Welcome, everybody. I'm joined by my my colleagues, Scott Scott Spirit in Singapore, Peter Rademaker in Amsterdam with, Victor Knapp in Amsterdam, and Peter Kim Porchak in Scottsdale, Arizona. So some god awful time in the morning. So thanks for getting up, early in the morning, Pete. So this is our q three trading update.
Peter will take you through section one on the trading update, then, Scott will go through the market as as we see it, and then Victor will chime in on the content practice, and then Pete on data and digital media practice. And back to Scott for clients and mergers, and then I'll come back with a brief summary. So over to you, Peter.
Thank you, Mr. Martin, and good morning, ladies and gentlemen, and thank you for joining us in our third quarter trading update. The group continued to progress with a very strong third quarter despite the impact of COVID and is now more in line with its targets of doubling organically in size in three years by 2021. And basically, that shows, if you look at our Q3 reported revenue, at EUR 86,400,000.0, which is 53% more than last year on a reported basis. And our gross profit Q3 was 75,300,000.0, which is 79% up compared to our reported number in the third quarter in twenty nineteen.
More importantly, on a like for like basis, revenue grew with 13%. And our Q3 gross profit, our most important measure as you know, grew with 23%. And again, like we have seen in the first half year that our gross profit grew significantly stronger than our revenue due to a change of mix in our projects that we deliver to our clients. All regions showed a very strong growth and I'll come back to that in a minute. And our cash flow remains very strong with net cash balances averaging CHF 87,000,000 in Q3 compared to approximately CHF 13,000,000 in the first half.
And that, of course, includes the placing share placing of net CHF 113,000,000, which we did mid July, and that takes into consideration the merger payments of around 19,000,000, which we did in the third quarter of this year. And for 2020, we remain with our earlier expectations and now more substantiated by the strong Q3 performance that it will be sector leading double digits growth on a like for like basis for revenue and gross profit with reasonably strong EBITDA margins. So if I go to the next slide, there you have some of the numbers that I will elaborate on. So content, from a revenue point of view, our content practice delivered 69,300,000.0 of revenue, which is 69% up compared to last year. It's 15% up on a like for like basis.
And year to date, our revenue was 181, which is 74,000,000 percent up, and on a like for like basis, 10% Our data digital media practice grew with 10% on a reported basis to 17,000,000, 17.1, which was 7% up on a like for like. And year to date, it was 46,700,000.0, which was 15% up reported and 7% up on a like for like, delivering the 53% up for the for the full quarter to 86.4 and 227,700,000.0, which was 58% of reported and 9% on a like for like basis for the full quarter for both practices. Gross profit, like I just indicated, grew faster. On a reported basis, content grew to 58,400,000, which was 119% up compared to last year reported and 28% up on a like for like basis. Year to date, 120 152,700,000.0, 113% up and 19% up on a like for like basis.
And our data and digital media practice grew with 9% to 16,900,000.0 sterling, which was 6% up like for like. And on a year to date number, it was 46,500,000.0, which was 15% up and 7% up on a on a like for like basis in year to date. And then if you look at our next slide where you see our geographies, like I just indicated, very strong growth. Americas grew in third quarter with 93% to 55,100,000, and our EMEA activities grew with to 12 or or almost 30,000,000 with 34% up on a reported basis, and Asia Pacific grew with 83% to 7,200,000. So you see that The Americas still very strong in our total performance with approximately 73% contribution in the third quarter, EMEA with 17% out of the total, and Asia Pacific with a 10% contribution out of the total of €75,300,000 gross profit for the quarter.
And if we go to the next slide, you can see that we started the year, as we indicated also in our half year numbers, with a 30 3% up in line basically with our budgets that we prepared at the end of twenty nineteen. Where, of course, at that moment in time, we didn't factor in any COVID because it was nonexisting at that moment. So third we started with thirty three percent in in January. And then as as in February, COVID hit already in APAC. We saw a decrease in the in in the growth to twenty one percent, and that bottomed at still at a growth level in April at three percent.
And ever since then, we saw stronger growth. And and in in in the half year,
we already showed to you our July expect or July numbers at eighteen percent
and a sequential improvement to August with 24% and in September with a 25% growth delivering that almost 23% growth on a gross profit basis like for like in the third quarter. So as a summary, a very strong growth in the third quarter with very strong liquidity and basically well on track to reach our expectations for for this year. So that was my short summary of our trading. Over to you, Scott.
Great. Thanks, Peter. Welcome, everyone. Good morning. So I have a couple of slides here just on some of the trends we're seeing in the market, specifically with regard to digital.
So the first one here illustrates advertising spend as a percentage of GDP, which is something that's remained remarkably stable at around 0.7% globally in the past decade or so. But when you split out the spend as digital and analog, then you can
clearly
see the different directionality of those two sectors with it being much more correlated to digital spend, and you can see analog in decline. The next slide shows the results and the projections for some of the leading platforms. So Alphabet, Facebook, Snap and Twitter, and these are charts from MoffettNathanson in The U. And as you can see, they all suffered significant COVID related declines in Q2, but they've also all staged remarkable V shaped recoveries to their fortunes. And given that these are our clients and our partners, then it's not surprising our own top line trends have delivered a similar shaped chart as Peter showed you.
Next slide. This all feeds through to the strength and the dominance that online advertising has continued to show. And again, this is a chart from MoffettNathanson showing their projections that by 2024, digital advertising, which is already the dominant sector, will have a share of almost 70%, and with continued steep declines in all traditional media. Now as you know, we at Sfour are 100% focused on digital and that's not just because of the steep growth perspective, but also the scale of that market. And so if we could go to the next slide, this last slide in this section gives us some perspectives on our total addressable market.
And that's a question that I know some of the investors have asked us recently and some of the analysts. The first chart on the top left there is the Zenith media projections for media spend. So it's similar to that MoffettNathanson chart we just saw, but it's in billions of dollars rather than percentage. And it also illustrates that digital, again, is the dominant sector, so it's over 50% of spend for the first time, and continues to show significant growth in the years to come. Actually, their projections were done fairly early on in the COVID crisis.
Another analysts have come out since then with even more aggressive projections showing growth this year too, so not even the dip that Zenith projects. If you move across, you can see the market sizes for media spend, which are an obvious starting point for calculating our addressable market, given the market we're in, but it's far from our entire market. So you can see the total media spend, the digital media spend, total marketing spend. But if you take trade marketing, for example, this is a $500,000,000,000 plus market, which traditionally has been direct transactions between brands and retailers in exchange for shelf space or promotions. Now this is rapidly shifting to digital spend, so you're seeing marketplaces like Amazon and Alibaba or Instacart and even Walmart and Target in The US making huge inroads into this, spend, and it's spend that is is now flowing, through agencies and and something we're seeing a lot of, particularly on the commerce side.
Underneath that, you can see Adobe and Salesforce. So they're the leading marketing technology firms, billions of dollars of license sales annually. And as you know, our strategy at s four is to be a key service partner for firms like them. And so I've just taken two there. There are many others.
And the service revenues are widely estimated to be a multiple of their license fees. So again, this is another multibillion dollar market for us. Table on the bottom left is Gartner's view on the scale of the cloud computing market. Now obviously, a large chunk of these, dollar revenues go to the tech players, so that's Google Cloud, AWS from Amazon, Microsoft Azure, etcetera, etcetera. But again, there's significant service revenues here for our data practice around data engineering, systems integration, cloud migrations, analytics, visualization, etcetera.
Now this is not an exhaustive analysis of all the components that make up our addressable market, but hopefully illustrates that it is a multi, multi billion dollar opportunity and all parts of it are in serious growth mode. Now that final chart on the bottom right, that shows the revenues of the top 25 advertising groups according to Ad Age, including all the holding companies, the digital parts of the consulting companies, so Accenture Interactive, Deloitte Digital, etcetera, and many of the large independents. And this adds up to $120,000,000,000 of revenue. Now that's an area we're determined to disrupt and take revenue from and win far more than our fair share of. So as you can see, there's plenty of scope for us, and it's going to be a long time before we worry about hitting the ceiling on our addressable market.
Now with that, I'll hand over to Vic.
Hello, everyone, and thank you, Peter, Scott for explaining our last quarter's numbers in detail. And as you can imagine, looking at the numbers, was a very interesting and positive couple of months. The growth at the content side of the business returned after the COVID dip and the majority of it comes from The U. S. And APAC.
And I'm super happy to announce and it's a bit of a spoiler alert for the rest of the presentation, but we see a bright future for the European growth as well with the recent BMW MINI pitch win. So if we go to the next page, I will explain a little bit more what happened this year. So to summarize 2020 in one sentence and with a lack of a better word, let's call it fascinating. We had a very promising and positive start of our business in January and February, then COVID hit and although I don't want to look back too much, I would like to say a few words on what happened on the content side from mid March to May. Our business got hit on film, experiential, some consultancy capabilities.
And obviously, we had reduced revenues from some of our travel clients. We lost more than CHF 10,000,000 of revenue that was already secured and we lost a few weeks of sales velocity. But we responded fast and aggressively with new COVID proof solutions. Virtual events, Covid free studios, quickecom and we made a very big statement and proving a point by winning a whopper, expanding our European presence during this process. And we're looking very hard to future proof our business by creating scalable and modern solutions, which I will tell about in the next pages.
Next page please. So we launched our XP Live streaming tool, a scalable virtual event solution that is customizable for trade shows, education and entertainment events. Secondly, our COVID proof studios and post production capabilities are fully equipped to comply within safety standards and with live stream sessions and broad creative possibilities. So we can shoot content now in a safe environment instead of the large scale shoots that are prohibited in many countries. And lastly, a lot of the brands we work with have been looking at e commerce for years.
Yet COVID has meant that they need to move way much faster. So our quick commerce solutions are designed specifically to swing up direct to consumer sales and optimize marketplace presence and maximize conversion. So from idea to content and launch in weeks and create a solid base to build out for the years to come. If we can shift to the next page please. So by helping our clients grow it leads to our own growth and our own growth is getting noticed by the trade press.
So Adweek named MediumOnx, Circus and Firewood in its yearly list of fastest growing agencies. And what's important about this list is that it gets us into the long list of the major RFIs. And if you can imagine, this list also gives us a pretty good indication what would happen with our ranking if we start combining the brand names. Next page please. And the most important piece of news of the last quarter is obviously the BMW MINI pitch win.
After a process of almost a year, the decision in the biggest auto pitch of the year has been made and I'm very proud that BMW announced in their press release that Mediumunkt will be at the heart of the new setup working on creative and production. I will give you in the next feed a little bit more information about our Whopper. Although I can't give you the exact details of the deal, I can share that BMW will bring us a whopper status in 2021. The first projects are already in and we're currently ramping up the teams all over Europe and off boarding existing agencies. And our job is to build a customized modern marketing engine, which will be built on the delivery centers and the creative execution power of Medium Oaks.
The high performance marketing engine will modernize BMW and MINI customers' relationship management across all touch points for 26 markets in Europe. All product campaigns creative and production will be handled by our engine. Which leads to the next sheet, we launched MediaMonks Germany. We hired exceptional leadership with award winning creative director Theo Ecco, ex Chief Creative Officer and Partner at Jungfermat and Thomas Trehrat, the ex CEO and Board member of Ogilvy and previously Partner at Jungfermat. That's just the start, we will announce many more talented new hires to come.
Berlin is expected to be at 40 FTE mid-twenty twenty one and there's a lot of interest already from other German brands to build similar solutions. From Germany we go to fashion. Three weeks ago we announced a whole new team to service our fashion and luxury clients. The former Wednesday leadership, the fashion specialist of Omnicom, decided to join MediaMonks and build a dedicated creative and execution team to help serve fashion brands with their digital ideation. And I'm very proud to have Liam and his team on board to make this happen.
And from fashion, it's just a flip of one page to France. We have very great news on our European merger front as well. Derwin joined MediaMonks as of September 10. Founded and led by Vale, we have added a very respected social media specialist and bring us a lot of entertainment knowledge as well. We already won our first client together and we are in many conversations about servicing our global clients in France, Europe's third largest advertising market.
And with all these new wins, teams and mergers, let's flip to the next page to see some work. Two pieces of work that I want to highlight on this page: Hasbro's iconic PulseConvention where we helped reimagine the whole event to thrive in the current restrictions. Two full days into a three d board game for tens of thousands of entities to go through. All which were broadcasted on the Hasbrosepills YouTube channel. And for the release of the new Air Jordans we created a release event in MicroSite that helped Nike virtualize the iconic shoe for fans around the world.
And the last piece of work I want to highlight in the next page is that I'm very proud to say that we built the world's largest VR event for the world's largest VR company, Facebook. And produced in VR we created customized software that people could experience the ten hour event on Facebook Live and Oculus Venues. And if we go to the last slide, I explain a little bit what is to come. So a quick glimpse of our modern scalable solution that we're working on to help future proof our business. We're very well known about our always on communication and our partner of Record Model will add a creative layer to always on, which will make people talk about our work and talk about the projects we do for our clients.
We call that Feed the Feeds. Secondly, we're working very hard on transforming broadcasting as you could have seen in our live event and also the market that Scott described earlier on. Brands need a partner that can push technology forward in new content formats and experiences like cloud technology and digital green screen rooms. Talent can join from all around the globe. And from QuickCommerce we want to move into EverywhereCommerce.
A customer demands e commerce capabilities across the entire digital ecosystem and it needs to be fit for brands and create content and media every day and all day. And lastly, we're taking the first steps into creating original content. We work with the best in the industry like CAA to create digital first iconic stories. So that's it for me. As you can see, there's a lot going on, a lot of positivity, many thanks for your time and hope to see you next quarter and I'm looking forward to the question you might have.
Pete, over to you.
Thank you, Victor, and hello to everyone from Scottsdale, Arizona, as Stuart Martin mentioned. I'm very pleased to talk about the data and digital media practice, that's for today. Obviously, 2020 has been a very challenging year with the pandemic and all of the other events that have been, roiling the markets. But, I do think that, you know, in November as we are now, it is safe to say that the pandemic and the events of the year have truly accelerated the changes that we've seen worldwide, and we see this generally as a move forward towards the future. I'm pleased to report that, the Mighty Hive employees are safe and well around the world, and we keep track of their health and safety regularly every day as a matter of fact.
And so that is the first thing that I'm just very,
very pleased to
report. They are safe and well and adapting rapidly to the challenging environments, both work from home and all of the other changes to the working environments inside of this year. Next slide, please. We do believe that digital media spend has rebounded from the, debts that we saw earlier this year. We are pleased with the results that we've seen, over the last few months and are cautiously optimistic for the future.
Obviously, these, you know, projections are still very, very dependent on the macroeconomic factors, which seem to be, you know, changing by the day, as, you know, we seem to be in a twenty four hour news cycle where every day brings new and important information about what the future may hold. That being said, at this moment, we are pleased with the media rebound and the and the activity that we see increasing from the, depths of the year this year. Next slide. What we are seeing is that we are harnessing the growing momentum in digital media and redoubling our efforts inside of data for continued growth. What I would say generally is that, one of the accelerants that we have talked about earlier was, really around just the future coming a little bit faster.
And the future is definitely going to be ushered in via data. And that is one of the fastest growing parts of our business. And increasingly, we are seen as a data partner of record as we are trying to help our clients tame the very important questions around how to use the data, how to protect the data, and what will the future hold for these data strategies. Of course, data in and of itself must be paired with media and creative, thus our holy trinity model, in order to, make all of these things worthwhile and real. So in but inside of digital media, we, obviously, we're seeing transformation, talent and training, social commerce and customer experience all trending upwards and data with strength across the board, cloud, analytics, measurement.
Customer data platforms, or CDPs, have been particularly interesting over the last few months, and we're seeing a strong uptick in activity inside of these particular types of engagements. Obviously, privacy continues to be an ongoing topic of discussion, visualization and storytelling, etcetera. Next slide. We are also pleased to say that we are seeing an uptick interest in in housing. Earlier this year, as the pandemic hit, it not only impacted some of the media spend, but also, slowed down some of the decisions that were out there around in housing.
As you know, Mighty Hive does do a bunch of in housing globally. I will, for the record, once again, say that we're not zealots about this particular thing. We don't think that everybody needs to in house, but it is certainly an option that's very interesting for many, many of our customers. That being said, earlier in the year as the pandemic was really starting to push forward, we did see some folks start to pump the brakes a little bit on these decisions just because I think that people were a little bit cautious and rightfully so about potentially starting an in housing, engagement in the middle of a global pandemic. That being said, in the past few, weeks and months, we have seen this, interest pick back up, And you can see some of the sort of value proposition and persuasion points, etcetera, that are associated with that if you're not familiar with them.
Next slide. This has resulted, and this interest has resulted in some, great wins for us. Not to let Victor take all of the have all the fun with his BMW win. T Mobile, who is now the, second largest mobile provider in The United States, has decided to engage with MightyHive in order to in house their media. And this is really, really exciting news for us, and we're very, very pleased indeed and looking forward to working with them.
Next slide. What we can say is that, of course, the T Mobile win was made possible by the fantastic results that we have seen with Sprint now by part of T Mobile. And, just that has just been a category defining win, for many, many, many, reasons and has been immortalized in a Harvard Business School case study, which, if anybody would like to see a copy, is available online. And so, congratulations to Sprint's, on the publishing of that case study, literally making the textbooks, which we're very, very proud of. And, a quick shout out also to our other in housing client, Bayer, who is progressing along very, very well inside of this.
And, for those of you that didn't know this, that client's Bayer was recently named the best in house media operation in the world. Next slide. So we're expanding, inside of the media and the data. But probably the most exciting areas of growth that we are seeing is where Victor and myself and Wes and Chris and all of the folks at MediaMonks and all of the folks at MightyHive and S4 and all of the and everybody within the company are just starting to see the unitary structure. And this is where we can see the true synergies, bringing all of this together and really kind of pursuing the vision that sir Martin brought us together in order to chase.
And so we're definitely seeing these integrated wins, and I, for one, can report that they are very exciting indeed. And, I can report that, in one, after after action kind of meeting when we're analyzing what went right and what went wrong in the particular pursuit. Probably my favorite part was listening to the folks all saying, we would not have won this pitch without our partners. And so that is something that I think is just, tremendously exciting. Next slide.
And so as you know, we are continuing to bring more capabilities to our clients, trying to predict the future and be responsive to them. And as you can all see and all sense, there's lots of change in the air. So whether that is, social commerce or performance or cloud or artificial intelligence and measurements, I won't steal Scott's thunder, by going too much into our, sort of active merger and acquisition activities over the last few months, but they have all been very, very impactful already. And we think that as they continue to settle in, there will be even
more synergies to be had.
So with that, actually, think I can pass it over directly to Scott, and he can continue on from here.
Scott? Great. Thanks, Pete. So I'm just going to cover quickly clients. Think actually, if we go to the next slide, Pete and Vic obviously covered two of the major wins we had this quarter on the BMW, obviously, our new Whopper on the content side and T Mobile on the data and digital media side.
But you can see here some of the other clients that we've landed this this quarter. So some some great names on there. Big win for us in Latin America with with Whirlpool. You saw the Hasbro work that that Vic referenced there, doing a lot of work for Shopify, Saint Jude's in in The US, another big, digital media client we've won. MercadoLibre, in Latin America, which is a creative content, digital media, and and data client for us.
And you can see some interesting new, clients as well. So companies like Klarna, which is one of the leading fintech platforms, Beyond Meat, which is a disruptor in the FMCG sector Sunrun-in the energy sector and then a couple of NDA clients in consumer electronics and automotive as well. And then we continue to expand some of our larger, relationships. So you'll recognize many of the logos here from previous presentations. These are big, existing clients of ours who continue to give us new assignments and provide new revenue streams for us.
If we head to the next slide, the STAR portfolio. So this is based on a 100% of our client revenue unlike some companies that cherry pick their top clients. So this is based on all our client business and it's remarkably stable, think, from previous quarters, slight uptick on technologies, we're up to 55% now of our revenue coming from the tech sector, which is something we're very happy with and proud of. I think obviously tech companies have grown well in recent months and invested heavily in marketing, so that's probably what's driven that slight uptick. And I think projecting forward, we'll keep that as stable as possible, but obviously we're going to see an uptick in auto in particular given the BMW win and potentially other whoppers coming in other categories as well.
Move to the next slide. As Pete said, just cover the M and A, so move on to the merger slide. We did three transactions this quarter. So Orca, in July, which is the full service Amazon agency based in Seattle, BrightBlue in September, which is a measurement econometric measurement company based in London. And as Victor mentioned, Dare.
Win giving us French market presence with Wale and his colleagues in late September as well. So we continue to have a strong pipeline on the M and A front. We have several deals in due diligence right now. The sectors we're looking at, data and particularly digital media, some geographical stuff. So we continue to explore markets like Germany, e commerce, and digital transformation.
And we are actually seeing, a bit of an uptick in activity or certainly inbound activity and willingness to have conversations, I think, around m and a, potentially some of that driven by, fears around, tax regimes getting tougher for entrepreneurs, so, people, looking to do deals. And we've seen, some quite interesting and and larger transactions that that we're having a good look at at the moment. So there will be, no doubt more to talk about, in the future on that. So with that, hand you over to Martin for our summary and outlook.
Thanks thanks, Scott, and thanks, Pete, thanks, Victor, thanks, Peter. So just to summarize on the the last slide, just a few key points. Firstly, and most importantly, as, Pete said, people our people and their families are generally safe, mostly still working from home and probably more working from the office in Asia Pacific, but EMEA and The Americas still mostly from home, and we anticipate that will continue to be the case, well into 02/2021, when we perhaps start to see a vaccine being more wide wide widely distributed. Secondly, we we have, extremely strong and broad diversity in both gender and race, but there is more to do as we pointed out in our statement, with our black community. We're about 40% people of color in The United States, in The United Kingdom.
Black community represents about five to 6% where it should be about 13% in The US and in New York where we we we operate and we've committed to operating, as, the communities in which we we work in. So in New York, for example, it's 25%. So we have to to up our game and already started to do so, for example, with the, black minority recruitment programs, both at the black universities and at high schools. Second point or third point is we have strong q three performances you heard from Peter, and we're now back to pre COVID levels and indeed our targeted performance. So we we, as you know, are targeting to double the size of the company organically, 19 to '21 and twenty to twenty two, and our new three year plan for twenty one to three embodies that too.
So q four is on track to deliver strong double digit growth, both top line and bottom line in terms of performance and our targeted margins for 2020. So we're we're not exhibiting any of the, sort of caution that we heard from, for example, the adholdcom companies in their q three, calls where they they exhibited, uncertainty about what's gonna happen in q four. And we believe we have an even stronger fighting chance than ever before of delivering on our twenty to three three year plan, which was to double the size of the company organically as well. Our new plan for twenty one three is to double the size of the company again organically with the same 20% EBITDA margins after central costs. And our 2021 budget targets, 25% like for like growth, both top and bottom line is consistent with all the three year plans, obviously driven by Victor's good news around BMW and perhaps some other things that have come.
2021 looks to us like 02/2010. We're very bullish about 02/2021. We have macroeconomic tailwinds, this rebound in GDP down 5% this year, up 5% or so next year. And indeed, the micro tailwinds around the whopper wins that, we already indicated and the client activity, which is re driven by digital acceleration, particularly in, tech and health care, which as Scott pointed out, is almost 60% of our business. And there's concrete evidence most gratifyingly of client conversion at scale.
That's our central objective for 02/2020. Brand awareness was 02/2018. Brand trial was 02/2019. And conversion at scale or the beginnings of it was 02/2020. We've seen that with BMW MINI and the engine, and there's more to come, on that, in that area before the end of the year.
And we're making very significant progress on our 20 squared client objective, that is to generate 20 clients with more than $20,000,000 of revenue so far each year. And so far, we have three, and we're on the cusp of a four. Merger the merger pipeline, as Scott mentioned, is extremely strong, and is particularly active at the moment given the potential for US tax hikes, although that seems to have receded a little bit following the results of the presidential election in The United States. And last but not least, we have a very strong management team, part of which is on this this call. We're committed to the unitary p and l and the elimination of any silos, and our integration focus remains extremely strong.
And a heightened unitary rebranding, we've been worked on by Wes and his colleagues, will come in early twenty twenty one. So, Fraser, that's, that's the end of the presentation. We took about forty minutes, over for q and a, please.
Thank you. So ladies and gentlemen, if you wish to ask a question, Okay. Our first question is over to the line of Paul Richards at Dowgate. Please go ahead, Paul. Your line is now open.
Thank you. Good morning, gentlemen. Great to see the development from your, tech focus into automated in q three. There's been suggestions that some of the FMCG, CPG companies that have actually fared quite well, in COVID nineteen are looking to further accelerate their digital transformation, I wondered if you could share your thoughts on that. Second question is very interesting, the market size and scope that Scott shared and some of the deals that, that mergers sort of come through in in q three.
How far do you think you can extend your range of business into what would typically be seen as sort of Accenture, type areas? And then finally, could you give us a bit of color on October, if you have it? It certainly sounds like, the momentum has continued into q four very strongly. Thank you.
Victor, do you want to do you want to, answer on the FMCG and what you're seeing from FNCG Scott, maybe you can talk about deals and, vis a vis Accenture. On October, you know, I I think the continuation of what we've seen. Peter, you wanna comment on that just first? Yeah. So so the
so indeed, the numbers are not in yet, so they're they're expected in the next couple of days, but all indications are indeed further strong growth or sort of in the range of what we've seen in the third quarter. So indications are good, but they're coming in, we know it in a week or two.
Okay. Victor, do you want to let FMCG and what you see there?
Yes. Paul, thank you for question. So as you know from one point five years ago, Medium's client base was very, very tech heavy and we're moving in and that's why a whopper win as BMW is super important. But we also won some significant roster positions at FMCG companies, which we hopefully want are going to announce in the next couple of months. So I completely underline your view on that FMCGs need to move into digital aggressively as well.
And we're teaming up in order to do so. So I completely believe and know we have the right knowledge and products to help out as well as on the digital media side, on the data side. And the content solutions that we have, look at our film studios for example or our focus on food and liquid expertise. So we have the knowledge in house, we have the products in house, we see the trends and the major step that we're going to take is to or land and expand the existing roster positions, so Mediumholtz gets and S4 gets a bigger part of that business or secondly, win something very extensively that we hope to announce soon. So we're ready for it.
We really come from the technology side, but we see that more and more of the FMCG companies are also getting people in on important places from that managing processes on that side. So I think we will see a big uptick in that part.
Yes, Scott, do you want to talk about the other one?
So Yes. Just to point out on FMCG, Paul. Hi, Paul, we're there. That's our second largest category. So we do have quite significant business there already.
And as Vic said, we're hopefully be winning more shortly. On your question around the market and sort of extending our business, how far we can go versus Accenture. I mean, Accenture is clearly and I should be clear, Accenture Interactive, so not Accenture. Accenture Interactive is clearly our main competitor. So they were, our major competitor in BMW pitch, which we won, and and we compete them compete with them pretty aggressively on on a lot of the other, business that we've we've won recently.
Definitely our most consistent, sort of competitor we we come up against. You know, we're quite clear about what our service offering is. So, you know, as you know, the the three areas, data, creative, digital media, and I think that does already overlap, quite a bit with what Accenture does. So I'm sure we'll we'll see more of them. And I think, we we you think about where we're heading in terms of building out capabilities around digital transformation, I'd imagine our service offering is probably gonna look more like Accenture Interactive's, in the future, and and is already heading in that direction, and and pretty different from, the holding companies.
Just Just add one thing to what Victor said on on FMCG. The sort of model that you're seeing at P and G, under Mark Pritchard with which is what I call a Netflix type model using first party data. They they have, I think, one point two, one point three billion consumer profiles looking at how they they produce more personalization at scale, which MediaMonks, for example, specializes in and the use of data analytics, the sort of things that Pete and his colleagues at MIT and I have been developing. Those are all part of the model that we see FMCG companies increasingly starting to do. And I think the other thing to say is that one of the things we see, and we think you'll see this very shortly, is where where the data and analytics capability at MightyHive has penetrated.
It gives us opportunities to leverage those relationships into the content area. Okay. Next question, Fraser.
Next question is from the line of Adrian Dussain Ilier, Bank of America. Please go ahead. Your line is now open.
Yes. Good morning, everyone. Thanks for taking the question. So first of all, Pete, you mentioned the win of T Mobile. Just curious if this is part of the ongoing media review or is that completely separate?
Secondly, like for like growth year to date about 16%. The broader ad market is down 10%. If you look at next year, media agencies are expecting something like 4% to 8% ad market growth, and you're looking, if I may say, at just 25% like for like. So can you just explain why would the gap between your performance and the ad markets, why would that reduce? And thirdly, perhaps maybe more for Martin, do you think there will be any impact from the new, U.
S. Administration on the digital ad market? Any chances of breakups potentially? And what sort of impact do you expect for digital ad spending and perhaps your own performance? Thank you.
Okay. Do you want to talk about T Mobile, Pete?
Absolutely. So T Mobile is going through a review at the moment, and the decision to for the in housing is not a part of that. And so we have been we've been we have hands on keyboard now and are working away on T Mobile, and it's been a very good start so far. In terms of the second question there around the media and the growth in these types of things, I would say that, you know, we're feeling bullish about next year for all the reasons that we've already covered inside of our remarks today, being fully digital and, seeing the trends in terms of which way digital spend is going and which way other spends are not going, tends to give us a little bit more confidence in these types of things. And, we just kind of see a rebound in all of the other types of functions, whether that be data.
And, I can't be I can't decide whether to be more excited about the, ongoing stuff that we're doing inside of data and media or the, the types of possibilities that are going to emerge as we continue the process of merging everything together into a single unitary offer. And so, but all of these things together are what give us confidence for next year.
Yeah. I think, Adrian, just on the on on the gap for minute, mean, you cycle, when you cycle 10 to 15% down or 15 to 20% down, you're you're you're, at some point in time, gonna get some relative relative improvement. You're also gonna get a GDP gain next year. Some are more bullish. Some houses are more bullish about what's gonna happen to GDP.
Some peep some, like, Goldman, for example, are talking about six, six and a half for next year, as a as a rebound. Clearly, some traditional media are going to you know, if it if there's one year that you will see maybe the ad hold codes improve, it has to be next next year, particularly q two because they're gonna be cycling minus 10 or minus 15. I mean, they don't if they don't show positive growth next year, they never will. But I still think the fundamentals, if you look at what's happening to the projections for digital market spend next year, you I think the stuff I've seen in The US for next year is something like 17 to 20% growth with that GDP rebound as we showed you in the the slides in the presentation. We think there's a a very high correlation now between digital ad spend and GDP growth, not dissimilar to the correlations that we got we had in the previous millennium in the nineteen seventies and the eighties between traditional media spend, and GDP.
So I think that's that phenomenon. On the US administration, we were talking about it amongst ourselves before we came on the call, and we've been asked questions obviously in relation to our q three trading statement this morning by the the the the media. You know, I think the result the election result is probably from a market point of view that the as good a result as they could have got or as the markets could have got. What we it's an uncanny. The electorate seems to sort of always eliminate the ex not always.
Sometimes it eliminate the extremes, and what you have is two Americas. You have a a rural Republican America, and you have an urban Democratic America, which we've seen with this very heavy voting, two thirds of the electorate having voted, and the the the margin, well, the the the weight of the voting for both presidential candidates. So I I I think the result probably is a happy medium, a happy balance. We'll have to see what happens in Georgia, on January. It seems that it will be a tough road for the Democrats, and it's likely that or more likely than not, that the senate will be, republican controlled.
If that is so, you have a balance where, president-elect Biden and Mitch McConnell are gonna have to work out a modus with Vendi. They have good experience with one another, good experience generally, and maybe we'll see a balance. And as Scott mentioned in the in terms of deal flow, we saw, I would describe it as frenetic activity in anticipation of not only the the increase in corporate back to where they were, a corporation tax rates at 28%, but also the prospect of capital gains tax rates being doubled to income tax rates. That seems to have receded. We obviously have to wait for Georgia.
That may not be the case if the Democrats get control. And, but stimulus bill, we're probably gonna get one. Question is when, and the wait, we'll see. Probably not as much as if it was a Democrat converse blue wave sweep,
but
certainly significant stimulus. So that's that's good news for the markets. And then the extremes on the tax, perhaps limited, and the the progressives in the Democratic Party didn't get to where they thought they were gonna get, that that two nations in America or certainly that rural Republican, those roots, prevent, you know, the extremes on the Democratic side too. So I think all in all, a a pretty balanced solution, and I think that's what the market so far seem to be reflecting in terms of their their weight. In terms of breakup on on tech, probably, again, the the pressure on tech breakup is less than we thought it was going to be.
I just I I personally, I think that breaking up the tech companies wouldn't wouldn't achieve much. Interestingly, in this second lockdown, if you're a small, medium sized business in The UK, for example, or Western Europe, what do you do? You don't advertise on ITV. It's too expensive and it's too inflexible. What do you do?
You use Google. You use Facebook. You use Amazon, and you use the online solution. So all the second lockdown has done is, in my view, is to, increase the likelihood of digital digital transformation and acceleration. So tech breakup, be careful what you what you, wish for because you may actually make it even more difficult for small and medium sized businesses which are the lifeblood or part of the lifeblood of the economy.
So I I think on on balance, the the the result was probably, as Pete said in our in our pre call chat, as good as from a market point of view as it could get. Fraser?
Okay. Thanks, everyone.
Our next question is over the line of Anne Marie Johnson at Barclays. Please go ahead, Anne Marie.
Hi. It's, Emily Johnson, from Barclays here. Good morning, and thank you for taking my question. First question, I just wanted to ask about the different organic growth rates across the different businesses, so across content and data and digital. How much of that is the the difference is is land?
So content clients having sort of stronger growth in the existing base versus expand, and there's just been more new client assignments there? And and then secondly, looking at q four, have you seen any impact from advertisers plans changing because of the new lockdowns across Europe? Is it that they this time now, they aren't changing their plans because q four sales are even more important than ever and and they need to market, to to maintain their share of voice, or are they adjusting their marketing plans again? Thanks.
Okay. Thank you, Emily. On q four, no change. Peter, do you wanna comment on whether we've seen any change on on q four? Think it's been No.
I think that's a short summary that we don't see any change or at least not yet and also are not expecting it. We have a strong pipeline. We have our strong secured pipeline. And compared to, I would say, early or March this year, we don't expect that panic sort of panic reaction where budgets were frozen or like the event business was totally stopped. And by the way, like Victor elaborated, that model changed for us into far more digital events.
So we're sort of less dependent on that, if there was dependency at all in the first quarter. So Emily, I would say all in all, we don't we don't see we don't see these changes and are are well on track in order to reach our targets for this year.
Yeah. I mean, on on content, think, Victor, it's fair to say that that, we come come to Pete on data and, analytics and digital media. But on on content, I I think it's more what I would call expand so far. The the impact of BMW is too early. I mean, it's started, but do you wanna talk a little bit about how you see that cooling land land would be in BMW and whatever else would would is coming along, and expand is more the project by project.
But go ahead.
Yeah. There's there's been no financial impact of of of BMW There will be minimum amount of impact in Q4, and it's literally we're ramping up for 2021. So it's the main focus for this year was twofold: show that we could increase the volume that we do with our clients and help them with different parts of our business and solutions. And then secondly was, can we prove that we can win a non technology brand, so can we land a new whopper from an RFI, which we did.
But there's no financial impact on it now. One additional note on the Q4 plans, what I noticed, and this is besides just the financial impact of it, but what I noticed is the change that brands need to do is real. So there's no denying anymore that digital transformation plans need to be executed, that the move to ecom needs to be executed. And while the summer was promising for retail again, the second lockdown is really showing that you need to get your digital house in order. So that is what I can see from the brand side.
That is a real big push of execution.
Pete, do you want to talk from data and analytics and, digital media?
Yep. Similar to the comments before, I'd say, we saw more contributions from the expand rather than the land over the last few months. And, actually, that's kind of the way I like it. I actually really enjoy it when we, start with something quick, skipping the some sometimes seemingly never ending, you know, RFP processes that can take months and quarters and even years sometimes to complete. And as Surmarva said many times in the past, who's got time for that these days?
The the market simply moves too quickly. So we are seeing some great motion inside of the expand, and I think that we will continue to see that type of expansion. I mean, we are always obviously looking to hire and and to bring on new clients into the mix. But I would say that oftentimes when we kind of get those, especially on the data and digital media side, they tend to be, you know, sort of projects that are a foothold, and then they move from there into something larger and then something larger. And then from there, as we expand, we move it not only at the expansion inside of the data and digital media side, but into the creative side.
And so we hope to show you some more evidence of that type of motion, in the near future.
Do you wanna say a little bit, Pete, about data and analytics? So I think it's interesting what we're seeing there in terms of first party data, third party cookie pressure from Google and and Apple.
Sure. I think it's pretty clear that there's been a lot happening inside of our industry, you know, beyond just sort of the the macroeconomic things that are, you know, sort of the stuff of headlines. And so inside of programmatic and inside of advanced digital, there's been quite a bit of motion inside of technology standards as well as potential regulation and those types of things. And so we've seen quite a bit of outreach from our clients who are seeking our guidance around what the possible strategies will be for, making sure and securing the future of their data strategies regardless of how the market turns, you know, over the next few months and what are the different types of things that happen in this regard. And so, you know, this against the backdrop of general acceleration of transformation in the first place, I think that it has created almost a perfect storm of data questions that we have been seeing tremendous, activity inside of.
Good. Thank you. Thanks, Emily. Next question, Fraser.
Next question is over the line of Steve Lishtey at Numis. Please go ahead, Steve.
Morning, everyone. Two from me, please. They're not meant to be negative questions, but everything's so good. I might as well try it. One, just on have you actually had any major client losses this year?
If so, why? And then the second question is, for more for Pete, on the data and digital side, look, 7% growth is great compared to most companies I follow, but it's not great compared to content. If we look forward to next year, you know, given media market should improve and stuff like that, you know, what's the chance of you sort of doing, so let's say, percent growth rather than 7% growth from here, especially given the market drivers that you talked about as well?
Okay. Let's let's start with losses. I I think losses no. Have we have we I can't think of major losses, but have we not won things? You know, we've had what's your pitch rate, Victor, now running at?
What what proportion of pitches do you do you win honestly now? Not dishonestly.
Oh, yeah. We we moved in a time of, to honesty now, I I I believe. No fake news. No fake news anymore. So it it It depends a little bit per market.
So our pitch rate in The U. S. Is super high, it's around 80%. Smaller markets where our brand name isn't established yet like in The U. S, the pitch rate tends to be a little bit lower.
So we moved in quite some markets, Japan, Korea, Australia, So our pitch rate needs to go up there and that will tie in with the growth of the team and the reputation that we build and the people that we hire. So let's say in new markets our pitch rate starts at 50% and we need to move it up until 2018. So yes, we're getting tested out in newer markets, which is fine. It's also making a point in those RFI processes and we sometimes or often see that even when we lose a big RFI in a smaller market because they say, well, you're too small here still, the client comes back within a year's time to grow within a smaller piece of business. So I haven't seen a major loss of business this year.
So we're growing within our existing client base, and we hope to to add some new in in in the end of
the I think I think we we would say, Victor, we, that that that we sometimes we're not included in things that we think we should be included in, or sometimes we're included in things and we don't win them. And I think to Steve's question that that's, you know, if I was gonna say what's an irritant, That's an irritant. Maybe it's it's our self belief, but, you know, we think we should be included in various things. I mean, some sometimes you don't win things. I mean, you always claim that the reason you don't win things is because price.
You know, the the other people cut their price and and and that's the way they want it. But I would say, you know, it comes back to this sort of awareness trial conversion at scale, progression. And I think on the content side and your pet on the day side, we'll come on to that in a sec in in a second. On your on your second part of the question, I mean, I'd respond to that by saying, well, our budgets for next year, as Peter said, you know, we're looking at at 25%, which is consistent in in our budgets, and that that's evenly spread or more evenly spread across content and post data and digital. But do you wanna talk, Peter, a little bit about how you see things in data and digital and the different component parts?
I mean, how digital analytics is done, US media, non US, international media?
Sure. It's a great question, Steve. And, I will start off just by, just acknowledging, a, that the, content side has done one hell of a job over the last few months, and so hats off to them. And it has and but by no means is the, data and digital media side sort of, you know, sort of second guessing our own results. As you already noted, Steve, you know, by comparison, we've done extraordinarily well.
That being said, you know, I think my colleagues will note that I thrive on competition. And so we are excited, right, to try and close that gap, with the crew. And, that being said, like, as I noted earlier, I'm not sure there's almost an embarrassment of riches here. I'm not sure which one to be more excited about, the chase and the race or the, the synergies and the fact that we can combine together and get an even better results. And so, you know, the I think that that's kind of the way that I would answer it.
And with so many question marks in the air, you know, time will tell. But as you can tell from the overall sort of, tone and vibe that you're sensing here, we're pretty excited for the future.
Yeah. Just just to add to that point is that, you know, as it will become apparent, I wanted to go into the detail now. I mean, there are things that happen at at s four or that happen on in the content practice around media months that would not have happened but for the work of Mighty Hive in data and analytics or digital media. And, you know, whilst we report to you, even though we're gonna do, you know, a unitary, branding exercise early in 2021, which is the twentieth anniversary of MediaMonce's birth. Even though we're gonna do that, you know, we'll continue to report, the two practices even though we're unitary.
But, I mean, the point I'm making, Steve, is that whilst we report to you and try and somewhat arbitrarily assign, you know, growth to content and to data and analytics and digital media, they feed off one another. And, you know, I would say, BMW Mini has been a pure content win, but I think you're about to see things happen at s four, which would not have happened but for the twin the twin pillars. And what's interesting about BMW and Mini is that, you know, if we're successful, I'm sure we'll get other opportunities both geographically and functionally that will flow flow through from it. In fact, I think we're already starting to see that. So, yeah, I think the two together, we we'll set we'll continue to separate them for your purposes, but, you have to look at the thing in the in the round as well.
Fraser, next one.
Cool. Thanks.
Okay. We now go to the line of Matthew Walker at Credit Suisse. Please go ahead. Your line is now open.
Thank you. Good morning, everybody. Obviously, results for q three. I had a few questions. The first one was back to Adrian's question about the 25% like for like and the the gap between the other companies.
I mean, including the BMW win, which was pretty significant, doesn't I mean, I know that the 25% is sort of on track with your three year growth. But specifically for 2021, given that it's a rebound year for GDP, plus you've got, you know, easy easier comparisons from '20, and you've got a BMW win on top. Are you being deliberate deliberately pretty conservative there? The second question is
We we can't win with you, Matthew.
On
It reminds me reminds me of yesteryear. We got there. Mean, I I just
want Well, I I I
One one thing I'd point point out is BMW, as Victor said, I mean, BMW has not influenced the numbers really in q three. It'll start to influence them in q four. I think we did get we did get some revenue in from BMW in September, I think. Right, Peter? We did a little bit.
No. It's it's basically starting in October. It's really starting in q four.
Okay. So so just to that point point, Matt. Sorry. Go ahead.
Oh, so you the other one. Yeah. On the media on the media side, to Steve's question, I mean, can we expect may maybe being a bit more specific, can we expect for media to tick up to double digits in q four this year? How significant is the T Mobile win, and when does that when does that kick in? And then finally, on the merger contributions, you've got some some additional clients or companies coming into the group for the numbers in q four.
How much in terms of million pounds will they contribute to revenue in q four? Or to put it another way, if you include all the m and a stuff that you've done previously plus the m and a that's gonna kick in in q four, how much is that m and a revenue going to contribute to the q four revenue, please?
Peter, do want to answer that one first? I don't want to answer that one.
No. The thing is, and I know, Matthew, we've talked about this before in a sort of one on one conversation, but so there will be, of course, there will be the contributions of the new mergers like Orca has been announced, Lendstand has been announced. They will start contributing in in q four. That's one thing. So there will be, but, honestly, it's going to be not very significant in the greater scheme of things.
That's one thing. And second, in in in attributing it to the merger contribution or, let's say, the the going concern of the existing group without the mergers, that's we don't measure it like that because, as we have indicated before, we look at ourselves in a unitary structure. In a way, if a new company comes in and has some attribution or there is something sold or new projects or it's in land and expand, we don't mind where it lands. So it can land in medium ones, although it may may have been a client's form from circus in in the old structure. Because in the unitary structure, it's not so much, hey.
Where does it land? Who to who whose p and l does it contribute? And that's why we basically don't measure it like that and also don't quantify what is the exact contribution. What we tend to do is, as you know, is that we compare on a like for like basis because that creates for us by resetting basically the basis from last year or previous quarter or whatever and then compare it and that's our organic growth. And again, we don't mind where it who counts for it in which p and l or in which geography you want.
Yeah. Do you want do you want to comment, Pete, at all about how you see, data and analytics and digital in q four and and going into next year? I mean, you obviously, I made the comment about the budget for next year and our growth. It really is across more across the board, but go ahead.
Sure. I think it's a little bit early to tell. Obviously, it's, very early inside of q four. There's a lot of things up in the air. What I can say is that we are, excited for the future, and, we're gonna give it a hell of a try.
And, I can, I'm sure that we will be, talking about this in a few months' time, and we can, give you the exact numbers as to how how it goes inside of q four.
Yeah. On on the specific on T Mobile, T Mobile starts next year, doesn't it?
We've got some preparatory work that's already started, but it doesn't really kinda hit full swing for a while. Okay.
Alright, Matthew?
Okay. Our next question is of
Okay. Thank you. Thanks.
Our next question is over the line of Patrick Wellington at Morgan Stanley. Please go ahead.
Yeah. Good morning, everybody. A couple of questions. Firstly, I greatly enjoyed the return of the chart with no scale on slide 26, the data and digital growth. So can you relate that, slide to the narrative?
Because there's not a huge downturn in, Q2 on that slide, and yet there's a big step up in September. So can you talk about the dynamic of that? And in relation to the clients that Scott was pointing out, Alphabet, Facebook, Snap, all turning up very sharply, but your data business not turning up at the, same time. So that's the first question. Secondly, just going back to the one that Matthew bravely tried, which was, are you gonna do more than 25% growth next year?
To double from a 19 base, you did 39% pro form a last year. If you grow at 16 this year, which is your nine month growth rate, then you will need 25% growth next year to get up to 200. Everything on this call suggests that your growth rates will be faster than 16 this year. So, how do we interpret that? Is 25 too conservative, or is actually 25% too aggressive if you're only gonna hit 200 for next year?
And then thirdly, in a slightly old fashioned style, can we talk about, EBITDA and your likely margin trend? EBITDA like for like was down at the first half, presumably, given you've had a strong EBITDA quarter, it's up at the nine month stage. You talk about, some of the compensation costs coming back and so on. But what's the picture? You've got strong revenue growth next year.
Presumably, you're not going be putting back all your travel and entertainment next year. So are you gonna get a particularly strong EBITDA growth as you go into '21 because you'll have the extra revenue, but maybe not the the regular cost?
Okay. Let's do with the EBITDA question first, Peter.
Yes, start to try to answer that question. So indeed, in the first half, we were after central cost, I think we were somewhere in the 14% to 15% range of our EBITDA. As we have seen, and this year shows it in a sort of similar pattern as last year, because last year I think we were in first half something around 16%, 17% and did somewhere around 23% and a little bit in the second half. And that's sort of the similar pattern that we see also in because we don't this is trading update, we don't dive into our EBITDA numbers. But from a trend point of view, you see that also happening in this year or sorry, in this quarter and also our expectation for the fourth quarter that it will be in the sort of size or growth percentages or not growth, in absolute percentages, what EBITDA is going to deliver in Q3 as well in Q4.
It's the same sort of same pattern as we see as we saw last year.
Okay. Just turning turning to your data analytics question, which I think it was the was the point. I think, Patrick, you're saying why why haven't data and analytics take grown significantly given the rebound that we've seen, in the the big tech advertising revenues. Is that it?
Yes. I mean, you there's obviously a a big step up between August and September. And if you wanna put an absolute number on any of those months, please feel free. But, you'd you definitely appear to be lagging that step up from, your counterparts.
Well, I'm I'm not sure I really agree with that. I think you have to look at the the picture overall. And I think, you know, we now would we would we like the 24% or the 25% in August and September to be even greater? Of course, we would. But, you know, when I compare it to where we were I mean, true.
In January, we were at thirty three, and in February, we we went to twenty one. So we're in sort of pre COVID terms. We're midway between where we were in January and February, and we started to see impact of COVID in Asia in February. We really didn't see it in Europe until late March. So I think that the the rebound, pretty much follows what we've seen elsewhere.
It's not a trade desk.
So, Martin, I I hate to interrupt, but Martin, I hate to interrupt, but I'm specifically talking about digital media. If you look at the digital media chart on slide 26, there's a definite uptick between August and September, but only 7% growth over overall year to date.
No. No. Data and analytics and digital media, I take take together, as a whole. And I think that we've we've seen I mean, if you split the three if you split out data and analytics and digital media into three component parts, Digital media in The US was under was under more pressure, I think, in COVID than digital media outside The US. And I think data analytics continued to grow quite significantly from a smaller base than digital media as we went through COVID and in the through the months.
So I think overall, it it it was it was consistent with what we saw in the industry as a whole. I mean, is there anything you want to add to that, Pete Pete, from your from your perspective?
No. I mean, I think it's just the and as we're taking a look at some of these v shaped, recoveries, like, you have to remember that the sectors that Google services in terms of their overall stuff, there's a lot of SMB inside of there, as Surmar has pointed out, very often that there's, you know, sort of they're they're servicing parts of the economy that we don't have quite as much exposure to. So I don't think that there's always going to be a perfect correlation between the shapes of this graph and that. But other than that, I agree with generally what's smart and stuff.
Yeah. I mean, let me let me put it the other way, Patrick. I mean, what would you what would you have expected given what you just said?
Really, I'm just fishing for the, what was the September number there on that, numberless chart on slide 26.
And which number which number are you fishing for?
I'm looking I'm assuming that this is the organic, the organic gross profit growth rate of your Yes. Mighty hive operations being shown on-site '26. So if you wanna fill in and we've got a nice trend line. We've got some nice bar charts, but we've got no numbers. So I'm just we've got the number 26, which is the number of the slide, but nothing more on numbers on that side.
You wanna fill in?
On slide 26. Do you want to take a look at that?
That yeah. That's Pete's slide, but, I'm not sure how transparent we wanna be in it.
Okay, Martin. And then just nipping back, as we said, you did once, you did 39%, net sales growth in in, like for like in 02/2019. If you do 16 this year and 25 next year, you're almost exactly hit that doubling. Yeah. What messages we are we we saying about that?
I mean, really, you're be over 25 next year.
Well, look, we we're we're at the beginning of the year, or we're coming into the beginning of the year. We've just done our budgets. The the budgets are, in theory, meant to be reasonably conservative, you know, on what we know. The plans are meant to be targets, and the budgets are meant to be what we think is gonna happen. But we've already referred to BMW and Mini.
The the other part of it, you know, we we we think there is more to come. So I think the answer to your question is when when we've seen and you've seen what more there is to come, we could be more definitive. I mean, that to to to answer your question directly, if we were to add another whopper or additional opportunities, it's probable that we would sit down and revise, you know, our budget well, if not our budgets, certainly our forecast for next year as a result. So, you know, if you were pushing me to the wall, I would say that when I look at the the budgets for next year, given what we know might come down the line, they're probably conservative.
Okay then. And pushing you against the wall and twisting your arm up your back. So when is the next whopper, do you think, gonna be decided? And surely BMW is roughly the run rate of two whoppers anyway, isn't it?
Well, I mean, it's more it's certainly more than 20,000,000 of revenue, dollars of revenue. When when the whopper lands or whatever whoppers do, when when we eat the whopper or whatever, however, what they're really the right analogies, you will be the first to know.
I'll take that before the year end then.
Yes. Yes. You you will be right in assuming that.
Great. Thank you very much.
Okay. Our final question in the queue is over to HSBC and Joe Spurler. Please go ahead.
Good morning. Actually, most of the questions have already been asked. But, given what you're saying about the strong pipeline for M and A and some of the reasons why the activity is picking up there, Are you still seeing price expectations in that kind of five to 10 times range? Is that still kind of the working assumption we should be thinking about? And on that M and A program, what are the priorities now after the recent additions you made in in the third quarter and beyond?
Thanks.
Yeah. I I would just say that the the market is very febrile is what I would or febrile is what is the way I would call it. It's very, very boring. And and pricing is is very firm, Joe. Do you wanna give us give us more, Scott, please?
Sure. So I think on pricing, I mean, as I said, we have a few deals on the smaller side similar to what you've seen us do so far this year in due diligence right now and on pricing on those as well within our, kind of stated goals, as you said, five to 10 times EBITDA, one to one to two times, top line. So that's all kind of in order. We are, as Martin said, we're seeing some other opportunities come up, some of which are a little larger, and some really very strong assets and quite competitive in some areas. So I think the pricing might stretch on a couple of those slightly beyond the top end of our metrics, but nothing crazy.
And then in terms of the areas we're looking at, I mean, it's it's a lot of what we've seen already. So on the data side, we we have a kind of what we call a service road map. So we've we've done quite a lot of stuff on the site side analytics, and measurements, and we have, some more, things we're looking at more on the data engineering and the cloud side there. On ecommerce, we're looking at building out skills, particularly on Adobe and Salesforce, and and further kind of systems integration capabilities there. There are a couple of geographical things we're looking at, particularly Germany, but a couple of others as well.
And then, on the digital media side as well, looking at what we can do to kind of expand our service offering there. So there's plenty, for us to be getting on with.
Just just while I have the line, I I think during the presentation, you spoke about getting to 40 heads, in in Germany. How are you thinking about resourcing that BMW contract beyond that, that that footprint?
Victor, do you want to talk about that?
Yes. Thanks for that. No, this is specifically the what I'm talking about is specifically the creative hub in Berlin that we're expanding at this moment. So Germany in total will be a much bigger operation that covers Munich, Berlin and another city. Secondly, the production of all of it is done in our existing hubs, and that's also the main reason that BMW and MINI chose for us because we have the execution power that some of the consultancies that we're pitching for this business lack.
So it will be scaled over our Hilversham, Ukraine and India operations. So in total, it is a couple of 100 people that will dedicatedly work on this account, which is a part built in Germany, and the majority is the scaled solutions that we already have in place. Does that answer your question?
Great. Yes, Thank you very
I'd just add that we're we're already preparing coming back to Patrick's question about, you know, growth rates for next year. We're already preparing for what more may come down the road, and we're already starting to hire in in The US for for other things that may be happening. So we're we're anticipating, you know, quite significant increases in our headcount. You've seen our headcounts up 26% like for like in the first nine months of the year, plus point to point. And I'd anticipate by the end of the year, it will be up even further.
And then as we go into next year, both for the BMW, anything else, it will be increasing quite significantly. I mean, we we've said, Victor, that we thought we'd be hiring an incremental 300 people for BMW. Is that right?
Yeah. It's not just for the accounts because we are reassigning people that are already working with us, but indeed it will be something like that.
Yeah. And then for other things that may be coming down again, coming back to Patrick's question, I think probably there'll be another 300 that we'll be recruiting in The United States and elsewhere. Okay. Fraser, any any more quest any more questions?
There are currently no further questions in the news. So can I please pass it back to you for any closing comments at this stage?
Alright. Thank you. Thank you, everybody. Thank you for joining. I think you've been on the line for about, an hour or so.
Hope you enjoyed the presentation, and thank you for all the, the questions. Any further questions, we're all at s four Capital or or at MediaMonks or MightyHard to answer the questions. So thank you. We have another call for our primarily for our American audiences at at 1PM, which Peter, Scott, and I will be taking. So thank you very much indeed.
Thank you. See you see you next year for the full year. Bye.