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Hello, and welcome to the S4 Capital Q1 2020 Trading Update. I will shortly be handing you over to Sir Martin Sorrell, who will take you through today's presentation. [Operator Instructions]For now, over to you, Sir Martin.
Thank you very much. Thanks for the introduction. Welcome, everybody, to our Q1 trading update for 2020. I'm joined by Peter Rademaker, our CFO; Scott Spirit, our Chief Growth Officer. And we thought it would be a good idea for the people that are involved in our operations, Victor Knaap and Wesley ter Haar from MediaMonks, our Content practice; and Pete Kim and Chris Martin from our programmatic and data analytics practice to join us as well to give you a full idea of what's been going on in Q1 and what we think will go on beyond Q1.I should start by saying that, most importantly, most, if not all, of our 2,500 people, a lot of whom, I think, are on this call this morning, have performed extremely well during this terrible crisis that we've been going through, through COVID-19. And I want to thank them all for their efforts. And thankfully, we have been actually only marginally affected so far by COVID in terms of -- COVID-19 in terms of infections and the implications from those infections and illnesses. So I want to say first that we're very thankful for that; and secondly, to call out the efforts of all the frontline workers who've made our lives much more healthy and much safer during this crisis.With that, I just want to make a few outline comments. We've had a reasonably good first quarter in, obviously, very challenging circumstances for our clients. And our people have responded extremely well by working from home in an extremely effective way. I have to say that that's not something new to us. It's something that we've been used to. As digital natives in the industry, this is something we've been used to. So working from home was not really a wrench or a change, but neither was 24/7 working. So we've adapted very strongly to it. But also, I'd add that we are probably a little bit more optimistic than most about the pattern of exit from these lockdowns that we've seen -- mandatory lockdowns that we've seen in most jurisdictions. Obviously, Q2 is going to be an extremely difficult quarter for our clients, but we expect that Q3, we will see an improvement -- a relative improvement, I stress, from Q2 and in Q4 -- Q3 and Q4 and into 2021. So we would tend to be more in the V-shape school than the U shape or W or L shape, although there are going to be some sectors, as we'll go into, which will suffer more than others and will take longer to adjust. For example, IHG and IAG, reporting this morning in the travel and hotel industry, are probably examples of that.So with that, I'll turn over to Peter who will be dealing with the trading update, to Scott who will be dealing with the trends. Then Victor will take us through what's been happening with our Content practice at MediaMonks. Pete will take us through -- Pete Kim will take us through our data and programmatic practice at MightyHive. Scott will then come back to talk about clients and our merger activity. And then I'll come back with the summary and outlook and take you through -- take the people on the call through Q&A.So firstly, over to you, Peter.
Thank you, Sir Martin. Good morning, ladies and gentlemen. I'll run through the financial performance of the group over the first quarter. And what we have seen in the first quarter is a continued strong growth despite the early impact of COVID-19. And you may have read it in the press release, but what we've seen is growth percentages in January of 33%; February, 21%; and in March of 6%. So there, you see also the impact of COVID-19 on our financial performance. And if I look at Q1 as a whole, the reported revenue was up with 30 -- 73% to GBP 71 million, and our Q1 reported gross profit was up with 85% to almost GBP 61 million. More importantly, given all the mergers we have done and finalized last year, a more relevant comparison, I would say so, is the like-for-like comparison. And Q1 2020 was up compared to like-for-like constant-currency revenues with 17% and on a gross profit basis, our most important measure, was up with 19%. And then again, like I just said, in relation to the mergers we have done, maybe pro forma -- on a sort of full basis, including all the acquisitions for the full quarter of 2020, our pro forma revenue was up 19%; and our gross profit, 22%. All regions contributed. Although we have seen impact, of course, in different stages of the quarter in China, in Europe and in the U.S., but all regions have shown strong growth. And our cash flow, that remains very strong with net cash balances positive on most of the period. And on average, to show you an average of the first quarter, we have operated with a GBP 16 million net cash position, consisting of basically GBP 91 million cash on our balance sheet in average over the first quarter and approximately GBP 75 million of term debt and revolver that the company carries. And maybe most importantly, as Sir Martin just mentioned it already, our 2020 full year, what we are expecting is a sector-leading double-digit growth on a like-for-like revenue and gross profit basis, with reasonably strong EBITDA margins.Flipping to the next page. You see our practices -- our revenue and gross profit by practice, some of the numbers I just addressed in the previous slide. But here, you see it also on the practices split out, meaning that Content on a reported basis grew with 89% in the first quarter and programmatic with 32%. And that means that also Content is even relatively stronger than last year in the performance because it consisted of 80% of our total revenue, where programmatic contributed 20%. On a like-for-like basis, like I just mentioned, the 17%, if you split that out, that's -- Content grew with 17% and Programmatic with 18%. And on a pro forma basis, again, for the full quarter, including all the mergers for the full 3 months, Content grew with 20% and Programmatic with 18%, and total revenues as a result are up with 19%. On a gross profit basis, Content grew with 112% on a reported comparison, especially as a result of most of the -- 5 of the acquisitions and mergers were done in the Content practice, grew with 112%, where programmatic grew with 32%. On a like-for-like basis, Content with 19% and Programmatic with 17%. And on a pro forma basis, Content grew with 23% where Programmatic grew with 17%.And flipping to the next page. You will see our gross profit by geography. As we've seen also in last year and also in the preliminary results of 2019 presentation, Americas is our most -- that's North and South America, our biggest regions, contributing 73% of the total gross profit, where EMEA contributed 18%; and Asia Pacific, 9%. And the growth, what I referred to in the first slide, Americas, on a reported basis grew with 96%, where EMEA grew was 45% and Asia Pacific with 118% and again, more relevant in -- with all the mergers executed. On a like-for-like basis, Americas grew with 21%, EMEA with 11% and Asia Pacific with 21%. And finally, on a pro forma basis, Americas grew with 24%, where EMEA grew 11% and Asia Pacific with 23%.Going to the next page, a short summary of our precautionary actions taken to mitigate COVID. What we've done is -- although our growth is still very strong with approximately 20% growth compared to last year on a like-for-like basis, we took these precautionary measures. Because, as you know, from last year, our top line and gross profit lines were up over -- above 40% and now at the 20% level, and as a result, we immediately took our precautionary measures on cost and on liquidity. On cost side, basically, as a sort of waterfall from the top to the bottom, we took a 50% reduction in the compensations for the executives and the Board as of April 1 of this year, and we have been reducing and terminating office leases in numbers of cities and -- which is also accelerating the integration. What we have seen also from our people, and Sir Martin referred to it, it was, I would say, almost flawless the working-from-home methodology in the past quarter. But we have also seen that -- also going forward that we expect that working from home in the various territories will remain for at least a couple of months. And we have also seen that a lot of our employees already indicated going forward that the mix of working from home and in the office will be different going forward. And as a result, where possible, we immediately took the measures to reduce office leases because of working from home or using the other offices of the practices or the companies in the various cities to further integrate the company.Other OpEx reductions we did, of course, travel, which came sort of naturally, but also on our entertainment, marketing, promotions and bonuses. All these measures were taken by drilling down in these costs and basically setting certain targets and agreeing on cutbacks in cost, again precautionary because we were still in a good growth position, but basically gearing up or buckling up, as I would say, maybe for Q2 and Q3. And hiring reduction and scaling down on the numbers of freelancers was one of the measures we took and adjusting people to client demand where necessary. It was very limited, but where we could or needed to, we took these measures. And with the current measures, all of the above, the impact on 2020 will be around GBP 18 million relative to the budget that we have prepared to 2020.Going to the next slide on the precautionary actions, again precautionary actions to mitigate COVID-19 impact on liquidity. We've drawn down our revolver early March in order to -- not coming from necessity that we needed the liquidity, but basically to be on the safe side because, as I mentioned in the first slide, in average, we've been operating with GBP 91 million cash on our balance sheet and, in total, GBP 75 million debt in term loans and revolvers. We're monitoring cash of all entities on a daily basis. We have, of course, intensified everything in relation to cash balances and receivable collections in order to get in as much as possible of our cash flow. And the good thing is, and Scott will touch upon that also later in our client split per sector, that in the first quarter, approximately 53% of our revenues came with the big tech companies and the tech platforms. And they maintain at least -- also did the others, but especially you can see it on tech, they maintain their payment terms quite strict, so our cash inflow is still very strong. Although we applied for it, no government loans so far. And basically, what we make use of in the various territories, because every territories has different rules and regulations, but mainly, we took advantage in a way or took the possibility of the delays in tax payments where we could. And finally, one of the things -- these are the main things -- main measures we took. We've been waiving our bonuses for the execs and exchange that in shares with a lockup for 2 years in order to improve or maintain our liquidity position in the company.Scott, I think that was my part. So I would say over to you.
Great. Thank you, Peter, and thank you, everyone, for joining. So whilst the impact of COVID-19 has obviously been profoundly negative on our health and the economy and employment, as countries start to follow China's lead and emerge from the lockdowns, I think it's important for us to consider what that new normal looks like for our consumers and for our business and to that of our clients. If we could go to the next slide. One of our clients, Satya Nadella of Microsoft said on their earnings call, "We've seen 2 years worth of digital transformation in 2 months." And I think many others have conferred or even gone further, "We see consumers and brands rapidly changing their behavior and their consumption patterns." I know in my own family, my mom is now raving about the benefits of Tesco delivery, and my dad worked out how to FaceTime my sister and me at the same time. But it's not just our parents. I'm sure all of us on this call can look at our behaviors over the past month or so and see the same accelerated digital trends. Even those of us with kids who already spent most of their waking hours looking at screens are doing even more online.So I'm going to run through a few examples where we're seeing growth opportunities for our clients and for ourselves both now and, I think, in the future. The first one, if we can go to Slide 11, is streaming services. So obviously, with all of us stuck at home, this has been a real boon for the streaming and entertainment industry. One of our large clients, Netflix, added 15.8 million subscribers, which was more than double the expectation and represents a growth of more than 22% year-on-year in the first quarter. And another one of our clients, Spotify, gained 6 million paid subscribers. As they said, listening habits were changing due to coronavirus.If we move to the next slide. Live events have all been canceled. So whether that's sport, music or B2B trade events, they're no longer happening given social distancing. But that hasn't stopped the industry. So this is an example of Travis Scott, the hip-hop star, who performed live in Fortnite, which is a game -- mobile online game. Over 27.7 million unique players in game participated in that event, far more than his entire tour -- would tour that happened last year. Consumer and trade events alike are starting to go virtual at least for the foreseeable future, and we are helping a number of clients work through the implications of this.Next slide is gaming. So gaming and e-sports were already on the rise, but this was underlined when, during the middle of this pandemic, BMW announced that they've sponsored 5 of the world's leading e-sports teams. Another client of ours, a new client, the Twitch division of Amazon, has seen activity explode during Q1.Next slide is e-commerce. So our client and partner, Adobe, released a study recently that showed e-grocery sales have doubled between March 13 and 15 compared to the previous 11 days, which is when the lockdowns really started to kick in. And we've also seen from our client Amazon, they've hired an amazing 175,000 additional employees in Q1 to handle the surge in orders that they're experiencing.Next slide is learning. So any of those on the call with kids will be familiar with this, but Unicef has estimated 1.6 billion young people are learning from home while schools, universities are shut down. Google announced on their results that 100 million students and educators are now using Google Classroom, which is double the number from the beginning of March.Next slide, social networking. So our client and partner Facebook saw messaging volumes increase more than 50% and voice and video calling more than double across Messenger and WhatsApp. And another client of ours, TikTok, is celebrating being Q1's most downloaded app globally with over 2 billion installs now.The final slide in this section is around work. So obviously, we're not having a live quarterly event in London. We're all joining this by call, and that's probably become very usual for all of us now. Our work has been transformed in the last month. Our largest client and partner Google said that Meet, their online comms product, is now adding roughly 3 million users each day and has seen a 30-fold increase in usage since January. We're all obviously now familiar with Zoom. They've increased their users from 10 million in January to 200 million in March. So these are just some of the trends that we've seen in consumer behavior and enterprise behavior in the past month or 2 that have really been a giant leap forward for digital transformation. There are clear winners emerging in these categories, and many of them are the disruptive tech firms like Google, Facebook, Amazon, Netflix, Spotify, et cetera, of the world. But it's also obvious that many of the so-called traditional brands can immediately adapt and take advantage of this switch in digital behavior. So certainly, many of these lockdown-inspired peaks in behavior and consumption will probably recede at the moment we're allowed to go outside and reengage with the physical world, but these leaps forward will remain with us. And the conversations we're having with brands and clients are all around how they can accelerate their own digital transformation plans, how they can reach more consumers through digital marketing. And they are looking for partners like us to help them get there faster, better and cheaper, and that makes us feel confident that we're very well placed for a recovery.The next slide, 18. That said, S4's performance is clearly not immune to the effects of COVID-19, and we've seen significant volatility in the past month or so. And this makes any attempt of guidance very difficult, as Peter and Martin have said, but we did want to be as transparent as we possibly could with you and give you some impression of what we're seeing and, consequently, how we feel about the next quarter. So this slide illustrates an internal sales force report, which is a comparison between 2020 at the top and 2019 at the bottom for the global media volumes flowing through MightyHive systems on behalf of its clients. Now given the size and shape of their business, it is skewed to the North American market. So as you can see, and it's really about the shape of the graph that you need to look at, until mid-March, the shapes are almost identical, albeit with higher volumes in 2020 given MightyHive's strong year-on-year growth. Then, in mid-March, the spend drops off suddenly. There's a peak. And in 2019, you can see the typical end-of-quarter budget flush, which is the circle. This simply didn't happen in March this year as that coincided with lockdowns and the peak panic around the COVID-19 pandemic. Now on a more positive note, we have seen stabilization in spend since early April. And this is very much in line with the commentary we heard from Facebook and some of the other digital media platforms in their earnings reports last week. We're seeing spend levels and patterns hold steady at similar levels for the same period in 2019.We go to the next slide, 19. If we look at it from an S4 perspective, as Peter already said, we saw a strong start to the year in January with 33% like-for-like gross profit growth. But this began to slow in February as China instigated a strict lockdown, sending out ripples of concern across Asia and the world. As the virus started to spread around the world in late February, we moved to work from home in early March. And in mid-March, many markets instigated lockdowns of their own, causing what we described as a shock to the system for our business and, I think, the wider industry. Many clients simply stopped spending altogether as they instigated their own business continuity plans. In mid-March, we moved quickly to help our clients adapt and adjust to what was going on. And Vic and Pete will share more detail in a second on how we modified our own service offering, creating new products and services to help clients with this transition. In March, we had 6% like-for-like gross profit growth and continued to generate free cash flow with, as Peter said, 19% like-for-like gross profit growth for the quarter. Now given our stated strategy to be the service partner of choice for all the leading platforms, commerce and marketing technology companies, it's not surprising that the shape and scale of our growth was similar to the likes of Google, Facebook, Amazon and Adobe. We don't have access to our financials for April yet, but anecdotally, just as we see stability in the programmatic media spend at MightyHive, we see stability and green shoots of recovery from the March trough in the Content, the data and the consulting practices. And assuming the lockdowns continue to ease, as we're seeing across Asia and Europe and, to a certain degree, in the U.S., this gives us much more confidence going forward.I'm sure we'll discuss this further in the Q&A. But with that, I'll hand over to Vic, and he will cover how the Content practice has been developing.
Hello, everyone. Thanks for your time. Thanks, Scott. It has been an interesting few weeks. Like Microsoft and Google and many other digitally focused companies explained already, these are the weeks that digital transformation accelerates. We see marketing and IT working together more closely; sales and brands, online and offline, coming together. So we could definitely say that COVID speeded up digital transformation at many of the businesses and brands that we work with.Next sheet, please. So we've seen a couple of things happening on the Content side. First of all, our offices in APAC, predominantly China and Singapore, had a pretty soft Q1 because of the Chinese New Year, followed by the lockdown. And from the second week of March onwards, same as the trend that Scott just explained, we experienced a bit of a shock to our system by cancellations of work and especially in the work that's tied to production that involve a lot of people. So in film, in experiential, we saw some influencer projects being canceled. We had some consultants in-house at clients, but because of the lockdown, they couldn't enter the buildings. And we had some travel and retail brands that obviously spent less on advertising. So that was the Q1 and the last 2 weeks of March.On the main side, we have 2,000 people working globally that we moved to working from home. And as Scott mentioned already, that went rather smooth. Obviously, we have the tooling, the digital mindset and a way of working already to work from home pretty efficiently. And this resulted in a low number of confirmed cases, and we're now fully focused on mental health and productivities across the teams across the globe. And most importantly, we needed to do things differently on the commercial side. So we're now 6 weeks in. We have a strong pipeline of COVID commercial opportunities. There's a lot of new work for brands coming in or work that was supposed to go to another partner. So we see a shift from live-action shoots to more animation, from physical to live streaming events and especially, a lot of movement from trade show to other solutions.Next sheet, please. So the commercial side has been extremely important, and we have established 3 major things in order to keep our business healthy. So we've connected 100-plus people sales team within S4 that get daily briefings and materials to support -- and they are supported by 4 pitch teams that can turn around quick solution creates. We send you the deck with 7 different solutions that we provided from how do you do production during COVID, how do you do virtual events, how do you shoot film during COVID, how do I make my brands in a commerce environment in 2 weeks and so on and so on. That got a lot of traction, and we're proud to say that, and we will show that in the next couple of sheets, that already resulted in new work for HP, Nike, Toyota, Facebook, ABI, to name a few. And lastly -- so super important that those brands say something different. It's a different time. A lot of people are spending their time at home, and brands need to change their tone of voice accordingly. And lastly, we're helping our clients with the strategic next steps. We're moving into a new reality, 1.5-meter distance society with no big events possible and every single country dealing with that in a different way. So what we're trying to do is connect with our partners, like Adobe, Snap, Unreal, Google, YouTube, Forrester at the best possible way to create thought leadership on how that new reality is going to look like and how digital plays a role in that.Next sheet, please. So if we are looking at solve the now, we have already done, so briefed, fixed and produced multiple solutions for our clients. One of the great things that we produced is a Nike athlete program, and I want to show you 2 videos of that. So one is the Nike athlete program where Nike Master Trainer, Kirsty Godso, streams workouts every Saturday for an hour. So I urge you all to have a look at that, coming Saturday. But now you can see a 48-second version of it. Can we please play the video?[Presentation]
Many, many thanks for watching. Let me move on. So this is a great example of how normally Nike obviously is very active in gyms and workouts and how we moved it into the new reality by training from the trainer from their own apartment to your own apartment.Secondly, what I would like to show you is the MediaMonks-owned Safe Studios. In around a week's time, we managed to change the way -- how we work in all our studios worldwide. So we have studios, equipment, directors, DOPs, everybody on set from a safe distance. We created a video that's gotten a lot of traction, like how can we help brands shoot content during a time of COVID. So I would like to show you the video. It only takes a minute to show you how we organize that.[Presentation]
Okay. Good. Thank you. Thank you for your attention. So this is -- what you just see is one of the first in the world's safe, hygienic, fully equipped studios where the client can call in remotely so they can just look at their work from their home. So moving on to the next slide, how do we say things differently. We were involved in Toyota's Olympic campaign. Obviously, the Olympics are shifted to next year and even maybe further out. So what we've done, and we've seen that big trend, instead of making a new campaign, how can we repurpose materials that we already make and make them into a new context. So in this case, it is all about the athletes that overcome obstacles in order to keep themselves fit and ready when the society opens up. On the other side, I would like to tell you a little bit about our Facebook work, where we help train small- and medium-sized businesses how to boost their business by using Facebook in the best possible way. It's all produced in Spanish and Portuguese for the coming 2 months where small and medium businesses obviously suffered a lot from COVID. So solve the now, say things differently. And lastly, my last sheet is how to move into the new reality. So we receive a lot of questions on what's next. How do we -- we do a few things to help brands dealing with the upcoming months or maybe even a year to come with social listening, expert sessions. And we do a lot of virtual workshops with tangible outcomes, in tone of voice, in digital platform choices and how to deal with the upcoming time and how to adjust your content and brands in order to keep in touch with your customers even when we live in a 1.5-meter society.That's it from the Content side. Please, Pete, go ahead.
Thank you very much, Victor. On Slide 26, we begin our discussion of the data and programmatic practice. And broadly speaking, I'm pleased to report that from an employee health and wellness perspective, MightyHive and indeed all of S4 has responded extremely well, taking early action to move to work-from-home working situations. And that early action has paid off, and as of this recording, we are tracking exactly 0 confirmed cases for our employees worldwide, which is [ excellent indeed ]. From a business perspective, we have seen on the media front mixed impact across the various verticals and industries that we serve, along the lines that you may expect with certain industries that have been more impacted, reducing media budgets while others that have been less impacted, degrading less or even increasing in some cases. We have also seen in our 2 other lines of business, digital transformations and data, upticks in business as many companies and advertisers around the world are looking to use the respite in media in order to -- and in recognition of the ongoing acceleration of digital change to accelerate their own efforts in these critical areas.Moving on to the next slide, Slide 27. We see the top sheet -- cover sheet from some recent client materials that we have been -- we've sent out, responding to COVID-19 and encouraging our clients and potential clients to take action and build resilience during these challenging times.Next slide. Specifically, this is an executive summary from that same presentation. And from a client perspective, you can see that MightyHive has focused our efforts in assisting clients to navigate these challenges, which remain over the next few months and quarters. Broadly speaking, our short-term recommendations are divided into 2 parts: immediate actions, which are divided into 3 different categories: essentials like food and health care; treats and postponables like in-home entertainment and similar services; and heavily impacted verticals, including luxury goods and restricted items like travel. And for the essentials group, we are encouraged them -- encouraging them to maintain the course and continue to advertise; treats and postponables, adjust and monitor accordingly; with luxury and restricted pausing and assessing their spends in order to really deal with the ongoing challenges well. As we move forward, we encourage our clients to use this time to become more efficient, saving time and automating wasteful manual processes, reducing wasteful overhead and prioritizing customer insights and loyalty. And across all of these, we once again note that these are acceleration to trends that were already happening. Longer term, the fork that you see in our diagram represents the unknown shape of the economic recovery, which could be either -- we've, here, positioned it as the experience between a rapid recovery and a longer downturn. And we're working hard every day to make detailed plans with our clients based upon the themes that are listed here.Moving on to the next slide. We see that -- on this slide, you will see a sample of projects and services that we have already created to assist our clients. For example, the COVID-19 command center, which we'll go into a little bit more detail in the next slide. The answer is just a simple question, "How can I gain an actionable view into media spend and allocation during these challenging times?" Media platform overlap review, which is to gain additional transparency into technology cost-cutting and into working media spend. Media quality reviews, which are geared towards really making sure that the advertisements are appearing next to content that's most suited for brand objectives. Cost waterfall analysis, which, once again, take a look at the ongoing issues that have -- that continue even during COVID-19 around transparency in the supply chain to understand exactly where spend is going and to understand where the often confusing ad tech landscape is -- can be improved. Brand sentiment analysis and churn risk analysis, I think are self-explanatory and really just help our clients to respond quickly. And then the ongoing sort of projects that you see listed at the bottom include first-party data collection review. Even as COVID-19 has impacted, we've also been dealing with other challenges inside of the advanced advertising and media world with the ongoing "death of the cookie," really making third-party data less important and first-party data, which is the biggest chunk remaining, even more important than ever before. And so assisting folks with those types of things and then moving into analytics and IT and media platforms training.On the COVID-19 -- on the next slide, we talk about the COVID-19 command center. It's just a deeper dive into one of these things that we've been -- that's been very popular amongst our clients. And it demonstrates not only the specifics of one method that we're using in order to really help our clients during these challenging times, but also, I'm really proud of the fact that it shows the speed and agility which MightyHive and all of our [ compatriots ] at S4 can bring in terms of creating innovative solutions during even the most challenging times. And so for this COVID-19 command center, you can see that we're generating a holistic view of ad spend and performance, joining various different data sources together, building multi-touch attribution models that account for interaction between channels and creating dashboards that actively quantify this value so that it's usable in a timely fashion. And all of these can be done in 4 to 6 weeks at a very modest cost. And not only is it valuable during the COVID-19 crisis but also lays the groundwork for additional transformation and data work as we move forward.Inside of the next slide, we talk about one of the case studies around -- one of our clients who's been using MightyHive services not for media but for data and how that has already proven to be very powerful. And you see a quote here from John Halvorson, who is the Vice President of Global Media at Mondelez International, saying that, "In order to do advanced machine learning that the fastest growth companies in the world are using, you need to have a common architecture and a common location for your data." This is precisely the types of work that Mondelez and MightyHive had proudly achieved together. And rather, we helped and assisted Mondelez in getting new insights by really taking a look and inventorying the different media and sales data that were trapped in silos and often needed a little bit of massaging in order to be uniform. And we created a plan to really clean up that data and figure out how to put out a new global advertising taxonomies to make sure that the data that was coming in was clean and accurate. And from there, moved into a world in which we could combine these data sources and ultimately creating a automated cloud-based approach that allowed Mondelez to monitor its own performance faster and in more flexible ways than legacy methods had previously been able to do. And I think the results really speak for themselves. It's often said that you cannot improve what you cannot measure. And by improving the measurement of these results, Mondelez was really able to increase their ROI by 20%. Double-digit gains even during challenging times. And so we're very proud of these results, indeed.The final slide that we'll talk about on the next page really is something that we're announcing today, which is that I try to support our clients during these challenging times of COVID-19. MightyHive is going to be making one of our own internal tools, the MightyDesk, available free of charge to our clients. And the specific things that we're doing and it's not sexy, but it's incredibly important. Ad tech and advertising and online advertising veterans know that ad trafficking into ad service is one of the most critical yet time and time-consuming and labor-intensive aspects of digital marketing. And internally at MightyHive, we've created software that cuts huge amounts of time out of this sort of necessary, but again, labor-intensive task. And for some -- in many cases, this has saved hundreds of hours per month trafficking campaigns within Google campaign managers and other ad services. So we're very proud to announce that we'll be making these internal tools available free of charge to our clients, and we encourage any clients that might be listening to visit the web page listed here for additional information.So with that, I'll turn it back over to Scott to take it from here. Scott?
Thanks, Pete. So next slide, please. So I think despite the challenges of COVID-19, and you've seen our responses to that from Pete and Vic. We've continued to see significant new business wins during this period. So from existing clients via our land and expand strategy, which we've talked about previously, so the likes of Google, Netflix, HP, Facebook, P&G, Amazon, et cetera, as well as new clients. We continue to see strong demand for our services, as Pete said, around first-party data, on data strategy, vector engineering, cloud services, analytics. And in Q1 in this area, we won significant assignments from the likes of SWB Insurance, TV Globo, Fuji TV and then a European luxury brand and an Asia-based global automotive brand. Several of these assignments also include media, and we also won major programmatic in-house projects for a global [ CBD ], a global e-commerce software company, a global automotive company and a major U.S. hospital group. So in-housing continued the pace.On the content side of our business, we expanded many of our existing relationships and gained particular traction around our embedded and hybrid model with our larger tech clients. We won new assignments from a global pharma company, from Quibi, from PayPal, Twitch, Dole Food, AkzoNobel and CEMEX. And when it comes to major pictures, we are pretty selective about participating given that they're often long drawn-out processes driven by procurement. And we've been fortunate enough to have a supply constraint, not a demand constraint, on our resources. That said, we do continue to have a robust new business pipeline. And whilst we note comments elsewhere in the industry, the overall pitch activity has declined, we are involved in several potentially game-changing pictures for us for a European automotive company, 2 global pharma companies, a global FMCG and a global electronics company. And I'm sure Pete and Vic can confirm that they've never been busier on the new business front.On to the next slide, please. This is a slide which illustrates the balance of our client portfolio. So just to be clear, it's based on 100% of our Q1 2020 like-for-like revenue base. And we discussed this a little at preliminaries, but we feel with such strong exposure to the tech sector. And many of the clients we've mentioned today, this gives us an excellent base for growth and resilience. We have minimal exposure to the worst-hit sectors such as auto or retail fashion or travel. But even there, we've seen some strong work from the likes of Nike, Toyota, as Victor showed.And then on next slide, moving on to M&A. On the merger front, we were delighted to welcome Bruno and his colleagues -- around 300 of his colleagues at Circus to the S4 family in January. Circus is a leading digital creative agency with offices across Latin America, L.A. and Madrid. They're highly awarded. They have a fantastic client list, including Google, Netflix, Spotify, Twitter and Uber. And we've already partnered with them across parts of S4 to great success. Our priority, as Peter and Martin have already alluded to, is to protect our balance sheet and our liquidity. However, we do have a modest pipeline of [ urges ] in highly strategic areas. There's a couple of small data analytics specialists, an area we see continued strong client demand in; and a creative agency in Germany, which is one of the last remaining geographic [ depth ] in our portfolio [indiscernible] various spaces. We continue to talk to agencies in areas like data analytics, e-commerce, which have seen increased demand as a result of the current crisis.So with that, I'll hand you over to Martin, who's going to summarize.
So thank you, Peter. Thank you, Scott. Thanks, Victor, and thanks, Pete. So I just want to go to the summary slide, the last slide before we get to Q&A. Our people, I'm glad to say, are safe. And most of them, if not all of them, a couple of our offices are already up and running in Asia Pacific. But there are basically -- most of them are well and safe. We have had one or 2 infections and one or 2 members of families have been affected seriously, and our hearts go out to those families and we wish them long life.Having said that, S4 continues to lead the industry, as you've seen in double-digit top line growth and in margin. We have a strong balance sheet, as Peter has emphasized, and we've -- and liquidity. And we've stress-tested it not only in the current quarter, but beyond that, in Q3 and Q4, and in fact, into 2021. And our annual report, our digital annual report and our physical annual report has been issued today, and you can see that on our website. We've taken early cost action, as Peter said, and we retain significant flexibility in relation to what may or may not happen. We have a very favorable client portfolio, as Scott has emphasized, with 15% plus of our -- of our portfolio in the tech sector. And we have a very healthy new business record and pipeline. And we're involved in a number of very significant pitches. What we see the impact of COVID-19 as being, and this is not new to you in terms of view, is that the -- all the trends are pointing towards increased digital transformation. There is a controversy between those who think that the world will be in recession and those who think that the action -- the fiscal action taken by central banks and by governments is sufficient, at least in the short to medium-term, to buttress what's happened and provide growth and continuity. But whatever happens, we see digital transformation accelerating at the consumer level, at the media -- level of media and last but not least, the enterprise level. So COVID-19 really accelerates the adoption of our Holy Trinity model and integration. And last but not least, we are ready from now because we're seeing lockdowns ease in various jurisdictions, we're ready for recovery, whatever it's shaped.So with that, can we turn over to Q&A, please, operator. Thank you.
[Operator Instructions] Okay. So the first question is from Johnathan Barrett from Panmure Gordon.
I really just want to focus on the more difficult segments of clients. So the travel of strong live event segment. And just the nature of the conversation that you're having with clients about how they're starting to try and work out and how to come out of this. Are they giving you any hints as to how they're going to manage that? Are you in quite advanced dialogue? Or are you just simply having to be patient for the moment and wait?
Thanks, Johnathan. I think basically, they're all wrestling with the problems. We had a call last night, Wesley, Pete and I with a mixture of CMOs, data offices, about a dozen of them for about 1.5 hours last night. And I think it was quite interesting to see how they were wrestling with the issues. Now they came from various sectors, there were one or 2, I think, related to travel and hospitality, but nobody, I think, front and center, in that. I mean, I've listened to Airbnb and what they're doing. Obviously, they've been heavily affected. You saw the layoffs they made yesterday, which were very significant. But Brian Chesky talks about adaptations in travel patterns. So for example, on leisure, less international, more domestic. On business -- the nature of business travel will change. It will get less, probably be more domestic than international, at least in the beginning. And use of technology. So I think people are wrestling. I mean, maybe, Victor, you could say a little bit. You're close to travel clients where we've seen cutbacks in spending, as you mentioned. And Pete, maybe you can add a little bit from your point of view. Victor any thoughts on the travel and hospitality area in what we're seeing? Because we do have clients in that area, although they are a small proportion of our revenues.
Yes. Thank you for that. So when we look at our client base, we look more like 3 kinds of clients like V-shaped like coming up, returning to the market very quickly. U-shaped and L-shaped. And we try to map the different kinds of clients based on those patterns instead of looking just as a general audit. And I feel like for the travel industry in particular, it's a little bit too soon to really look at that. So on automotive, for example, we have great dialogues already how to get back to it. We see trends into, for example, smaller electric cars that are popular. So that will recover way faster, and so we're already thinking about creative concepting, how to reach the new target audience, what kind of tone of voice. But I feel from a content perspective, the travel industry is a little bit too early to really change the tone of voice in advertising already.Pete, anything to add?
Yes. So from our perspective at MightyHive, as we talk to clients inside of the heavily impacted sectors, we see a study in contrast and the contrasts really are between sort of the desire for digital transformation and the ability with which their organizations are able to be agile and to actually have them occur. And so I'd say that I've never before seen more desire from all -- really all industries, the mentioned industries, notwithstanding, and the -- and so everybody really recognizes the opportunity to do these things. Unfortunately, for some of the more heavily impacted industries, that's offset by just some financial realities, in particular, those that have heavy capital expenditures that they need to take into account in order to see if they can afford such changes right now. So broadly speaking, I would agree with Victor's comments, that it's a little bit too early to see it, and I would just add those nuances that there is -- the desire is high. But at the moment, the ability may be impacted by financial realities.
And just to add one thing to what Victor and Pete said. We heard last night, agility is often talked about as being the key characteristic that companies need even pre-COVID-19. But post-COVID or during it even more so, what was clear and apparent last night, and this does not also CMOs and CDOs was that agility has been ratcheted up inside their organizations. And that third point, when you move from consumer to media to enterprise, that third point around enterprise, that, we think, is going to be a very, very significant change. That CEOs, CMOs, CFOs, will now start to push. There is no status quo anymore where that's gone. Q2 is a good illustration of that. So chump change will be very, very violent and significant in terms of transformation and particularly, digital transformation.
Can I just take you on to working capital with regard to changes. Do you think we will see a step change in the way that media payments are handled now because of what's happened? Or do you think that the market has settled on that approach?
I don't. But, Peter, do you want to talk about what we see on media payers? We made reference to it in the RNS statement because we thought it was a matter that people in the industry had commented on that there have been significant changes. A couple of the holding companies pointed to that, although when you looked at their working capital flows, it didn't seem that there had been sort of extensive activity of that nature. But Peter, do you want to say what you see?
Yes. So what we -- like I mentioned at the start is that we are in a very, let's say, good position also with our client portfolio, 53% is technology. And they remain to pay in these typical technology sort of payment terms, which is somewhere around 30 and 45 days. So our inflows are strong, and it's not, of course, our only technology. And maybe on some of the business segments, we see some delay, so that's true. It's absolutely true. There is some delay. We're increasing slightly in our working capital. But I would say, so far, so good. So we don't -- we are not confronted, at least not yet. Although I would expect some in Q2 or maybe even slightly more in Q3, that we will have some more pressure on our working capital because as a result of delayed [ inflows ]. But I would say, so far, so good. That's what we have seen to date.
Yes. And I would just add, I mean, it's -- as Peter was answering the question, I was thinking about this in relation to the [ ISBAR ] report that we saw overnight, which we may get further questions on this call, and I'm sure Pete would like to respond to that. But I think we're seeing as a different category in relation to this issue around working capital and media. Our model is much more trans -- well not much more. It is transparent. And much more flexible. And therefore, I think we are sort of in a different category, maybe to others, in the way that clients view us and what we do. So the model is, as I say, transparent and flexible. So I think that's where we are. So I think we've seen a little bit of pressure, but not to the extent that other people seem to be indicated.Okay. Next question.
Okay. So the next question is from J. Spooner from HSBC.
Could you talk a little bit more about the GBP 18 million of cost savings? I mean, where is that coming from? Is that a lot of great plans that are not now going ahead? Or is there quite a lot of focus on the existing cost base within that?Secondly, can you talk a little bit more about the challenges of winning new business in this environment? Are clients more tempted to stick with existing suppliers? Or is there a willingness to try the specialists like yourself? And I have a follow-up question is maybe if I wait till the end.
Okay, fine. Okay, Joe. Thank you. Peter, do you want to deal with the cost question?
Yes. Sure, sure. So Joe, coming back to your question. So the GBP 18 million is that's relative to the budget. So like I tried to explain, it's a combination of reduction in compensation, offices, OpEx reductions. It's relative to the budget. And if you would look, for example, compared to -- and of course, this is, again, relative to the budget, where we were growing at -- or expected to grow at high levels. But if you would compare it to our pro forma numbers last year, let's say, our operating expenses our personnel and indirect cost, it would represent approximately 10% of that cost base. For 2020, on a budgeted basis, it would be slightly lower, of course, because of the expected increase. But basically, it's a waterfall of measures that we have taken precautionary, as I tried to mention -- or as I mentioned. And then, yes, the categories I already addressed. So basically, that's what we did. But I'm not sure if that answers your question.
Okay. On winning business, just before I ask maybe Wes, Wes ter Haar, Victor's partner who's on the line as well. Maybe he can respond on the new business one. But I'll just make a comment that I think we tend to do best when clients have within them change agents, put it like that. So when clients want to change their model, that might be to increase agility, to increase speed, accelerate. I think we tend to do better in those circumstances. And as I said before, we think the sort of penetration or extended change agents is increasing. I mean, COVID-19 is going to accelerate change, particularly in digital transformation. And therefore, I think the atmosphere or the climate will be favorable to us. Wes, do you want to try and answer the question on how does winning business, then maybe Pete can come in from a MightyHive side?
Yes. I have to admit 6 weeks ago when the sharp shot to the system happened, I think it would have been overly boasted to predict the pipeline we actually currently have. I've seen a huge uptick in new business. We had a really interesting quote from a key client yesterday in an all-hands meeting. He said, "our 2 24 road map just got compressed to 2 21." Everybody has moved digital transformation from the “it's important, but not urgent” category to “it's urgent and needs to happen now” because COVID is putting immense pressure on everybody's digital ecosystem. So we're seeing sales cycles shorten, people moving quicker. I think we've said many times that digital transformation does not happen in PowerPoint slides. It happens in projects, it happens with implemented process, with people. So I think we are positioning against the sort of traditional slower nature of consultancies with urgency and that urgency has never been more important. We're also seeing the forming of completely new industries and businesses. If you look at the event industry, which is huge, all of that money is now being reframed and retrofitted into digital native experiences, which is where we are at our strongest. So we're actually seeing some of the bigger pitches this year are forming purely because of these new sort of needs being pulled together from both companies and consumers. So new business is actually very active. And I have to say, I said this yesterday in a pitch call, we hate that some of these [indiscernible] exist. For all of the reasons we are aware of, but it's very exciting to actually talk about these things because it's the reason we started MediaMonks originally, why we all joined S4. So from a new business perspective, very exciting.
All right. Pete, so I think we've got Chris Martin on the -- I've got some -- Pete is in Arizona. Chris is in Colorado. Godforsaken hour. But if you're still awake, Pete or Chris. Go ahead
Yes. This is Pete. So I think it's pretty clear to everyone that times of great change require new approaches, and our clients realize that. And so we have seen, as we mentioned, a strong uptick in interest in our digital transformation, and in particular, our data businesses. And the best clients that are out there, just are realizing that the vast changes that have been pushed forward and pushed before by COVID-19 require new partners and new ways of working and new methods. And all of these things have resulted in an uptick on our side. So what we're seeing is, yes, a much greater willingness to reexamine relationships, sometimes that have been decades long. But in the harsh light of reality and what we're all going through now may not -- may no longer make sense and therefore, it creates room for new partnerships and new ways of working, all of which are benefiting S4 broadly.
Yes. And I would just add to that, Pete, I mean, do you want to say anything about what you see on the data and analytics side because I think there is -- and those are budgets which sometimes, and not just marketing budgets, they're IT budgets, too. Do you want to say a little bit about -- you touched on it a bit more.
Yes. Yes. I think that it's pretty clear. And once again, I'll just mention this -- some of the discussions that Sir Martin, West and I had last night. And one of the emerging themes was definitely agility, but also just this notion that agility must be paired with insight because agility on its own or speed on its own may actually just encourage you to run in the wrong direction even faster. And so you have to know not only be able to move fast, but also to know where to move and insight definitely is the sort of key factor in that and insight comes from data. And it is -- and I think people know that. And so if things were a minefield before COVID-19, and people were creeping through it, now they're sprinting through them. And in fact, matters more than ever before, and I think that's obvious. And so what we are seeing is a very, very strong uptick in data programs, really trying to figure out just a very simple sequence of events, which is you must take a look at all of the different data sources that you have. You must clean them up and standardize them and then combine them and then you must analyze them and take action. And these data insights can -- must be pervasive, not only into the marketing and the advertising, but into all aspects of customer interaction. Customers these days do expect seamless interactions, whether they be online, off-line, in store, on the phone, anyway. And so data is your memory, data is the ability to actually mesh those experiences together. And so we do absolutely see an uptick in that foundational element. And the best marketers in the world are really kind of pushing in this direction, and we're the beneficiaries of that. Sir Martin?
Okay. Joe, you have a follow-up.
Just a final quick one. The statement this morning referenced that you had seen some shift in terms of customer spend from the first half to the second half. I just wondered how significant that was? And if there were any particular trends within that?
Yes. We were talking generally about the 2 buckets as we put it in the tech bucket and the CPG, pharma, retail auto travel hospitality buckets. I think on the tech side, we have seen, I mean, a number of tech clients had plans to invest heavily in Tokyo 2020, which is now not going to be renamed 2021, but goes to 2021. With a question mark over whether they will be able to deliver an Olympic games in the classic sense given the phased lockdown because planning takes a long time. So that's -- then Euro 2020, also investment. Investments in baseball and basketball, the Premier league here. So there was a lot of money freed up by the cancellation or postponement of those events. And what we saw was money switched to purpose. I know one analyst was on early asking what purpose campaigns are. And basically, they're around the issues that we're facing with COVID-19, support for frontline workers and PPE and health and safety. We saw money switched into that. But again, then the money being postponed into H2 because not all that money could be used, let's call it, the live sports or -- and related activity spirit -- live experiential stuff could not be moved into those purpose campaigns. And we saw money being shifted into H2. On the understanding and the sort of deals were cut, if you like, between the CMOs and the CFOs, that that money would be spent but would be spent in H2. So I think there is a little bit of that. It's not pronounced. There are tech clients that are going the other way, without naming names, but it will be apparent. There are a number of tech clients that are investing heavily, either in equity investments, or in repositioning their companies because the tech companies have been exposed to a number of issues: the privacy issues, the brand safety issues, interference and election issues and some of them are seeing this as an opportunity with when they are relatively strong to invest in building their brands in different ways. And I think the tech companies will emerge largely, and I'm referring to hardware, software and platforms, will emerge from COVID-19 in a better position in terms of image and reputation because of the sorts of things that they're doing. Amazon hiring, as Scott said, 175,000 people. Google and Apple cooperating on apps for tracking and contact tracing. Those sort of efforts, which have been seminal in terms of helping with the health and safety issues around COVID-19, I think, will rebound to the benefit of the platform companies, hardware and software companies.Any other questions, operator?
Okay. So this is the final question now from Matthew Walker at Credit Suisse.
Just a couple of questions. So the first is, what do you think the range of outcomes realistically is -- I mean, you talk about double-digit growth, does that mean 10? Does that mean 15? Does that mean 20? And what do you mean by -- when you talk about your EBITDA margin. Can you give a bit of clarity around that as well?And then finally, what's the shape of the quarter? What's the anticipated shape of the quarter? I know it's uncertain, but you presented some data showing stability in the digital media volumes. Does that mean -- I'm probably barking up the wrong tree, but does that mean we should expect a Q2 from you, which is broadly flat, and then growth in Q3 and Q4? What it -- just interested in your thoughts.
Well, you asked the really difficult question, Matthew. I'm so glad that we got to question three. Let me have a go and then Peter can sort of come in on it. I don't want to sort of be drawn or give a definite scenario because we've looked at the downside, I mean, we are forced, if that's the right word, as we issue our annual report, to talk about liquidity, to talk about the adequacy of working capital and bank facilities, et cetera. So we go through -- let me put it like this, really -- the really negative cases. You tend -- when you do these stress tests to look at the downside. I think some of the holding companies have looked at 0, no growth, as being their best case, which would not be our best case without naming percentages. I mean, you use the range. But you know what we did in Q1. You know that we did 19% on top line in terms of like-for-like growth in gross profit, which is the key number. On a pro forma basis, it was bigger than that, 22% or whatever it was. So you -- we wouldn't go as low as 0. On the other hand, when we looked at stress tests, we would go lower than that.On the question of reasonably strong, what we're indicating is we do see margin pressure as a result of what we've had to do and what's happened on the top line. Remember that when we budgeted at the beginning of this year, pre-pandemic, we are budgeting for 30% growth. And if I was -- if you push me to the wall on this call or beyond, I would say, on our media side, we were seeing sort of 10% to 15% declines from the budget of 30%. And remembering that media and data was about 30%, a little bit less, 25% of our business, and content was around 70% to 75%. On the content side, I would say it was a little bit less. I think you heard from Victor and Wes, that when we got into COVID in mid-March, there was a shock to the system, I think was the phrase that Victor used and Wes used. And -- but the shock has ameliorated. And I would say on the content side, it's not 10% to 15%. It's probably 5% to 10%. Now you can do the math on that. That -- if you ask me, again, pin me to the wall, what do I think? That's roughly where I think where we are on the basis of current knowledge. Margin will still be strong relative to what you're seeing in the rest of the industry. But I think we've got to expect there will be some softening of the margin. But I think we'll surprise ourselves by the end of the year in how well we do on margin. There's also a philosophical question here, Matthew, but we've -- if you look at the cost measures we've taken, there's sort of a waterfall of cost measures. We've done the easy stuff first. We've cut travel. Obviously, travel has gone. Nonessential business, freelance expenses, but without sort of cutting into our people, and we've really maintained -- we've altered the pattern of investment in people to client demand. For example, in Australia, we have sort of considerable resource around one of our partners, Adobe. Which we want to keep in place even though with physical distancing and the lockdown contact on client premises is not possible. So we've had to decide to keep in place resource, which in the current climate is under pressure because we think in a very short period of time, that scarce resource will be available to us again. And I think we're already starting to see some take-up from that. So I'd just finally say that in our -- at a time when nobody is willing to give you guidance, look at the number of companies that have just terminated any guidance, we're being a little bit braver. And I think the reason we're being braver is that we see we have a little bit more visibility because of the nature of our client base and probably something to do with the relative sizes of our business. Our businesses to us is complex and challenging, but against what others may have to wrestle with. We don't have the albatross of analog. We're operating in areas where there is more life, and people are looking at the sky rather than looking at their boots. So I think we can afford to be a little bit more realistic about it. But that's without being highly specific. Now I've said all that, Pete. Is there anything you want to say in addition?
What should I add Sir Martin? I really think -- I think -- because otherwise, I'm going to summarize what you said, but I think this is exactly what I would have said, if I would have answered the question. So I don't think there's anything to add for me at this very moment.
Is that precise enough for you, Matthew?
Well, I just wanted to come back on the Q2, notwithstanding what I said about the full year?
Yes. I think what we've said is that we see some stabilization in April. I mean, I remember Facebook not in their presentation, I think the CFO said that the first 21 days of April, they'd seen flat. Was that right, Scott? Was it flat at Facebook?
Yes, flat on last year. Yes.
Yes. And so we've seen some stabilization on the slide that Scott showed you where you had the numbers for January, February and March, and it went into April, not with a number, but programmatic was flat, and we were seeing content and data up. And I think you've got the tone from Victor and Wes and indeed from Pete, but that's pretty much what we're seeing. So qualitatively, I would say, we are seeing sort of some stabilization. If you -- we meet daily. The coronavirus crisis group, the CCG, as we call it, the people on this call plus one or 2 others meet daily. And if you look -- if you were listening into those calls, today as opposed to, say, 4 to 6 weeks ago when we initiated them, you put -- probably the tone is more upbeat because as Victor and Wes said, I think Wes said it very well, is the inbound and EBITDA and it is not inbound, we go for it. So it's inbound and outbound. New business activities are running at very strong levels. I mean, we're -- in the release we set our pipeline was at the same level as last year. And we -- just so you understand, we track, for example, on the content side, our pipeline, and we look at the percentages at any point in the year that are committed and contracted work and what we need in order to make budget or revised forecast or whatever it happens to be. So I think the pipelines are pretty strong given what we've seen the impact of the COVID. So I think the guidance that we're giving, and we're continuing to give some guidance. We haven't retreated behind the wall of so difficult and so uncertain, that we're not going to give you any guidance. We're giving you some -- I think, some thoughtful guidance and really telling you what we know, as Scott referred to transparency. And pretty much what we said on this call is what we know.Thank you. Anything else, operator? Or are we done?
Yes. We have one more question that's being registered from Paul Richards at Dowgate.
Two questions from me. The first is there's been some suggestion from some of the other holding companies that there's been a slowdown in housing. Just be interested in your perspective on that. And the second, could you provide a bit of color on Firewood? Obviously, one of the bigger mergers for S4. Can you give us an update on how that is progressing? I would love...
Okay. Scott, in-housing is your favorite subject.
Yes, sure. I'll take that one. So I think -- thanks for the question, Paul, and I hope you're feeling better. I think on that one, firstly, you have to define it, right? So I think a lot of people make the mistake of thinking in housing is a binary concept, so you've got outsourced store, 100% in source. And that's not at all as we see the industry. So I think we've explained before that we see it as a spectrum in a different way that clients engage with agencies, whether that's hybrid or embedded or indeed in house. And we would counter that to what you were sort of question quite strongly, I think. We've explained that we've won significant new business in this area in Q1, we've got significant pitches out there, both on the content and the media side. And all the statistics you see in surveys and in the marketplace sort of talking about in-housing need to the CEO of the association of National Advertisers did an interview campaign this morning saying that the in-house agencies have really come to the fore and shown their strength during this period. So don't agree with that at all. I mean, I'm not surprised that holding countries are saying that. It's a bit like us [indiscernible] if they've seen much demand for Christmas, but probably not not going to help much because we don't -- we rarely compete against them on in-housing assignment usually against other specialists or consulting companies. And so they might not be seeing it, but we certainly are.
Yes, I'd just add to Scott's comment that the [ ANA ], [indiscernible], who heads the ANA and the American Association of National Advertisers came out strongly. I think it was last night with a presentation or speech around COVID-19 driving clients or encouraging clients to in-house. And I -- as Scott said, it's -- there are varied models here. You mentioned Firewood, we'll come on to that in a second. Firewood has an embedded model, which is where they embed people from their agency. Firewood is a part of MediaMonks, and they embed them from their agency in the client. So you have outsourcing at one end of the spectrum, embedded let's say in the middle and then in-housing at the other end. So it's not, as we say, a binary choice, they're are stages of it. But it's interesting that the ANA is saying, and this is our experience that, on that spectrum, we're seeing increased interest, certainly experimentation. And now I think you will see further implementation. I think I'd agree with the ANA that we're starting to see greater interest in that area. And particularly in 2 areas: embedded, where -- it's our people, but they're embedded in the client. They're working and this will, obviously, COVID-19 will impose restraints and constraints in that -- from a security and safety point of view, but embedded becomes more important. And I think in-housing will become a greater feature. I don't know, Chris, if you're on the line still, do you want to say anything about in housing because you do a lot in that? Are you still there?
Actually, Chris had to drop off. This is Pete. I can cover that.
Okay, go ahead Pete.
And so what -- I would agree that we have seen an uptick in the interest around in housing, and that has been caused by the acceleration of trends. And also just the ongoing realization of other factors that we have seen in the past. Notably, speed and agility is always important, has always been importance is even more important today. And just -- I think it's not hard to claim that's embedded or in-house teams can move faster, communicate better and respond more quickly than teams that are outsourced. And the other thing that I would say and point to is that the notion that first-party data must be both protected as well as used to drive revenues and profits represents a bit of a conundrum for folks. And I think it's very clear that the data must be used, but it must be protected. And the only place that that can happen is in a much more protected environment like in-house. As Scott notes, we do look at these things as not just a binary solution. We're not in fully in-house or fully outsourced. There is a range of options in between. We do believe that every advertiser in the world is going to have to make some move along that spectrum. And we think that in keeping with the general notion that COVID-19 and recent events have accelerated these shifts we certainly believe that, that's the case here as well.
Okay. And then just turning to Firewood, I mean, I would just say that Firewood had a tremendous first quarter, and that's continued. Wesley, do you want to comment on Firewood seeing that you're closest to that?
Yes. Well, to your point, a very strong Q1 I think they're model -- I agree the embedded sometimes the spectrum isn't that clear to people. I see a lot of clients looking at it as a more efficient model because it is. So we're seeing involve the uptick of new business opportunities within the Firewood pipeline, that sort of point at that indicate and one or 2 interesting deals that are very close to being signed. So we're not seeing clients or the market pull back. I think it's more the definition of what it is. I think you should look at it as an idea of having great people that organize and operate in a flexible way around client needs. Sometimes that is partly in offices, which, of course, at the moment, nobody really much has offices. Sometimes it's in lower-cost production hubs that we have. Sometimes, it's a mixture. It's more about the agility and the structure to make it work together as a single team. Instead of the sort of traditional, I would almost say legacy model briefing handovers and rabbit out of hat created process. It's more about the way of working on it is this sort of really specific thing about people in offices. But overall, to Pete's comment, we're seeing that pipeline be super healthy. And I would expect more clients to move into it. I think there was a report that came out 1 or 2 days ago from Gartner, if I'm not mistaken, that shows that agency fees are probably the first thing being looked at. You should really look at the model that we're building as we're not sort of a typical agency fee model, right? So we see a lot of what's happening in the market as a positive for our model to [indiscernible].
Okay. Thank you, Wes. Thanks, everybody, on our side for the call. Thanks, everybody, for listening. And we'll try when we meet for the half year to put more flesh on the bone from Matthew's question and be more specific. But I think we've given you a lot of specific guidance, certainly more that you're getting from others in the industry and beyond. So thanks for listening, and we'll see you at the end of Q2. Thank you.
This now concludes today's call. Thank you all for joining. You may now disconnect your lines.