Download the Annual Report

2022 Performance

Chapter 2

Financial highlights

  • Billings1

    £1.9bn

    +45.8%

    Like-for-like2 +23.5%

  • Pro-forma3 billings

    £1.9bn

    +24.3%

  • Revenue

    £1,069.5m

    +55.8%

    Like-for-like +24.3%

  • Pro-forma revenue

    £1,108.7m

    +25.8%

  • Net revenue

    £891.7m

    +59.1%

    Like-for-like +25.9%

  • Pro-forma net revenue

    £924.1m

    +27.1%

  • Operational EBITDA4

    £124.2m

    +23.0%

    Like-for-like -16.4%

  • Pro-forma operational EBITDA

    £136.3m

    -11.8%

  • Operational EBITDA margin5

    13.9%

    -410bps

    Like-for-like -710bps

  • Pro-forma operational EBITDA margin

    14.7%

    -650bps

  • Operating loss

    -£135.3m

    2021 -£42.1m

  • Adjusted operating profit6

    £114.1m

    +20.4%

    Like-for-like -19.5%

  • Loss before income tax

    -£159.7m

    2021 -£55.7m

  • Adjusted result before income tax7

    £89.7m

    +10.5%

  • Basic loss per share

    -27.0p

    2021 -10.3p

  • Adjusted basic earnings per share

    11.8p

    2021 13.0p

  • Market capitalisation at 12 April 2023

    £911m

  • Share price at 12 April 2023

    158.6p

For full reconciliation from statutory to non-GAAP measures, please refer to the Alternative Performance Measure Appendix on page 201 of the full Annual Report and Accounts.

  1. Billings is gross billings to clients including pass-through costs.
  2. Like-for-like relates to 2021 being restated to show the unaudited numbers for the previous year of the existing and acquired businesses consolidated for the same months as in 2022 applying currency rates as used in 2022.
  3. Pro-forma numbers relate to unaudited full-year non-statutory and non-GAAP consolidated results in constant currency as if the S4Capital plc Group (the Group) had existed in full for the year and have been prepared under comparable GAAP with no consolidation eliminations in the pre-acquisition period.
  4. Operational EBITDA is EBITDA adjusted for acquisition related expenses, non-recurring items (primarily acquisition payments tied to continued employment, restructuring costs and amortisation of business combination intangible assets) and recurring share-based payments, and includes right-of-use assets depreciation. It is a non-GAAP measure management uses to assess the underlying business performance.
  5. Operational EBITDA margin is operational EBITDA as a percentage of net revenue.
  6. Adjusted operating profit is operating profit/loss adjusted for non-recurring items (as defined above) and recurring share-based payments.
  7. Adjusted result before income tax is profit/loss before income tax adjusted for non-recurring items (as defined above) and recurring share-based payment.

Business summary

2022 was good in parts, with continued strong, client conversion and top-line like-for-like growth offset by weaker than expected operational EBITDA margins. We ended the year with good momentum with the second half delivering three times the operational EBITDA of the first half. The much improved second half performance reflected the expected market leading net revenue growth, tighter cost management and better cash generation, underpinned by enhanced commercial discipline and financial processes. These will remain the core focus.

2022 was our fourth full financial year with revenue of over £1 billion for the first time. The growth rate achieved was well ahead of those generated by our two main addressable markets – digital media and transformation.

Both digital media and transformation growth remain well above those of traditional, analogue markets. We are mainly focused on the digital media and transformation markets and are at the heart of developing trends around Blockchain, the Metaverse and AI. We are already starting to use Artificial Generative Intelligence in improving copywriting  productivity, in delivering more empathetic hyper-personalisation (better targeted content at greater scale), more automated media planning and buying and ensuring our people have access to what we term AI’s ‘superpowers’. We do, however, expect our markets and clients to grow more slowly in 2023, reflecting the weaker global economic conditions which have been impacted by inflation and higher interest rates, and general geopolitical uncertainty around US/China relations, the war in Ukraine and relations with Iran.

In 2022 we cemented our offer in the digital marketplace with a new proposition: ‘NOW’. The industry has become so fixated on ‘what’s next’ that it’s easy to forget where our clients’ priorities are. Rather than a five-year plan, they need results, solutions and relevance right now. Change is happening rapidly every day and we need to acknowledge that by constantly re-inventing ourselves and becoming the change makers. That’s how industries move forwards, and that’s the measure by which we should judge ourselves.

We’re always on. A global communications business for the new marketing age.

  • 8900 People
  • 32 Countries
  • 1 Unitary structure

Our four core principles

We are purely digital

Holy trinity 
of First-party data,  
Digital content and  
Digital Media

Speed
Quality
Value
More

With a
unitary structure

Financial summary

  • Billings £m

  • Revenue £m

  • Net revenue £m

  • Operational EBITDA £m

  • Operational EBITDA margin %

  • Adjusted operating profit £m

  • Operational EBITDA and margin £m/%

Net revenue split by practice

2022 revenue

  • Content

    65.3

  • Data&Digital Media

    24.3

  • Technology Services

    10.4

Net revenue split by region

2022 revenue

  • The Americas

    75.6

  • Europe, Middle East & Africa

    17.5

  • Asia Pacific

    6.9

Financial review

Billings1 were £1.9 billion, up 45.8% on a reported basis, up 23.5% like-for-like2 and up 24.3% pro-forma3. Controlled billings4, that is billings we influenced, increased to approximately £5.7 billion (2021: £3.9 billion). Revenue was £1,069.5 million, up 55.8% from £686.6 million on a reported basis, up 24.3% like-for-like, and up 25.8% on a pro-forma basis.

Net revenue was £891.7 million, up 59.1% reported, up 25.9% like-for-like, and 27.1% pro-forma. Throughout the year our addressable markets remained reasonably strong, and we continued to outperform them. 

Reported operational earnings before interest, taxes, depreciation and amortisation (operational EBITDA) was £124.2 million compared to £101.0 million in the prior year, an increase of 23.0%. Operational EBITDA was down 16.4% on a like-for-like basis and down 11.8% on a pro-forma basis. The like-for-like growth reflects challenges in our Data&Digital Media practice after a strong 2021, particularly in the second half, and also hiring ahead of the net revenue growth in Content in the first half. The Technology Services practice performed strongly. The outturn was modestly ahead of our revised operational EBITDA target of £120 million.

Operational EBITDA margin was 13.9%, down 410 basis points versus 18.0% in 2021, down 710 basis points like-for-like and 650 basis points pro-forma impacted by the speed of headcount growth ahead of net revenue growth in the Content and Data&Digital Media practices. We implemented tighter controls from the end of the first half which are having the desired effect. The second half operational EBITDA margin was 18.2%. Our ambition remains to return the margins to historic levels, above 20%, over the medium term. 

Adjusted operating profit was up 20.4% on a reported basis to £114.1 million from £94.8 million, before adjusting items of £249.4 million, including combination payments tied to continued employment, share-based compensation, restructuring costs primarily related to headcount and amortisation of business combination intangible assets. Like-for-like adjusted operating profit was down 19.5% and pro-forma adjusted operating profit was down 14.7%. 

The reported operating loss of £135.3 million, was £93.2 million higher than in 2021, reflecting an increase in the amortisation of intangible assets, accounting for combinations including those made in 2022, the write down of 4 Mile and the impact of increased personnel costs. Loss for the year was £159.6 million (2021: £56.7 million). 

Adjusted basic earnings per share was 11.8p, versus adjusted basic earnings per share of 13.0p in 2021. Basic loss per share was 27.0p (2021: 10.3p). The Board has decided that no dividends will be declared in 2022, as was the case in 2021, given the focus is on profitable growth and reducing the level of net debt.

For 2023 we target our net revenue growth rate to reflect those of the two main addressable digital markets we serve. We estimate this as around 8-12% like-for-like, after reflecting the pro-forma impact of one ‘whopper’ reduction on net revenue. We will continue to manage costs tightly and target an operational EBITDA margin of 15-16%. As in previous years, given our seasonality, 2023 will again be second half weighted. Longer term, we expect to continue to be able to deliver strong net revenue growth with operational EBITDA margins returning to historic levels.

Notes:

  1. Billings is gross billings to clients including pass-through costs.
  2. Like-for-like is a non-GAAP measure and relates to 2021 being restated to show the unaudited numbers for the previous year of the existing and acquired businesses consolidated for the same months as in 2022 applying currency rates as used in 2022.
  3. Pro-forma numbers relate to unaudited full year non-statutory and non-GAAP consolidated results in constant currency as if the Group had existed in full for the year and have been prepared under comparable GAAP with no consolidation eliminations in the pre-acquisition period.
  4. Controlled billings is billings we influenced in addition to billings that flowed through our income statement.

ESG: a year of action

Within our industry, we’ve seen new initiatives and tools launched, like AdGreen, to help us move towards a more sustainable future through increased transparency and measuring of CO2 emissions. There has also been an increased level of collaboration, amplified by pledges, in which we share best practices and knowledge. We support these initiatives and continue to engage with leading stakeholders, industry efforts and global initiatives.

Media.Monks signed The Climate Pledge in 2021 with a goal to reach net zero by 2040. To set science-based targets we took full inventory of our emissions, using the Greenhouse Gas (GHG) Protocol standards to understand the reduction opportunities within the Group. We submitted our SBTi letter of commitment at the end of 2022, and are developing a detailed roadmap in 2023. We also enhanced our ESG governance structure, updated our global policies and compliance, completed our TCFD risk assessment and entered our ESG data into the CDP’s global disclosure system for the first time.

Our Global Chief People Officer James Kinney and our People team launched our DE&I platform: Diversity in Action. We signed the United Nations (UN) Women’s Empowerment Principles. We continued to focus on closing the representation gap in our industry by providing training to underserved and/or underrepresented talent. We support our clients in the mission towards a more sustainable future by continuing to use technology and creativity as a force for good in helping them amplify messages of the unheard.

Our impact model

  • Input

    • People

      8,3081 people
      32 countries
      48% women
      49% men
      3% undeclared

    • Ressources

      77 offices
      5,812 MWh electricity used
      14,071,207 km travelled by plane

    • Our relationships

      Clients
      Business partners
      Charities

  • ESG business model

    • Our vision

      Creativity and technology are forces for good and powerful tools required in the transition towards a more sustainable society

    • Our ESG mission

      We are a catalyst for the sustainable impact of our clients

    • Our strategy

      Zero Impact Workspaces
      Sustainable Work
      Diversity, Equity and Inclusion

  • Output

    • Offered 392 intern positions

      Launched Diversity in Action framework

      Enhanced content training

    • 3.7 tCO2e per FTE

      22.5% of waste separated

      57% of electricity is renewable

    • £977.2 million revenue2

      £51,503 (0.01% of revenue) and 4,090 hours donated to charities

    • 10,061 projects

      445 projects For Good

  • Long-term value

    • We empower our people to be a catalyst for change, in an inclusive, diverse and creative workplace

    • We create a climate-neutral and environmentally conscious business operation

    • We remain economically viable and invest in our innovations to enable us to contribute to sustainability challenges in the long-run

    • We improve the sustainable impact of our clients – to bring about the shift in attitudes and behaviour needed to reach the SDGs

Alignment with UN Sustainable Development Goals

  • Zero Impact Workspaces

    • 7. Affordable and clean energy
      7. Affordable and clean energy
    • Responsible consumption and production
      12. Responsible consumption and production
    • 13. Climate action
      13. Climate action

  • Sustainable Work

    • Industry, innovation and infrastructure
      9. Industry, innovation & infrastructure
    • Responsible consumption and production
      12. Responsible consumption & production

  • Diversity, Equity and Inclusion

    • Quality education
      4. Quality education
    • Gender equality
      5. Gender equality
    • Decent work and economic growth
      8. Decent work and economic growth
    • Reduced inequalities
      10. Reduced inequalities
  1. Full time equivalent (FTE) people excluding contractors, contingent workers and interns.
  2. Revenue excluding current year acquisitions of XX Artists, TheoremOne and 4 Mile.