than I am, so but I will try to explain now. But Matthew, to your to your point, I think you probably are referring to where we were in q three trading or or earlier. That's where we were heading above the 100,000,000, again, also as a result of strong cash flow and the combination of the 130,000,000. But
I
think if you look in the sort of average where most analysts were, and I don't know where you were by heart, but I think we were sort of aiming for $7,080,000,000 in net cash at year end. But one thing, which that didn't include at that moment in time, was the merger payments we did on decoded and metric theory on the on literally at 08:00 in the evening at New Year's Eve. So that was, I wouldn't say, a last minute, but probably in anticipating in anticipation of that, we didn't include that or it was not modeled in, like Sir Martin said, a very strong cash flow, I believe, if you have the ability to deliver 99% out of your EBITDA in operational cash flow. But I'll leave that for you to decide if that's strong or not. But I think that that's basically the coming back to the point that to your expectation that that metric and decoded deal were not included in that projection.
Just on your question, your sub question about the future. Mean, we have, as you see, net cash our net cash is running between on a monthly basis now between 40,000,000 and 60,000,000 That's the sort of rough range during the month. Obviously, that we've just completed Jan three, which will take the cash upfront on Jan three. We'll take something out of that. But I would just draw your attention to the fact that we've said historically that we would leverage to 1.5 to two times EBITDA, probably at the south end of that, at the 1.5 end, but we think we still have considerable capacity given the structure that we continue to employ of half debt sorry, half cash, half equity.
Given that structure, we still have significant capacity from internal sources to continue to expand through M and A. No doubt, we'll get questions and Scott can expand on what we're seeing in the M and A market in due course. Is that all right, Matthew?
Right. Thank you. Yeah. No. Obviously, my mom didn't anticipate what you'd get up to at 08:00 on, you know, the December 30, so apologies for that.
But thanks for the thank you for the answers.
All right. Thank you. Next?
Your next question is from Patrick Wellington from Morgan Stanley. Please go
Yeah. Good morning, everybody. A couple of questions. Martin, you said that, we've got a good start to the year in January ahead of, ahead of the 25%, budget. But we're at the March, so perhaps you could give us an idea of how February might look.
You could even give us an idea of how March might look, given that March has got a much easier comparative in gross profit growth. So that's my first question, the trend early into 2021. And then Peter, margins, EBITDA margins probably stronger than expected, 21%. You normally have a range of 20% to 22%. Obviously, the nature of the group has changed through acquisition over the last twelve months.
So can you give us a sort of feel for direction of EBITDA margins in 2021? And then a little bit of talk about clients. Again, looking forward at gross profit growth, to what extent of BMW and Mondelez contributed in January and February, and and when does the revenue from those begin to build up? And related to that, I think you've talked in the past about a v shaped recovery in your tech customers generically in 02/2021? Obviously, they're 55% of the total, so what they're up to is quite important.
So how's how's the environment in those tech based customers spending trends looking? Thank you.
Whilst I ponder what yes, Scott is very keen to get us off the month by month treadmill that we got onto as a result of pandemic, but I will come back to You're going to
just do it anyway, right?
Yeah. Yeah. It doesn't matter what we say. Patrick keeps on, you know, bulldozing ahead. So I'll come back to you on the on the the January, February, March thing.
Peter, do you want to talk about EBITDA margins? And then, Scott, maybe or maybe, Wes, you can talk a little bit about what you see on BMW and Mondelez in terms of revving up and what's happened so far in January and February, and I'll come back on V shaped tech as well. So Peter, margins.
Yes. So on margins to your question, Patrick, in 2020, we delivered right in the middle of the 20% to 22% EBITDA margin after central cost because we were at 21.1% to be very precise. So that's beautifully in the middle. And last year, in 2019, we were at 19.5%. And that's, of course, it's all a combination of the mix of data and digital media, which you saw in also in the pro form a numbers, which has a slightly higher EBITDA margin versus content, although both are very strong.
And going forward, so that 2021 was 2020. Going forward, it's a little bit early to say at this very moment in time where we are where we're heading to because typically, as I also mentioned, and I know it's all defense lines, but typically in the first half year, we encounter some lower as a result of seasonality or we're like we are doing also in December or in November and December of this year, gearing up already in hiring additional capacity people in order for the work from BMW MINI and Monoless to come in. So it's always a little bit hard how it exactly is going to evolve. But I think, let's say, going forward, that still that 20 to 22% range is a relevant range, and there will be some more economies of scale because we're growing. We're adding new combinations.
We're growing organically. So it it's likely going to, let's say, grow a little bit, but it's too early to call at this very moment in time to give precise indication on on where we will end up or where we're growing to.
Wes, do you wanna talk a little bit about the revving up of BMW and Mondelez? In January and February, We started to rev up. We've been hiring, but just just talk a little bit about where how you see the pattern developing.
Yeah. I I think we've we've been able to embed both clients quickly. It sort of shows the operational acumen, I think, of the team and our ability to sort of organize and operate around clients because we don't have the P and L attribution issues and fights. Most of the embedding has happened. I think March is where we we see the the real revving up of the of the revenue.
January, February, bit of December, a lot of it was setting up, making sure structures were in place. First pieces of work that have been really well received, building the relationships with the client teams. And March feels like the first month that both are I was gonna say revving up. That's more of a BMW con than a Mondelez one. And everything is looking good.
I think that that was interesting. Right? It's two big wins, whoppers from scratch, at least at the BMW level. And to have that embedded at that level of speed, think we're very happy to see.
Yeah. Just on I mean, maybe, Chris, on V shaped tech, I mean, when we look at the platforms, I mean, Google, Facebook, and Amazon, and Snap had blowout fourth quarters. I mean, my view is that we've seen very V shaped activity around tech. I mean, you just do want to comment on what you see from the tech clients?
I think that's exactly correct. The consumer behavior over the last year has predominantly been moving into the realm of where most of our, not only clients, but largest partners sit. So for example, Google is not only a huge client of ours, but we also partner with them on delivering their technology platforms and installing them into the joint client bases. And we've seen significant momentum on that front, without getting into the specifics on who and where. But the the trend is certainly that our technology book, which in earlier in the presentation you saw was about 50%, are investing not only in data infrastructure, but also returning to working media and digital, and if not, down over the year.
So it is a positive trend.
Yes. And then on your monthly question, which we want to get off, I think the best way of answering, it continues to be strong in February, and you heard from Wes that we think that BMW MINI and Mondelez are cranking up, and we'll see further impact of that in March and April. As you know, April was our weakest month, so you will remind us no doubt, Patrick, that we we have weaker comparatives starting in in Q two. But I'd I'd also just mention, we have signaled this before that, you know, we've told the market we're budgeting at '25, and we've indicated to you our internal budgets are stronger. So I would just say that we're sort of we feel good about 2021 and indeed 2022.
Just to underline the point, GDP growth is forecast by your bank and others on this call at five to six this year and four to five next year. I can't remember, well I can, I think it's 1980s, have to go back to before you can find two years of GDP growth at that level? One point I want to make, Scott mentioned the word royalty. Going back to the early WPP days or indeed Saatchi days, Warren Buffett used to argue that buying IPG or Ogilvy in those days was a royalty on the growth of globalization. I think you have to look at us as being a royalty on the growth of digital transformation and disruption, certainly on the marketing side of the equation.
So we have a secular tailwind, and I think cyclically it's stimulated by strong GDP growth. There's a strong correlation between digital spending and GDP too, so I think we have a good tailwind. I think we're fortunate to be in the sweet spot and to represent that royalty. Does that count?
Martin, at one point in your presentation, think that captured it. You want to talk about it generically? At one point in your presentation, you said conversion at scale, you're gaining considerable momentum. I mean, just taking a step back. I mean, what do you mean by that?
You're getting a seat to the, sort of high table these days? You're people are being able to notice you more. You're What's the implication of that?
Well, I think it's an interesting question. Wes and Peter and Scott and Chris and I and thankfully, Emma and Simona don't have to get up in the middle of the night for it, but every day, but we we meet every day for a few minutes to talk about people, our clients, and our finances. I mean, that was driven by the pandemic, but we've continued to do it on most days. And it's noticeable, you know, I've seen in the last few months that we are getting increasing awareness and trial and traction. I mean, Wes and I have been on calls with Victor and Chris and Pete in the last couple of weeks with major clients who, you know, it's a difficult thing to explain, but I think there's almost like a marketing VIX factor.
I mean, level of uncertainty in the market, principally I think because of the announcements from Google or the blogs from Google and the announcements from Apple, it's created a tremendous amount of uncertainty and at some levels concern because historically clients were looking at third party data or third party cookies as being the way that they would move forward with first party data, you know, supplementing the first party data. Clearly, there's controversy. Those people who own third party data, and you know them well, are obviously extremely sensitive to any suggestion that they've been marginalized, particularly when the ad holding companies have spent large amounts of money on acquiring 4,000,000,000, 2,000,000,000, whatever it is, on acquiring third party data sets. But I think the level of uncertainty and risk has been raised to a volatility, if you like, has been raised to a very high degree, and I think clients are really looking they're looking for guidance. I mean, Chris, you can talk a little bit what you see on the data and analytics front, for example.
Maybe you say a little bit about that, because I think that's the lead in for us in many situations.
I can. I think, Patrick, your question was about the momentum that we're seeing. Two, three years ago, we would get a phone call from Google, they would say, we need help, with a client that's too small for us. Now we get a call from Google when they say that they need to implement active case studies in the world of cohorting, which is the alternative that Google's presenting to cookie identification and targeting, where they need us to bring our clients to the table and push the cohorting solutions into the active media decisioning of clients. And so we are becoming much more of the trusted thought leaders, and the capable use case execution teams, multi award winning in housings where we transform entire marketing departments of our customers and then teach them how to be more effective marketers, and then we future proof those solutions.
Those are the type of stories that get CMOs to call other CMOs and say, you should probably talk to us for about what you are about to take on in your new role, which we've seen multiple times now, the CMO referral effect. So I think that's the type of momentum. Sir Martin called it the VIX. I think you you were talking about the recognition and and brand reputation. It is starting to form.
And I think that these first few whoppers this year, that are getting global coverage, between BMW and Mondelez, these are not just standard agency of record, relationships. These are transformative building infrastructure for the next 10 CMOs, not just the the next ten months type of conversations.
We will take our Emily Johnson from Barclays. Thank you. Good morning. So my first question is on Slide 22, you're showing the M and A contribution of the companies that you bought in 2020 for gross profit and EBITDA on a pro form a basis. And could we get the m and a contribution to revenues?
I think it was 18,000,000 in 2019.
Yep.
I'll go do you want me to go ahead with all questions?
Yes, go ahead. The question Second on the
question. The
question on Slide 22 is what?
Sorry. Could we get the M and A contribution to revenue? You've given it for gross profit and EBITDA.
Yes. I think we can dig that out for you. I think we can give you the number. Peter will give you the number. He can't lay his hands on it now, we'll do that subsequent.
That's one. Go ahead.
Super. Next question then was just following up on Matt's earlier question. Could you talk a bit about your strategic plans for Sfour Capital? I think in the Reuters article that he was referring to, you spoke about Globant being a suitable company to inject s four Capital into. Are you suggesting that you would buy out a larger company like Globant or that you would be willing to sell s four Capital?
And
then
the third question, I'll I'll ask Scott the question that you alluded to earlier. Can you comment on what sort of pricing you're seeing for m and a at the moment? Are your one to two times revenues five to 10 times EBITDA target ranges being squeezed by increased competition? Or are you still comfortable with those targets?
Do you want to talk about acquisition pricing, Scott?
Yes, sure. So on your first question, just quickly, just to be clear what those numbers actually are. So those are the gross profit and EBITDA forecasts from the investment memorandum during the deal process that those companies gave. So they're not actual figures of what they contributed. And I think once we report in our annual report, you'll see more detail on that.
We probably can find a revenue number, but that's not a number that we focus on. I think we focus on gross profit and EBITDA, but we can probably dig that out. And you can see from those numbers that certainly the valuations in 2020 were very much in line with what we said from an EBITDA multiple perspective. In terms of what we're seeing in the market right now, mean, there's plenty of activity. I think we saw an uptick of activity in Q4, and that's continued into Q1 of this year.
There's plenty of deals in our pipeline, lots of companies we're talking to and some very interesting ones. I think the one sort of thing I would pull out that we have seen from a competitive point that's affecting pricing is that we still don't really see the holding companies. They're not very acquisitive. I guess they're more internally focused on trying to work out what they own and merge that together than going out and buying things. What we're actually seeing is significant interest from private equity.
So that's direct private equity looking to invest into some of these agencies or it's private equity funded agencies who are looking to execute roll up strategies. So that's probably our primary competition. We've certainly seen some outlying deals that have been very aggressive on the multiples. I think overall, there's clearly a bit of inflation that's probably taking most of the deals we're looking at up into the top end of our valuation territory and maybe slightly beyond, but nothing too significant or too scary, I think, at this point.
Okay. On the strategy side, I mean, we remain the critical thing in relation to any discussion, whether it was Globant or anything else, There are four critical factors for us. One is digital, and I have to say, know, it goes back to a question of Patrick Arles. We've had an instance this week where client has split their budget. It's a one country well, actually, it's one country going into Europe as a whole, has split their budget between traditional and digital, and we've been or we think we will be awarded the digital piece of that.
So what we're starting to see is clients being prepared, I think, to split their budget with digital becoming 50% of media spend, forecast to go to 68% or 70% by 2024, digital is getting the lion's share, and I think clients are starting as they take back control of their marketing function, they're willing to split the budget. But in any event, digital remains our focus, that's number one, because that's what the growth is. Number two, we have a data driven model, which has become more important as a result of Google and Apple's decisions on privacy, etcetera, to drive the creation of the creation, production and distribution of content through digital media in an iterative model, so that's become more important. Thirdly, faster, better, cheaper, whether it's a good mantra or speed, quality, value is better, either will do. That remains the the banner, the motto for the company, and unitary structure is critical.
So coming back to the the comment in the Reuters article, I was saying, and this is a signal to you, don't think of us that we that we necessarily would end we'll end up doing exactly in the future of what we've done before. As I said before, there are many ways of skinning a cat, and you can we one of the things you could do is you could look at a bigger company, given the management capacity that I think we have in this in the people represented on this call and beyond, and I think they're capable of really big things, and if you could find a company like Globant that you could inject yourself in, you use the word sell, You know, we would be buying in, to use our vocabulary, because we don't look for people who want to sell, we look for people who want to buy in. We would be buying in to a company that had two elements to it, one that attacked digital transformation and disruption through the marketing and sales functions, and one that did it through the IT function. I mean, companies at the moment have three functions involved in digital transformation: sales, marketing, and IT.
We happen to do sales and marketing. That's the way we come at it. I think we could come at it in a different way with with other people. So, you know, we would roll our equity, if you like, just like we've done it with other people. We would roll our equity into a to a bigger operation.
It would all depend on the social issues as well as who who does what to whom as we put it occasionally. So that that was the the the method there. So that's on the strategy and and and structure. But, yeah, I just urge you not to think that, you know, we are gonna continually looking at adding companies like a Jam three, to our content to our content practice. Just we may be unconventional.
Very clear. Thank you.
Okay.
We
will now take our next question from Steve Lecce from Numis. Please go ahead.
Morning, everybody. Can you hear me okay, first of all?
Yes, fine.
Yes, sorry. Just digging into DTM a bit. Peter, I just wanted to double check what you said on like for like in the fourth quarter. I think you said DDM is up 35% like for like for GP in the fourth quarter. I just wanted to check that.
And my figure was actually close to 6% in the third quarter, so massive increase there. I just wonder if you can talk through that. And allied to that, it looks like you had a five percentage point increase in margin in the second half in DDM specifically. I just really wanted you to sort of talk through the specific trends in the fourth quarter and then whether we should extrapolate that through to next year completely, or is there some one off? And I guess, really, my sort of final question on on the same topic would be, if you're a betting man, do do you think that DBM is now you know, given the tailwinds that it's gotten all of the things that you said today, do you think DBM's got a fighting chance of growing faster in like for like terms of content this year even with the new wins that are going into content?
What a smile to Chris' face. Peter, do you want to confirm
the stats? So indeed, Steve, what I said was that you got it rightfully. So content grew with 24% and DDM with 35% in the fourth quarter, delivering the 27% on a combined business. And I think to your question, and I think Chris mentioned it earlier when he was talking about the DDM practice that, especially media spend and then even, I would say, even more particularly in The United States, really got back to levels, and Chris can better assess it if it's all pre pre pandemic levels. But we saw, especially in the second quarter, third quarter, especially U.
S. Media was at lower levels and that got back what we in a way expected that it would go back in Q4. And in a way, maybe it got even better or at a higher level back than we would expect it or what we expected in Q3. But that was basically the main result of the fact that DDM contributed so much, let's say, like for like growth in the fourth quarter.
Chris, do you want to comment on DDM and whether you're going to beat the pants off Wes?
We've we've talked about that internally, about the right language to use around percentage of the business between DBM and content. My goal, of course, is to I I think it was we're currently 25 to 30%, today of gross profit, and I want to be 50% within the next eighteen to twenty four months. That's an internal goal. That is not something that's public, I guess. I'm working on it.
But the, the intent is not to have content shrink. It is to have us, organically and inorganically grow to balance out what the industry, and what our clients should be spending across our book and portfolio in the long run. And, I would say that Peter's analysis is absolutely on the money. We had, whether you call it the v shape or the reverse square root, if I was to bring that back into the conversation, that is exactly what happened throughout the year, for for our book of business and what we were looking at in digital media and data. We saw a strong rebound in media budgets returning from, brands that felt comfortable in weathering the storm.
We likely also had a lot of budget burn through the end of the year on the media side where there was additional dollars not spent in budget, and they tried to use it, before the end of the year. So I think we we got some uplift there as well. What I can say is that sectors like travel have not quite returned yet. So there are parts of our book where there is still upward momentum for returning investment that we would expect in '21 as vaccinations take hold and travel begins to open up. So I think we still have a little bit more to gain back from our pre COVID numbers in '21.
Yeah. And I'd just add, Steve. I mean, when you think about it and you look at the platform numbers, you know, and you include the Trade Desk, you know, I mentioned the numbers before, 21 for Google in Q4, like for like growth ad revenues, 31 for Facebook, 41 for Amazon on their advertising, which is running at $5,000,000,000 a quarter, so $20,000,000,000 a year. You had Snap at 61 percent, maybe benefiting from some switches from from other platforms. You had Trade Desk at 48%, I think, x political, 40%, 41%.
Sorry, 48 with political, 41% x. So I I don't think it comes as a surprise really that we've seen a a lift in digital because if you look at the companies that we either work with or come into contact with, Q4 was strong, and I think well, you'll see as we go through this year how the platforms perform. Does that does that answer your question?
Yep. I'll I'll take that. Chris, I'll take that as a yes then.
I'll be more brief next time. Thank you.
Thanks.
Okay. All right. Any more? As
there are no further questions in the queue, I would like to turn
the call back to Sir Martin Sorrell for any additional or closing remarks.
No. That that's it. Thank you, operator. Thank you, particularly Simona and Imo for for getting up in in the middle of particularly Imo getting up in the middle of the night, and Chris, where he does it every day, so I don't I don't spend that much sympathy to him. But, anyway, thank you, Wes.
Thank you, Pete. Thank you, Scott. Thanks, Chris. And thank you all for joining us, and, we we look forward to any questions, Pete. We're all we're all here.
Peter and Scott and myself willing to take any further questions. Thank you very much. Thank you, everybody, and thank you to the for the crew here in Scorp Shoreditch. Thank you.