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Good morning, everybody. It's an unearthly hour for some of my colleagues that are actually on the West Coast. We're the East Coast. So we have 3 people on the call who are literally up in the middle of the night. So thanks firstly to them for being with us. Thanks for joining us. This is the Q3 trading update for 2021. We've divided it into 7 sections. Peter is going to do the numbers. And then Scott will look at clients, mergers and market trends. And then we've got DJ, I think in Mexico, DJ, who is going to cover technology services. Lewis, who's in Brooklyn to talk about the metaverse. Michael is on the West Coast talk about IDFA and cookies and might be interrupted by his 2-year-old son Cyrus, who probably pulled the plug on the presentation. And then we'll come back to a summary and outlook for myself. So to kick off, Peter, why don't you go through the numbers.
Yes. Thank you so much, and good morning from the Netherlands, and thank you for joining us in our third quarter trading update. The group continued to progress with a very strong third quarter performance, delivering strong reported and like-for-like growth numbers. And as a result, we see very strong 2 years tax on revenue and no gross profit net revenue in all quarters of 2021, which I will address in a few slides. The number of people in the firm are now -- was now over -- or is now over 6,900. And at the end of the third quarter, up 52% on a like-for-like basis compared to the same period last year and as we continue to hire aggressively ahead of the strong gross profit growth of 47% year-to-date. Now turning to the numbers, the most important numbers on this slide. The Q3 reported revenue was up 106% to GBP 178.4 million and Q3 reported gross profit, our most important measure of gross profit or net revenue was up 92% to GBP 144.4 million. Our Q3 in sales like-for-like revenues was up 56% and our Q3 like-for-like gross profit, up 42%. And as signaled before, EBITDA and EBITDA margin continue to reflect increasing investment to prioritize top line growth, I will come back to that later, given our success in building our whopper client base in structures as well as emerging services areas and technology platforms to increase efficiencies. The company, as you can see in a minute, is trading in line with the external top line expectations, surpassing the third guidance revision, which we did in the summer to 40% from 25% at the beginning of 2021. Liquidity remains very strong. In average, in the third quarter, we were in the sort of net cash balance between GBP 1 million and GBP 2 million. But more recently, our net debt position is fluctuating between GBP 20 million and GBP 40 million after significant merger payments. And following our GBP 375 million senior secured term loan and GBP 100 million revolving facility, which we completed in July, very early August. And finally, the company latest and fourth 3-year plan for '22, '24 calls yet again for a doubling of top line and bottom line organically. And on the next slide, you will see our quarterly and year-to-date performance compared to reported and like-for-like numbers. So jumping into these numbers. Our content practice delivered a revenue of GBP 129.5 million in the third quarter which was 87% up against reported last year. And Data & Digital Media growth was 186% coming to GBP 48.9 million of revenue. In total, GBP 178.4 million revenue for the third quarter, 106% up against reported. And on a like-for-like basis, content grew with our Data & Digital Media practice with 44% and in total, 56% like-for-like growth in the third quarter. And finally, year-to-date on a like-for-like basis, the reported numbers I mentioned in here. But on a like-for-like basis, content grew with 61% to GBP 328.8 million. Data & Digital Media practice grew with 45% to GBP 128.8 million. And in total, we grew at 56% now to GBP 457.7 million. Gross profit, net revenue, you see below, content practice, a reported basis 64% up to GBP 95.7 million. Our Data & Digital Media practice up 188% to GBP 48.7 million, delivering a 92% growth for both practices in the third quarter. On a like-for-like basis, that growth was 42%, consisting of 41% growth in the content practice, and the data and digital media practice was at 44% growth. On the year-to-date, the content practice on a like-for-like basis grew with 47% to GBP 252.7 million. Our Data & Digital Media practice grew with 46% to GBP 128.3 million. And overall, for the full group, we grew with 47% to GBP 381.1 million gross profit. And the gross profit by geography in the next slide is with growth on a reported basis between 86% and 115% in our 3 regions. And on a like-for-like basis, the growth is between 37 -- 34%, sorry, and 75%. And the strongest growth was realized in the EMEA region and a big part is our win -- of the big part of that growth is realized through our BMW Mini win from the end of 2020, which contributed significantly in the EMEA region. Our most important reason is still the Americas with around 71% contribution in the third quarter and year-to-date. EMEA is now at 19% in the quarter, and Asia Pacific at around 10%. So all areas or all geographies, as you can see, grew significantly. And on the next slide, we have included our 2-year stacks. These 2 years stacks that's simply adding the last year's like-for-like to this year's like-for-like growth in Q1 was 52%. Q3 was 73%, an extraordinary quarter Q3 -- or Q2 and Q3 at 65% delivering a year-to-date 2-year stack of 63% and it clearly shows that we are prioritizing our top line growth. Moving to my last slide, as I just mentioned, we are prioritizing our top line growth. now even surpassing our third guidance revision with 47% year-to-date growth on gross profit. Client conversion at scale momentum continues with now 6 whoppers are now secured and 19 more potential what whoppers identified. Our EBITDA and EBITDA margin continue to reflect increasing investments to prioritize top line growth. As I just mentioned, the employee base, for example, grew with 52% on a like-for-like basis whilst year-to-date, we were at 47%. So here you see part of the investment. And furthermore, that's split into client, for example, client leadership to service our whoppers, growth teams because we want to continue that level of growth and implementing tooling, for example, CRM communication. We're also investing in business areas where we see a lot of growth potential such as CTV, e-com and digital events. And further, we're further building our infrastructure on legal risk, compliance, IT, HR and talent. And this ends my part of the presentation. So I will now hand over to Scott to take you through clients, mergers and market trends. Scott, over to you.
Great. Thank you, Peter, and welcome, everyone. It's great to join you from London for a change rather than my normal Singapore. So as Peter said, I'm going to take you through a few slides here to talk about what's going on with our clients. I'll give you an update on our merger and then cover a couple of market trends that I know are sort of top of mind for many of our investors and the analysts on the call. So firstly, Q3 was another great strong quarter for new business, particularly on our land and expand plan. So as Peter mentioned, I think we came into the year projecting five whoppers, and we're very proud and happy to announce that we're ahead of schedule hit #6 with HP joining that crowd. We've won a lot of new business from our existing clients, and you'll see that in later slides. And I guess the exciting thing about some of that business is we're winning sort of big-scale projects in our core average of service offering. But we're really starting to develop some positioning and leadership around some really new innovative, interesting areas. So areas like the metaverse where we're working very closely with Facebook and others. We've been doing work in crypto and NFT and increasingly in digital transformation as well. So you'll hear a bit more about that later on. Also another strong quarter for new clients. great geographical spread of this. So clients from Mexico to China, we won one of the mobile operators, one in Singapore. We've expanded our Amazon relationship with some work on Audible, so another logo there. And a sort of shout out to our fashion and luxury team, which joined us from Omnicom here in London, but have really been plugged into the global network now and continue to develop some great client relationships, you'll see things like Moncler, Skin Trust Club, Luxottica continuing their strong run. Move on to the next slide. This is our client portfolio. So again, you'll see our sort of dominant sector from a client perspective remains technology, and we certainly intend to keep it that way. It's now up to Q3, I think 49% of our revenue so far. So slightly below where it was last year. And if you look at the other sectors and see which ones are growing, it shouldn't surprise you that the 2 segments that have had the most growth have been auto and FMCG and that's obviously largely down to the significant wins we had there from Mondelez and BMW, respectively. Again, I draw your attention to fashion and luxury, which didn't even appear on the chart last year and is up to 3%, thanks to the hard work that our colleagues are doing in that sector. On to the next slide. This one really again shows our regular update now on a quarterly basis of the scale of our client relationships. So on the left-hand side, you can see our top 10, top 20 and top 50 clients, pretty consistently, they've grown 80% year-on-year from a revenue perspective. So this really shows the strength of the land-and-expand strategy, which continues to be our main source of growth and development of our clients. So 80% growth across that client portfolio is really significant. If you look on the right-hand side, the table there, you'll see that we now have 6 clients above GBP 10 million at this stage of the year in revenue. We only had 2 last year. Obviously, those 6 are the whoppers we've talked about in the past. You can see a very nice pipeline of whoppers as well. So Martin's talked about us identifying 19 additional clients that we think over time will join that group from a land-and-expand and organic growth perspective. And you can see them in the GBP 5 million to GBP 10 million and GBP 1 million to GBP 5 million bands there. In that bottom band, I think it's also important to remember as much as we talk about our whopper strategy and building big scaled relationships with big enterprise clients. We do have a really important client base, which are more midsized companies, usually growth companies. A lot of them are e-commerce related, direct-to-consumer software companies, and they really make up that sort of bottom figure of 407 clients in the GBP 0.1 million to GBP 1 million category. These are great clients. We have, we think, a quite differentiated service offer that some of our larger competitors really can't offer to them, and it continues to be a strong growth area for us alongside those whopper opportunities. If we move to the next slide. This covers off our M&A activity in the quarter. So as you see, Peter led the team on our Term Loan B financing in July at the beginning of the quarter. And since then, we've done 3 transactions. So Destined, which is a sales force capability, based in Australia and Southeast Asia. And you'll see more and more sort of developments, I think, in the sales force area, that are clients of ours, but also an incredibly strong partner and a very successful company in the digital marketing ecosystem. The next one was Cashmere, which is an L.A.-based cultural agency, fantastic creative work, really, really strong client relationships. So a big relationship with Taco Bell, which is a new client for us. But a lot of relationships actually with our existing clients. So companies like Google, BMW, Amazon where they have really strong creative links into those clients. So really boosting our existing relationships there. And then finally, the most recent member of the family is Zemoga. I won't spend a lot of time on that because DJ is on the call and does a far better job of introducing that than I do. But it's a really exciting step for us. We've been talking now probably for maybe 9 months or so around formalizing our entry into what we call technology services. and this does that. And as I said, DJ is on the call, will introduce that in more detail later. The next couple of slides I'm going to cover, some of the topics that have been raised by investors either with some of our competitors or directly with us, -- And just to give you our perspective on what's going on. So the first one continues to be around our addressable market and the growth opportunities in our addressable market. So I think it really just want to stress here on these charts. The top left one there, you see some projections for digital media spend. So our friends at MoffettNathanson, who, I think, probably do some of the best research in this area and keep that consistently updated on a quarterly basis, have pretty aggressive projections for this year. And obviously, that's been seen in our results and our clients' and partners' results, but continued strong growth into the future as well. So they're still projecting sort of 15% plus digital spend growth for the next few years. You've got Groupm and Optimedia slightly lower on there, but they have a history of sort of revising that upwards on a historical basis. The next chart on the right there, its growth is the sort of flip side of that chart, if you like. So that's the growth in advertising revenues the 3 core partners. So Google, Facebook and Amazon. And this is just their advertising revenue. So for Amazon, for example, it doesn't include any of the e-commerce or cloud, et cetera. And you see really strong growth there. So actually growth that's significantly ahead of the projections on that left chart from the analysts and media agencies. So really strong continued growth of their ad revenues. Actually, Omar, the analyst at Morgan Stanley, who covers S4 talks about there being $700 billion to $800 billion of additional billings for agencies available just from these 3 [ spend-free ] partners by 2025. So if you think about that number, $800 billion in billings, it's a massive number. And it's a double opportunity for us at S4 because firstly, as money continues to shift from traditional to digital, that's a massive opportunity for us. Our service offer is built entirely around digital. But secondly, remember, all 3 of these companies are our clients as well. So Google is our largest client, Facebook is a whopper and Amazon is also a top 10 client for us. So as their revenues grow their marketing budgets grow and their sort of needs for the kind of services we offer grow as well. So a great opportunity for us. The bottom left chart there is also from the Morgan Stanley report and really talks about the area that DJ is going to talk about, so digital transformation. And you see the waterfall there, taking it from where it is today to almost $900 billion in 5 years' time, and that's a 20% plus CAGR. So again, a really attractive addressable market, a massive market and one that's growing at very significant weight. The final graph on this slide is one that came from a Gartner CMO study recently, which talked about how CMOs split their budgets, their marketing sort of expenditure. I talk about technology, media, in-house services and agencies. Those buckets should sound familiar to you because they're exactly how we've structured that for service offerings. And we really address 100% of the available marketing budgets that companies have. We help them on technology, and we increasingly do that with the kind of capabilities that tech services are bringing to the group. We help them on media and data. We help them with their in-house capabilities. We have that embedded model that's so important to our delivery capabilities. And then obviously, as an agency, we provide services. So I think that's a really interesting chart that shows that we address the full scope of their budgets. Next slide. So as a result of that significant digital growth this year and continuing into the next 3 to 5 years, it really does mean that the world is operating at 2 speeds from a service provider perspective. So this chart looks at the 2-year organic growth step. So Peter talked a little bit about our growth stack. It looks at it on a quarterly basis with projections from analysts like Morgan Stanley and Cowen for Q4. And really, the 2 speeds are very evident here. So the traditional holding companies who have significant exposure to traditional media are growing at a sort of average 2-year growth stack of maybe 5% in total this year. If you look at our sort of more contemporary peers, the ones that are much more focused on digital transformation and digital technology, companies like Globant and Endava and EPAM, they're all doing sort of around 50% 2-year growth stacks on average. And then obviously, if you look at where we're trading from an S4 perspective, we're above that and sort of leading the pack on that. So I think it's important to remember that all of that growth from the previous slide that's driving digital transformation does translate into the 2-speed universe. The next slide is around the concern I know many analysts and investors have talked about around the impact of supply chain challenges that many industries and clients have. But I really want to be fairly forceful on this that to quote Donald Trump, we see this as fake news essentially. So I think there's really a false narrative that's been built up around not -- obviously, there are supply chain challenges out there in the market. But the impact on advertising spend, certainly from our perspective, and I think many of our peers and competitors have said the same thing. We're really not seeing that. So if you look at some of the quotes on this chart from Jefferies or from GXO, which is a logistics provider, I think the common consensus is that the challenges that supply chains are seeing, will probably over peak or trough, however you want to look at it in terms of the worst of it. So I think a lot of people feel that, that peaked out in October, and we're now on the road to recovery. And then if you look at the impact from a client perspective, quite a few clients have come out publicly and said this is not impacting their spend. even if it is impacting their sort of supply chain and distribution. So you see a quote there from P&G's CFO and from Alan Jope, the CEO of Unilever, 2 of the world's largest advertisers being very clear that they're committed to not only maintaining but increasing their advertising. And in P&G's case, being very specific that they're continuing to shift money in a quite significant pace from traditional media to digital media. I think this is a really important point. I've had a lot of questions from investors around this. I've spent a fair bit of time talking to our client leadership directly to our clients. I think from S4's perspective, obviously, we have a lot of technology clients. So many of them dealing in bits and bytes rather than physical supply chain. So maybe they have less exposure to it. But we also have clients in consumer electronics, in auto, FMCG, retail, et cetera. who do have these challenges. But again, they're all being clear that they continue to invest in their marketing. And what we see with our mid-level clients, many of whom are direct-to-consumer companies who have sort of drop shopping and sort of supply chain built into their business model. Even there, where we see challenges or where they see challenges, what's happening is they're actually bringing forward some of their spend or some of the holiday spend around Thanksgiving and Black Friday in the U.S. and 11/11 in China and most of Asia and then even Christmas holiday spend. Some of that's being brought forward, which actually obviously is positive for our industry. We also see companies being very agile with their spend and switching between SKUs. So if they have a specific supply chain issue on one product, they switch the budget to another. It's obviously a lot easier to do with digital advertising than it is with pre-committed to traditional advertising. So we see no impact at all, if anything, a positive impact from this. And that's my final slide. So I will now hand over to DJ and let him tell you about Zemoga and Technology Services.
Thank you very much, Scott. Can everybody hear me well? Can you hear me?
Yes.
I just want to make sure. So thank you, Scott. Okay. Excellent. So Technology Services, obviously, it's very exciting to be the pillar here with Media.Monks and S4, we're seeing some continued exciting growth and interest in providing those services. Obviously, the growth, as Scott mentioned, upwards of over $800 billion in 2025. That's a short amount of time. And we are seeing that demand in the marketplace with existing customers as well as new customers. If you're not familiar with Zemoga, our firm is a digital transformation services firm. We deliver nearshore advanced digital product capabilities. We basically supercharge our clients' existing efforts as well as some of the strategic digital transformation projects that they're doing. We've been doing this for the last 20 years. But most importantly, the last 10 years really focusing on this demand for digital transformation and product design and development across several services that we provide that for the entire life cycle of product design and development. And that world-class digital product development capabilities: design, engineering and delivery, is kind of like the sweet spot for us. We actually work with customers directly in discovering and building a strategy around something that is actually going to change their business and move the battleship in the bathtub for our large enterprise clients, rapid prototyping, testing, we actually have probably the most advanced user acceptance testing lab in our office in Bogota, and it's very, very exciting because we're able to prove through a lot of this before the big investments from are made and actually engineering these pieces, of which we have the overwhelming majority of our staff, which are in Bogota, Colombia, Medellin, Barranquilla and Cali, delivering those services for our clients across the board. After those are done, the delivery often we are seeing requires managed services, program management and product management. So the engagements that we're getting overwhelmingly are long-term contracts where we are providing sort of kneecap to kneecap services from a nearshore model. The tech expertise that we have is wonderfully complementary to a lot of the great technology skills that Media.Monks already had in their quiver. If you see a logo here, we consider ourselves experts in that technology. We are full stack developers. And although we have relationships with a lot of the platforms out there, we approach the projects with a technology-agnostic approach initially. That resonates very, very well with these customers who are trying to figure out the platforms that are going to take them into the next huge part of their business. These services are everywhere from mobile app, our mobile first development and design firm all the way through to, as I mentioned, quality assurance. This is a requirement for enterprises that are looking to move some of these skills, not only in the engineering and design part, but also in the maintenance part of some of these digital transformation and product design and development services. We also have an enormous amount of DevOps capabilities, which are critical now in the marketplace. We've been doing this for a while. So we're very proven in our collaboration in frictionless delivery model. There are basically 2 methods. We often start by placing very high skilled individuals that are hard to find an existing effort. Customers often use that as a test case for us, but the overwhelming majority of the engagements we have are actual full pods, where we are providing the customer a part of individuals who will design and maintain a product for the life cycle and improve it consistently. And that's another important part. Most of our larger customers have entire business units managed by our staff. We are, like I mentioned seeing that increase substantially the need for them to push this type of work over to an organization like us and the beauty of this is once these products are designed and developed, a lot of the services that among did not provide around marketing, driving traffic and measuring that and the data around making that successful. It's obviously hugely complementary from the rest of Media.Monks. We've been doing this a while from our nearshore footprint in Colombia. I'm very proud to say that since -- actually even before the transaction was finalized we've seen a little bit over 10% organic growth. So the news not only for our customers, which have applauded this as a lot of people within S4 now our staff have as well -- the marketplace has. So this post-merger news has not only retained our staff but also made it an attractive place for this new way of doing business for our organization. We've been setting milestones in the marketplace for a while. We're, I think, just a little over 440 and we see that continuing to grow as we continue to be the -- probably one of the most attractive organizations within the Andean region to work for. Our clients are -- they're -- they've been with us for a while, and a lot of them are expanding what we do because of the merger. We've had several meetings with some of our larger customers who we do feel pretty confidently relatively soon, they will be expanding outside of the services that Zemoga provides into more of the global Media.Monks service offering. In media entertainment, retail, e-commerce, financial services, health care and others, all of them, again, as I mentioned, hold us in very high regard in how we deliver and really do applaud what we've done here. with Media.Monks. So I'm very, very excited about that and the synergies it provides. And with that, I will hand it back to Scott.
Thank you very much, DJ. Great introduction of the sector and Zemoga there. So really happy for you to be part of the family. As DJ said, there's some great synergies here, and we spent a lot of time as we were going through due diligence working on some of the opportunities. So I think the first thing to point out is that this is -- this is really an extension of what we already do at S4. It's not a pivot or an entirely new area for us. So we already have actually within S4 significant technology services revenues primarily within the content business. And going forward, as of sort of our Q4 or annual report, from a reporting perspective, we will be moving some of that revenue into the technology services sector. So you'll see the scale of that increase significantly. There's obviously strong client synergies there. When we were doing the due diligence, we sort of shared our client list and our prospect list and identified several sort of low-hanging fruit opportunities there. I think as DJ said, he has a very specific service offering. It's actually very complementary to the service offerings that we have across the rest of Media.Monks. Around data and digital media, around creative. And really, if you think about the kind of project he's doing, where he's building digital products and services for companies. There are offers and work streams that are related to some of our Arbor areas. So around design and creativity and user interface, we obviously have really strong capabilities there from the Media.Monks stable, around data. A lot of these products and services are ingesting consumer data, using that to personalize them. So we have some great work teams and capabilities there. And as DJ said, once these products and services are built, they're often consumer facing and they need marketing campaigns behind them to drive adoption and downloads, et cetera. So again, really complementary. The nearshore model that he has is one we're very familiar with. So we already have really big scale production centers not so far away from them actually in Buenos Aires and some others in Latin America have big ones in Hilversum. We have one in New Delhi, and we're building one in Kuala Lumpur as well at the moment. So it's a very familiar way of working for us to have the delivery centers and supporting client work in other markets. I think it really does broaden the total addressable market. So I really talked about that before, but taking us into conversations with CIOs and CTOs and addressing new budget opportunities. And if you think of it from a CEO perspective, increasingly, marketing and technology are coming together. So CEOs want those departments to work together to share projects, share budget and we are now very familiar on both sides of those fences. I think, obviously, from S4's perspective, part of our growth strategy is around M&A. Zemoga's an example of that with our access to capital and the pipeline that we have, we certainly intend to build on that going forward. And then finally, the point that DJ also made, we've had some good early traction on this. We've had a couple of client wins already where we're adding some creative resources to one of his clients. And he's adding some tech resources to one of us, and we have a really strong pipeline of co-pitching opportunities to go ahead. So excited about this, and you'll hear much more about it. With that, I have 2 more sort of colleagues to introduce. Later on, you'll hear from Michael, who will cover a topic that we've covered many times on our earnings calls before, and it's probably the one we get the most questions on around the impact of deprecation of cookies, IDFA and all those kind of technical things. We've talked about it at length, but Michael is a real expert on it. So hopefully, you'll hear from him later on. But now I'm going to hand over to my colleague, Lewis, who has unplugged his VR headset for a change and is joining us in the real world but he's going to talk today about the metaverse and what an opportunity that is for us currently and what it represents going forward. So over to you, Lewis.
How is it going? If you could shift over to my first slide, please. I think the thing I want to do here first is just do a bit of demystification around what the metaverse is and what it means for us. in a very real way. Media.Monks are a huge part, and S4 or a huge part of the metaverse right out of the gates. So we've been doing this for quite a while already. And what it means to us, and it's not just about shiny avatars in the sky, but a big part of it is about building pipelines and infrastructure. So whether it is building XR, VR, MR also to pieces like that. It also is very much the plumbing. So looking at some of our larger scale clients our car clients and how they can build a virtualized digital twin pipelines that stretch all the way from their factory or even prior to that factory into their marketing into their advertising into the final product as well. It's also virtual commerce. It's NFTs. It's building full-scale virtual locations. And in a very real way, it's gaming. If we move on to the next slide, I think one thing to note is Media.Monks -- at Media.Monks, we understand the ins and the outs of metaverse and virtualization platforms gaming worlds and all the intricacies of creating the biggest virtual experiences for the world's biggest brands. It's funny, long prior to Facebook's big announcement, we had already been taking meetings in VR. It's something we've been doing for many years now. We actually have a boardroom in VR, which you can see here. I'm a little disappointed we're not doing this meeting there. If you move on to the next slide, I think one of the other things to indicate is, and we've been -- this has been said about us, we asked the Fat Gladiator, S4 is the company to double dip on the metaverse, and we're doing that in really meaningful large ways for our clients and our company. If you move on to the next slide. This is about some of the work we've done already. So our metaverse group was founded in April 2020, right at the beginning of the pandemic. Since then, we've seen a 112% increase in related revenue in 2021 with major projects across pretty much every client group. So whether it's the NBA and VR, it's creating digital twins of cookies, Oreo cookies, whether it's building out entire colocation pipeline with NVIDIA and with HP. We were actually mentioned in NVIDIA's keynote yesterday around their Omniverse product. But whether it's doing insane large-scale virtual events like you see in the top right-hand corner with Pokémon and Post Malone. We're projecting something in the order of GBP 29 million to GBP 44 million pro forma revenue for 2022. Frankly, that might be a little conservative with the amount of work that's already starting to come at in this final quarter here. So whether it's from tech consulting and building out large-scale data center type pipelines to full 3D worlds, we are absolutely already pouring the content -- the concrete of the metaverse. And I think that's something to really understand about all of this is while we will get to a place where we're all meeting Fortnite next week, or in years from now. Right now, it's really meaningful and it's happening in a huge way for the biggest brands in the world, and I do mean the biggest brands in the world, is this first layer, this first foundation of the metaverse. If you move on to the next slide, we've been partners within the metaverse for the past few years with a huge group of partners, whether it's telecoms, compute companies, GPU companies, gaming companies or Facebook or meta directly we're building and we're working directly with them and collaborating to build out what will be the future of commerce. And really this sort of moment where we're, in my opinion, in the sort of the fifth industrial revolution as the world shifts from digital into virtual, if you move on to the next slide. And of course, Facebook and meta are a huge part of this. I'm sure we've all seen the announcement around Andrew Bosworth the CTO of Facebook becoming a core part of the metaverse and meta. We just did our second Facebook Connect this year, which is something really exciting launching that huge announcement. And we're obviously into our third season of the NBA in VR and another piece, we're hugely proud of creating content for the metaverse in the metaverse. If you move on to the next slide, please. Something that's really interesting, and we've started to see actual real returns for our clients. So this is a tiny use case, a relatively small virtual event for a single brand. So we built out this virtual event with within the meta -- partially within the metaverse across multiple different platforms and it saw a total concurrent users of about 14,000, which isn't insanely large, it's not insanely small either. To give you a context of what the same large number would be something like 23 million people watch the Ariana Grande concert in Fortnite the other week. I mean if you to put that into context, if that was a human event, that would be the third largest human event in history. So really looking at how many people are engaged and how when we talk about interactivity, people really have hands on. So when you create interactive content, it's engaged and it's direct. So we're looking at 14,000 concurrent, which is a modest number. It was a 40% increase from the previous year. But in an interesting way, that 40,000 people generated net sales of $4.5 million, which is incredible. And then you look at the fact that from that we acquired for that for our client, 1,300 new premium subscribers, that creates a real meaningful difference. So to move on to the next slide, I think the thing that we have to position around this and while there's a ton of hype and we all know how hype works, and we've all been through hype cycles, time and time again, and as we move into all these different versions of that and past that, we have to remember that really virtualization is the obvious next step in digital transformation. This isn't something that's going to happen. This is actively happening right now. And as we step forward for our clients and create these things, it's important to remember that if you don't have a metaverse strategy and you don't have a virtualization strategy right now you may be viewing the world in the same way somebody who doesn't have a web strategy in 1999 is. So with that, I'll pass over to my colleague, Scott, who I think is passing over to Mike.
Yes. Sure, I can see you, Michael.
All right. Thank you, everybody. Appreciate your time. So I'm here to talk about IDFA and cookies. So if we can go to the next slide. This is a topic that I'm sure it has everyone's attention. So I'll just jump right in. If we could go to the next slide, please. All right. So really, the headlines here that this is the biggest change in a decade. So this has been building since 2018. It's been driven by the industry, public and the government. The upshot of all this though is really that this is actually quite good news for S4. It's driving people towards first-party data and wall gardens via clean rooms, and we have no direct revenue off tied to cookie deprecation. So this is going to be an interesting time for us. First party data is becoming the new gold standard, and this is our specialty. So this requires sorry, multidisciplinary expertise around media, data and content and the very nature of cookie and IDFA deprecation and the difficulties that this causes in targeting increases reliance on our services. So because of what we offer, people are actually going to need more of it. Previously, it was something that would enhance what they have, and it's becoming more and more a need to have from a want to have. consumer intention and digital overall do continue to grow. I mean this was accelerated by COVID. And as more people continue to try to grow engagement to online users. This digitization has obviously brought privacy center full because people want to build something scalable, that's going to be durable long term. And so this has allowed people to come to us that need our services around privacy, data consulting and outreach to reach first-party data audiences through targeted content and through owned and operated properties. Next slide, please. So third-party cookies have been removed from Apple Safari for quite some time, and they're scheduled to remove from Chrome in 2023. Other tools are currently stepping in to start to fill the ecosystem. S4 does not create or manage any large third-party data sets that are going to be affected by the lost functions. And so what we're actually seeing is increased demand created for our data and privacy consulting services. People have us run test to see what works best in the new ecosystem as far as media tools. In many cases, they want anything ranging from consulting and advisory to training all the way through to ongoing management new ecosystem. So really for us, this has been a net win. And then IDFA is becoming limited based upon consent Apple ATT and MMM options are the 2 big things that are stepping into this place. So Apple does have a tracking option in place, and there is an MMM option that we can build out for our consumers if people do continue to want to know whether they're getting an ROI on their advertising dollars, which is the main question mark left from the deprecation. So interestingly, because this data is being lost, again, this is another case where our services can readily scale up in this sort of void. The last is all of this isn't just using first-party data. It's also using the first-party data within walled garden of the largest players in the space. This is Google, Facebook and Amazon. And we have high-level direct relationships with all these players. We work with them onboarding. We've got the technical skills to be able to create the new integrations. So all these new tools, all these new integrations, the clean rooms that you need to access the data within the walled gardens and to integrate it with your first-party data sets are things that we are ideally positioned to do. So again, the net upside of this is just driving more people to want more media management to help us understand the new ecosystems that we have to plan data management to make sure that they're hooking things up correctly and integrating the data to maximum possible ability. A lot of companies don't have the media and engineering skills that our teams have, and we've been able to bring all of these to the forefront to enhance our already robust consulting practices to really open up a whole new book of business here. Next slide, please. I apologize. I think I got a little bit confused. I thought this was a slide up when we spoke before. So I'll just really quickly reiterate again, the third-party deprecation. There we go. Thank you.So a driver for first-party data. So in this case, our services are directly designed to focus on use of first party data within content for outreach. So this is the test and learn and showing properly segmented information to the right audience. This is also helping us get the right the right test out, we could can turn those dials to show ideal content to the right audience. There's also privacy era activation, so making sure that they've got the right platforms in place and that they know how to run them or they have us run them within the privacy era ecosystem. Again, overall use of digitization is growing. Data consulting is a service that's been robust for us in the first place. But because advertisers have become so used to third-party data they've actually often not followed best practices and allowed their practices to atrophy.And so we've been able to go through and help businesses improve their first-party data sets to become more reliable in the coming lack of third-party data. Also direct privacy consulting, understanding where PII goes, being ready for all the changes in the space is other service. And then lastly, again, measurement, we have data science and MMM support. And as visibility in the death of the cookie are affected, we are able to go through and to help people fill that void with these services so that they can know what the return on their ad dollars has been and to help them focus properly, and this has led to increased confidence and increased spend we've seen in some cases. Next slide. All right. So consumer focus on digital is increasing. Here's 2 great examples. One is Mondelez. So this is a CPG company that we've worked with a global CPG. And what we've done is we've helped them set up foundations, a measurement cycle and action plan and feedback integration so that they can take the data that they see and use it to affect other media optimization. Their ROI per their own team is up 70% after working with us on this. And overall, they are positioned to spend even more dollars within Google's Walled Garden than before. and that translates from a media service standpoint and from an ROI standpoint into a win from both the client and for S4 and Media.Monks. As hardware is a direct-to-consumer hardware store. And this is a success with an integrated experience. So what's happened here is we're seeing that people want to work on something that, frankly, is becoming more difficult and more important, which is understanding the different touch points of your journey and offering increased facility to your users so that they can be interacting more digital manner. So in this case, as you can see from the numbers, it's quite a growth from having a properly facilitated app in integrating that with the data. And this has created a very positive feedback cycle where Ace is getting more data. They have more clients touching digitally so they can optimize further. And helps because as we all know in this era, more and more people are wanting to integrate through digital services.Next slide, please. Next slide. And then in the end, turbulence is creating a more disruptive opportunity for S4 and then so for Media.Monks. So our services are ideally positioned to benefit from this wave towards digital. And you can see this through our ability to provide first-party data consulting award-winning creative content, cookieless measurement, post-cookie digital advertising, advanced first-party segmentation for outreach and analysis and direct where we leverage our high-level direct relationships. As AdAge says, we are the industry's go-to player for ambitious digital advertising. Again, we have media tools and practices in place. We have data for first-party data integration and measurements, and we have content for award-winning content and direct user engagement, all of which are critical pieces in the privacy era. Thank you. And I'd like to hand this over to Martin Sorrell.
Thanks very much, Michael. And thank you to you and Lewis and DJ for again for getting up in the middle of the night. And you've got another session coming up shortly, just then go back to bed. To summarize the final slide, just a number of conclusions. Our top line growth, our like-for-like growth of 45% continues to be more in line with the tech services companies than any other sector. And of course, our guidance has risen from 25% to 30% to 35% to 40% and will go beyond the 40% by the end of the year. So top line growth has been prioritized, as Peter has pointed out, over margin growth at this stage in our development. We're prioritizing the top line. And our EBITDA margins reflect an investment in a number of areas in whopper management and building out the client structures that are necessary for the management of those scale of accounts; in new service capabilities such as connected television and last but not least, technology platforms enable us to be more efficient. We've achieved, as Scott mentioned, 6 whoppers in 2021, which compares with the 2 that we had in 2020. And we've outlined another 19. So taking us beyond the 20 squared objective, we would identify another 19 with potential over the coming years to get to that level. Our total addressable market spans digital media. It spans marketing services, trade budgets and digital transformation. The total of those is well over $2 trillion and is forecast by analysts to grow by about 15% to 20% per annum over the next 5 years. And as we put together our '22 4, our fourth plan, we're setting the target of doubling again as we did with the first 3, 3-year plan of doubling the top line and bottom line organically over the 3-year period. Advertising as a percentage of GDP has shrunk from about 1.75% a few years ago to 1%. And is forecast to rise back to 1.75% over the next 5 years, purely because of the rise of digital. The growth that we're seeing in the forecast that the marketplace really are purely concentrated in the digital area. We have -- also finally have a strong pipeline of merger opportunities across all our practice areas, including the new one of technology services and across all our 3 geographies. And as I said before, our fourth 3-year plan calls for a doubling of our top and bottom lines organically. And finally, our budgets as we put them together, will call for a 25% organic growth rate, which is exactly the same as we started off this year, although we're delivering well over 40% at the end of the year. So with that as a summary, let's go to the Q&A now, please.
[Operator Instructions] We'll now move to our first question over the phone, which comes from Omar Sheikh from Morgan Stanley.
I have 3 questions, if I could, please. Maybe to start, I've got a question on whoppers and margins. maybe one for Peter. I mean you talked about some additional investment behind the 2 clients last year Mondelez and BMW. Could you maybe talk about when you expect the run rate of revenues from those clients to get to where you want it to be? So presumably some point next year, but maybe you could give us some color on that? And then related to that, I guess I'm trying to think about whether these 2 clients or whoppers in general are accretive or dilutive to your margins overall. So as you grow the number of whoppers within the mix, does that -- is that a headwind or tailwind to margins. Okay? So that's the first question. Secondly, on the guidance for '21, I mean, you obviously said that you're tracking ahead of the 40%. But could you maybe talk about what the uncertainties are into going into Q4? Are there -- is there some project work? Or are there particular sort of accounts that may or may not come through, how much visibility do you really have at this point in time? And then finally, I just want to just touch on M&A pipeline, maybe one for Scott. What are you thinking about kind of future acquisitions? Is it the same area, same criteria, say, multiples? Is there anything imminent on the horizon?
You want to -- Peter, do you want to deal with the whopper margin accretive point?
Yes, yes, sure. So to your point, Omar, I think also in Q1 and in Q2 calls that we had, we have mentioned that especially the wins from last year at the Mondelez and BMW win, which we completed last year, we geared up immediately with our headcount or human capital. And basically, what we saw, especially most significantly, I would say, in the first quarter is that basically, that sort of transition to moving that work to us was at a slow pace to put it like that. So in other words, the revenue or gross profit contribution was limited in the first quarter. We saw it pick up in the second quarter. And I would say, Omar, to your point that we are sort of currently this quarter, sort of end of the Q3, we are getting into that sort of run rate level. You see that also in -- like I mentioned in the contribution, for example, from EMEA in the total or you see it if you would look at it split over the quarter versus the year-to-date that there is, let's say, some more significance in that -- in volumes we produce for both clients. So in other words, we are now sort of at the run rate based on the contracts we completed last year. And on margin, that also means in year-to-date given that lower volume and us preparing for all the work that the margins were low in -- for the work produced. But then again, now when we come up to that sort of a run rate levels, there you see, let's say, what we would call normal margins for the group. So not much distinction between our land and expand or these big pitches with these whoppers that that's sort of in a sort of moves in a similar pattern. So not so much that all of a sudden, this is all a procurement-driven rate cards things. It is, of course, one of the things, but it's not significant in sort of the margin contribution.
Just underline that. I think the head answer to your question, Omar, is they're accretive. In the short term, you will see -- you can see it in our headcount. Head count has gone up by was at 52% in the first 9 months of the year. The gross profit or net revenue has gone up by 47%. So there's a sort of 5% sort of swing on our head count, that's about 350 people. Average cost is about $100,000. So that gives you the figure $35 million a year a year of incremental cost, if you like, in the run-up on those accounts. So net-net, I think it's accretive in the longer term or in the medium to long term. In the short term, you have to gear up. On the question about the fourth quarter, it continues as before, we've gone from 25% to 30% to 35% to 40%. We're running ahead of guidance as we go into Q4. You asked about the uncertainties. There are no uncertainties other than making sure we get the work done by in the last -- in the fourth quarter of the year. But I think as things continue. We said we don't see any impact from the inflation. We don't see any impact from IDFA. We don't or indeed deprecation of cookies as yet, if anything, it's the other way as Michael and Lewis have pointed out and DJ have pointed out, we don't see any supply chain issues at this particular stage. So it continues. And the growth of the digital advertising marketplace, I mean, just to underline the point, the incremental investment being made by clients despite the pressure that's being put on the platforms, be it Google or Facebook or Amazon or elsewhere, the incremental spend this year is something like $100 billion out of a total marketplace of $650 billion. So a lot of the growth, one could argue most of the growth, has come even in a fiscal or monetary stimulus induced recovery in 2021 has come from the digital marketplace, and that will continue to be the case. Scott, do you want to talk about M&A?
Yes, sure. So yes, I mean, we have a very healthy M&A pipeline. I think we mentioned in the release that we've got 6 companies we're currently under exclusivity with and working through the due diligence process. So you'll hear more about them fairly shortly. And it's -- yes, we have an extended pipeline beyond that where there's lots of other discussions going on as well. It's quite evenly distributed across the various service offerings and across the various geographies. So we have some pipeline in Asia. We've got some pipeline in quite deep data capabilities and some technology services and content. So yes, it's an exciting time from an M&A perspective, probably more activity going on right now than maybe there ever has been. From a sort of multiple perspective, it's quite competitive in some areas, but it hasn't really pushed the multiples beyond our, I guess, albeit fairly broad guidance of 5 to 10x. So most of the deals we're doing are at the top end of that guidance, a couple we've stretched slightly a bit beyond into sort of 11 or 12x. So we're not seeing any significant challenges there. And I think there continues to be -- when you look at the rationale why DJ and Zemoga decided to join S4, it continues to be factors beyond valuation, I think that really make that final decision. So lots of entrepreneurs sort of approaching us. Some really great opportunities for us. And as I said, you'll hear more about that fairly shortly.
Yes. Just one other observation, Omar on your question, I jotted it down as you were asking the question. I mean if you look at the quarterly net revenue growth over the last 7 quarters. And just to remind everybody, so we started beginning of last year at 21%. As the pandemic hit, we went to 7%. This is top line like-for-like net revenue growth, 23% in Q3, 27% in Q4, 33% in Q1 of this year, 66% in Q2 and 42% in Q3. So that's the pattern. And when you look at it logically, if you look at the Q2 stacks, the Q2 stacks are, forgive the phrase of stacking up from that sense. And the pattern that others might -- I mean the pattern that we are following is very similar, as Scott pointed out to the 2-year stacks you see in the tech services companies. And levels which are totally different, totally different level to what you see in other sectors. So I think just to underline that the sequential growth is quite strong. to put it mildly.
We'll now move on to our next question over the phone, which comes from Steve Liechti from Numis.
I've got 3 as well, if that's okay. First is on margin for this year and really it's asking more about timing in the -- if we think about the first half figures in September, guidance was sort of flattish to down a bit, let's say, 1 percentage point. Now where we're ending up is probably more like 2 to 3 percentage points down on last year overall. My question really is, given we knew that the whoppers were coming on stream when they were and given we knew you're a growing business and would put in infrastructure investment, why is the margin going down more in terms of your guidance now relative to earlier in the year? If you could give me any color on that, that would be great. Second question is, again, on margin. as an agency business, a growing agency business, is the sort of 20% to 22% margin still realistic on an ongoing basis once we get through this hump of investment? And then third, on Tech Services. Can you give us any feel in terms of roughly how much of net sales will transfer from content into tech services on an annualized basis? Just a rough figure would be helpful.
Okay. Peter, do you want to deal with the 2 first questions on margin, margin timing and 20% to 22%?
Yes. So Steve, to your point on margin, Yes, we -- as you rightly remember, Q2, we already mentioned some more pressure or pressure in a way compared to at least last year, we did 14.5% exactly the same as the previous year. Then in the second half in 2020, we did something like 25% EBITDA margin, delivering that 21% overall for 2020. For now, we are -- as I mentioned in Q2, we're slightly below that or I mentioned that at that time. But we continue to invest more in growth, as I mentioned, and as our 2-year tax flag out. But we have decided that with that sort of that growth opportunities that we see in client conversations and all these things that basically, we decided to increase our people, our growth teams, our production people even more, basically anticipating on last year on our growth. So that's also, let's say, delivering that sort of 5% difference between like-for-like headcount as well as compared to the gross profit growth. So there's where you see one part of the investment, which is then I can say, more significant than when we were back in the second quarter because we see these tailwinds of growth and basically anticipating on that. So that's one thing. That's why basically, we see now slightly more margin pressure in a way compared to, again, to last year. Next to the fact that also with the size of the company and the infrastructure, the legal tax or risk compliance, these kinds of things that sort of needs to be built more strongly, even more strongly or more quickly. And those are the investments and those are the investments in OpEx that we did, and we expect to continue in the fourth quarter. And that would sort of in a high bandwidth that would bring us, I would expect us to be around 18%. So where we mentioned in Q2, 19%, there is a drop of sort of 1% that I would expect overall for the full year, for the full group. And then again, if you put it in perspective, most analysts are at around GBP 550 million gross profit, so 1% of that is a sort of investment of GBP 5.5 million. So there you see still a relatively small number. So then there is a more significant impact as a result of these investments. And then to your point, going forward, I see us and I also see that in our budget and our 3-year planning next year, be back on track on the sort of 20% to 22% range. Of course, we keep on investing, we keep on growing, but that 20% to 22% range that should be achievable with our near shoring, offshoring the way we have our service or delivery centers structured and these kind of things. So let's say, going forward, we don't see any changes in that bandwidth of 20% to 22%. However, the impact on this year is slightly more significant than we earlier indicated.
Okay. In terms of -- we haven't really gone into the complete details of how much technology services are in both content and data and digital media.Would you have a feeling, Peter, as to what the proportion of our existing business would be reclassified?
The honest answer, Martin, is no. I would expect it to be in significant numbers as in tens of millions and not 8x, but maybe somewhere, let's say, in the 20 to 30 or whatsoever. But the big -- why I'm sort of hesitating to say something about it because in -- especially when you look at content contracts or these kind of things, there is always a combination of basically decreases the production side and the tech services. So to unravel that is quite a significant job. And as a result, it's hard to indicate, is it now going to be GBP 30 million or GBP 40 million or even slightly more, that's sort of hard. So that's why we need to do that exercise in the coming months in order to get that number and the comparables of it.
A point to say, Steve, it's not insignificant. I mean, there are significant levels of activity in technology services that are embedded in what we do in content and data and digital media.
We'll now move on to our next question over the phone, which comes from [ Alex Pastelitos ] from Barings.
I'm going to continue the trend and also ask 3. The first, just on EBITDA margin. So those are seeing a bit more pressure than what you had guided earlier in the year. And apologies, I'm new to the story, but is there perhaps something else going on in terms of inflation, wage inflation, given that, that is a big cost? So maybe if you can give us some color there. And then just in terms of your contracts with these whoppers with these larger customers, sort of what sort of hedges do you have in terms of mitigating any inflationary impact and passing those on to customers. Do those go through immediately? Or is there a delay there? That's one question. The second is just on the market growth rates relative to your growth rate. So you're guiding around 15%, give or take, CAGR. Your implied guidance is much higher than that at 25%. I'm just trying to understand, is there any mix effects? Are you over-indexed to larger tech companies versus the market? Is that what's driving that difference? Is it a pricing thing? Is it a mix effect? If you can just give us a sense there? And third, I just want to confirm. Yes, sorry, go ahead. And then the third is just on EBIT to EBITDA multiples. I just couldn't hear it very well, but can you give us a sense. So are you seeing pressure on those? Is that in the 10-ish percent range EBIT to EBITDA? Or is it increasing more recently? That's it.
You mean M&A multiples?
Correct, M&A multiples, yes.
Okay. Fine. Okay. Well, just on inflation for a minute. There's always been demand for digital people. That is nothing new. I think the one thing that we've seen on the inflation front, is the leveling up in the U.S. in particular. I was going to say North America, but it's basically the U.S. In the gender pay gap is narrowing. The salaries, wages for Asian-Americans, Hispanics and Black community is leveling up. And I think that's to be welcomed and that's a welcome development. The DE&I statistics in the tech and media areas in North America or in the U.S. are not great. And I think following the recent tragic events, such as the murder of George Floyd, that there is a genuine effort being made to level up. And I think that's the thing that we're seeing which I would say is most significant. So it's not a general wage inflation. That is in terms of digital people. That has been there all time. I mean there are mechanisms in our contracts to take account of that. There are price revisions that are built into the longer-term contracts to enable you to review rate cards and change rate cards. So that's, I think -- so we're not seeing general inflationary. I think one other area is not really at the heart of your question, but one other thing that we have seen, I think, in recent months is in relation to The Great Resignation debate or point, we are seeing greater churn. And I think that's happened in the last, I would say, 2 or 3 months, and that's, I think, to do with the fact that lockdowns have gone on for longer than people anticipated or wanted. And people are genuine in looking at what they're doing. I'm talking about generally, not specific to S4. They are looking genuinely at what they do and how they do it and where they do it. So I'd say that's the other thing that we see. And there's surprising desire, well, I think probably a surprising in relation to what we thought 2 or 3 months ago for people to reconnect in the office, working from home for some people is acceptable for others are not. So for example, as we plan our we're negotiating a number of leases at the moment because we jettison a large numbers of leases during the pandemic. In that renegotiation, we're negotiating 60% [ pull of plates ] to what we had before. So that's sort of saying that we will have a hybrid model with around 60% office occupancy or office entry over the period over the week. On the growth point, we think the industry is growing the 4 addressable areas that are growing around 15% to 20% as Scott laid out. So we think for us to grow, given our scale at 25%, certainly, as we go into the year, things may change as they change this year, we have to see. But we have 2 tailwinds that have driven our business. The first is GDP growth or the fiscal and monetary stimulus that was pumped into the economy quite rightly post the pandemic. And that has delivered or is delivering 5% to 6% GDP growth this year and about 4 to 5 next year. So that's one thing. The second thing is the digital transformation tailwinds. And when we look at the addressable market, as I said, we're seeing growth rates of 15% to 20% digital growing from just over 50%, 55%, and most of the total addressable market to 70% by 2024. Do you want to comment on M&A multiples?
Yes. I mean what I said before. So we've always said we aim to complete deals in the sort of 5 to 10x EBITDA sort of value. If you look at the deals we did in 2020, we were just within that. It was sort of just under 10 around 9-point-something. And it's not that much different this year. It's probably slightly -- it's probably closer to the actual 10. So that trend has been there for a couple of years, certainly, nothing's changed in the past quarter or in the short term.
I just think you have to think about the M&A market being a bit segmented. So we're looking for people who want to buy in to creating a new model and disrupt the old. And then you take Zemoga, for example, or Cashmere, probably the 2 most recent examples where people are looking for a connection with digital specialists, and we have 7,000 of them now in 33 countries. They're looking for geographic opportunities, and we're 70% Americas, 20% EMEA and 10% Asia Pacific with the objective being 40%, 20%, 40% in those 33 countries. They're looking for capital. We don't have unlimited capital, but we have significant capital to deploy for merger and organic growth and investment. And last but not least, they're looking for client connection as well. So you've got those 4 areas that people are looking for in order to continue to build their business because the structure of our deals is unlike private equity. Private equity tends to be a sale. We're looking for people, as I said before, to buy in. So it's a slightly different market. But to your question, I think the major competitive source of capital that we see as private equity at the moment.
That's very clear. Can I just follow up on the growth rates point? I mean the topics you addressed leveling of gender pay gap. Those are all factors that impact the market. I'm just trying to understand what is it about S4 specifically that's causing it to outgrow the market? Is there something specific there like over-indexing to the tech giants or anything like that, that can help me understand what's driving this? It's a positive thing, right?
You sort of see it in the what was mentioned that Scott put together and the sort of things that DJ, Lewis and Michael touched on, I mean I think the answer to your question is we're trying to pick out those segments. I mean one of the investments we're making is in the CTV and CTV is -- it's from a small scale, it's true. But if you look at all the indicators, I was looking at PubMatic results this morning, you see very strong growth from connected television or if you look at the trade desks results -- Q3 results as well a day or so ago.We're trying to pick out those segments of the market that we think are growing. So in this presentation, technology services and DJ and his colleagues are trying to sort of isolate the areas that we think are fast growth or faster growth. You got Lewis focusing on the metaverse. That's somewhat controversial. Some people say, and I think Lewis said in his remarks, there's a little bit of hype in there. But fundamentally, we believe this is -- he called it potentially -- we didn't say potentially, he said it was the fifth industrial revolution. I don't know whether I would go quite as far as that, but it's -- it certainly got some potential in that area. And Michael's saying we put it slightly differently. The marketing VIX index has gone through the roof because the uncertainty caused by the decisions by Apple on IDFA and the decision by Google on the deprecation of cookies. All of this creates a huge uncertainty. I mean when you look at Michael's presentation, around first-party data and the signals and the platforms, I mean, it's not rocket science, but on the other hand, it may -- these are major areas for expansion for us. through the consulting services that we have and the products and the services we have. So I think the answer to your question is we're trying to pick out the segments that we think are fast to grow.
I think there is something in what you've talked about from a client perspective though, because as I referenced in the in the deck when you look at the kind of growth that some of our larger clients are having for the Google, Facebook Amazons of the world, obviously, that translates into outsized marketing spend growth for them as well. So having exposure to those clients very helpful. And then I think the reality is your growth can come from 2 places, right? You can ride the wave of the market and stand still or you can take share from other people in the market. And we certainly plan and have done both and plan to continue doing both.
Yes. Maybe one of the things, just as Scott was speaking, I mean 50% of our revenues are tech. And when you think about -- I've always described it as being a royalty on the growth of digital transformation. Effectively, in a sense, we're a royalty on the growth on the growth of tech. So maybe it's also to do -- I mean when you -- when people -- the analysts on this call, look at the holding companies, they explain faster rates of growth by virtue of the fact they have health care -- basically, it's tech clients, telecom clients and health care clients. And those are the 3 areas where -- which during the pandemic, even in the traditional areas of the market have grown faster. And so I think you can explain -- and we will continue to work most closely we have -- I won't bore you with the list, but we have a list of about 20 to 25 tech companies that we work closely with and try and evaluate their relative merits and that list changes as new ones come in. And we try to evaluate their strengths and weaknesses and build relationships with them, which are inventory relationships because we're buying inventory for them on a transparent basis or client relationships. So I think that's probably one of the reasons, too, is that we focused on people, on clients that are looking at the sky rather than looking at their boots.
And just on churn, this is my last one, but just on churn, what sort of churn are you seeing? And how does that compare with what you have seen historically? And then if you can give me a sense of where it sort of stands in the industry, given The Great Resignation.
Around 15%. Yes. About 15% to 20%, Peter, right, is about...
No. More recently, so you're right, but that's more -- that's slightly more historic than what we saw in the 15% to 20% we saw last year. So sort of one step back, if we look at 3 years ago or 2 years ago, let's say, before the pandemic basically, we are used to and that's also what we saw sort of around 20%. I would say last year, it sort of declined a little bit. So indeed, it was around 15% to 20% and more recently or in the last quarters this year, we saw a sort of slightly above 20%, 22-ish percent. That's sort of the range. But again, to put it a little bit in the perspective, that's sort of the same percentage as that we saw pre- the pandemic.
And is that in line with, above or below the market?
No, that's in line with the market. What we see with our peers. That's just sort of the range that they also encounter.
But to be fair, you say in line with the peers. To bee fair, I haven't seen any trend statistics from peers. I haven't heard what sort of levels. I mean, that's a question you can ask them.
We'll now take our last question from Matthew Walker from Crédit Suisse.
So the first question is your comps were harder, I guess. You had a 17-point gap between Q2 and Q3 last year. But all the same, maybe you could go into the reasons about -- you've seen acceleration on a 2-year stack for the other agencies, but a slight decline on a 2-year stack versus Q2 for S4. That wasn't something that I was expecting. So can you dig into that a bit? And then...
Can you just be specific from what levels you're talking about? You're talking I mean...
If you look at our Q2 it was a spectacular quarter, right? It's decimal points different to what happened in the holding companies. So I just don't think that's a valid comparison. I mean if you look at the past and I can't remember the number of the slide, but the pattern that I showed on that, which shows our sort of 2-year stack versus the competition, I mean it's very clear we had an outsized Q2, right? It barely fits on the chart. So you normalize Q2, then Q3 looks better than certainly the holding companies and most of the other sort of tech consulting peers. So I think sort of denting us for having a spectacular Q2 is probably not entirely fair.
No, I get the point that you had a much better Q2 and you saw a much stronger acceleration on a 2-year stack in Q2 than they did.
Be a bit tougher with you. What are the 2-year stacks that you're talking about? What's the best 2-year stack that you can give me?
Basically, if you -- I mean, obviously, they're smaller numbers. But if you look at [ Double Gear and Publicis ], they sort of accelerated from a 1% or 2%.
What was the...no, no, no. I can go from 0% to 1%, and that's 100%. What's the 2-year stack? What is the figure? Just give us the figure, give us the beef. What's the number? The numbers we're talking about is -- hold on, Matthew, it's 65%. That's roughly the 2-year stack. So what's the number you're comparing it with?
Well, in absolute terms, let's say, a 6 or a 7. So obviously, it's radically different -- it's more the movement from Q2 to Q3. That's what I'm getting at.
Maybe you can ask them why they didn't have such a good Q2.
You basically -- again, you look at the -- and I gave the figures in relation to Omar's question, just to repeat them. last year, 21%, 7%, 23%, 27%. Those are the quarterlies. This year, it's 33%, 42%, question mark Q4, right? And you know what the guidance is, we've gone from 25% to 30% to 35% to 40%. So that's -- those are the numbers. Now when you make the comparison, you're saying to the holdco, we don't think that's the valid comparison. We think the valid comparison is more to Globant, EPAM, Endava, ThoughtWorks. And I think we'll have C&IT as another comparison, the Brazilian company, which is listing shortly. So those -- and the stacks are there on Scott's slide that you referenced just a few seconds ago. So I think that's the real comparison and it isn't bad in relation to that.
Okay. Well, let's move on then. The [ 400 million ] you talk about as headroom, can you just clarify, because when I calculate it, it's a little bit more, but when I do it, I'm including the EBITDA of the companies that you might purchase with that money. So I just wanted to clarify, when you're looking at the [ 400 million ] headroom, are you just talking about the money you've got available? Or are you factoring in the EBITDA of the companies that you might buy?
No, it's just what we've got available it's not factoring in that at all. So it's not factoring in that additional flexing to be fair.
Got it. Okay. Understood. That's clear. And then the final question I had was on the net debt at the end of the year and acquisition payments. So it's fluctuating around sort of GBP 20 million or so of net debt at the moment. It was sort of flat at the end of Q3, but I think Peter said that it was yes, around GBP 20 million of net debt. So if you could just hazard a guess, assuming that you don't buy anything else, which obviously you may, but assuming you don't buy anything else, what do you think your net debt at the end of this year will be what are the cash acquisition payments that you're looking at for this year, again, not including anything that you haven't already announced.
Sure. Peter?
So towards 2 things. So in Q3, we were sort of in average in a net cash positive. And now we're sort of -- or at the end at Q3 because of merger payments mostly. We went into that 20 to 40 range. And that's also the sort of range, which I would expect at the end of the year. So of course, there is cash flow from operations, but there is also some payments to be done on prior mergers as well as new mergers, although you asked me to exclude them. But there are some to be settled can happen in the fourth quarter. So you can maybe chip in or turn into the first quarter next year, but there are some settlements. So all in all, I would expect us to be in that sort of 20 to 40 range in net debt at year-end.
And does that -- sorry, just to be clear, [ does that 2 ] to 40 include some deals that you might do? Or that's just including the deals you've already...
No, that's what. No. No. Because if deals that depends, of course, on the deals and the deal structures and the considerations to be paid. So that would be excluding those yields. New deals.
And your cash payment for acquisition of subsidiaries for this year, what are you thinking there?
You mean in total thus far?
Total cash payments acquisition of businesses this year, yes.
Yes, that depends basically again on whether or not we conclude these last bits and pieces on these deals.
Getting the incremental cash payments on deals between, let's say, October 1 and December 31 of last quarter.
So there are some deals that you've already announced, where the cash payments might be made next year?
Yes. He's just asking whether any cash payments in the fourth quarter on deals that have already been done.
Yes, yes. No, there will be some limited as we have. As you know, Matthew, in our deal structure, always that continued consideration. So there are a few to be settled, but the exact timing is always slightly different because it's always a bit of paperwork. But I would expect if I would say it right now, but it's really a sort of high-level number. I would expect that probably to be around another GBP 15 million approximately. If we can, let's say, conclude and finalize these bits and pieces that, that would be the sort of the level from prior deals that should be settled in the fourth quarter.
Okay. And the final one is, I thought the stuff you put in the presentation on the metaverse was actually pretty interesting. I think, for sure, you're one of the first agencies to do that. I noticed that Globant was just starting their metaverse studio. So I guess you're well ahead of them. But what was your metaverse revenue for 2021? Because you gave us a figure for 2022 or a range? What's the absolute number for '21 that you're looking at, just to just so we can gauge what kind of growth rate is coming in 2022?
We -- I told Lewis to take it out. But you could assume it was about half the forecast. You should have left it in. You now understand what the metaverse is, Matthew? Or do you know what you...
Yes, I'm just wondering what my hologram is going to be. But yes, I get it.
We'll send you your avatar. All right. Have -- All right. Okay. Very good. Anything else? One more. We've got one more.
Certainly. We'll now move on to our last question, which comes from Becky Lane from Jefferies.
Just one from me, please. So you're making good progress on the whopper 20 squared objective. But could you just talk a little bit more about the 19 you've identified in terms of current size and client mix? And also on that note, to what extent do those potential whoppers include assumptions about how the growing tech services offering could help drive that?
I mean I think the 19 that we've identified are all in the sort of GBP 5 million to GBP 15 million range a year. So that's the group that we're looking at as potential to go to the $20 million of gross revenue because how we define a whopper. Do you want to answer any more on that?
Yes. I mean in terms of the types of clients that still has a heavy SKU to technology, so it actually looks pretty similar if you look at the pie chart in the deck of where our exposure to clients is, it reflects that -- it's quite similar to that. So a very good proportion of our existing whoppers and sort of forecast whoppers is still in the technology sector. And I think by end of year, you'll see -- we'll keep that chart updated that I presented today with the distribution of our clients. By end of the year, you'll have a very clear idea of what we did this year, what the growth looks like and then into next year. Definitely, we're spending a lot of time with DJ and his colleagues to look at the opportunities of either bringing tech services sort of capabilities to our existing client base, and we've had one really good conversion on that already. Vice versa, as we said, we've also had a good conversion of bringing sort of creative resources to one of his clients. So as we literally head off to Amsterdam receiving to work on our 3-year plan, a big part of what we're looking at will be what that opportunity is for our existing...
Yes. On our last management call, which was Wednesday of last week, I mean, DJ was talking about what are the significant opportunities. And I think our largest land-and-expand opportunity next year is in the tech services area. That would be across all 3 practices. So what you're seeing is the opportunity on synergy. The other thing I would say is sort of related to the earlier questions from Omar and Steve and others would be that, that analysis, Becky, the 19, these are not pitch clients, these are land-and-expand clients. So where my view on the pitch side of it, it's a high -- it's a much more competitive process, if you like, from a procurement point of view, et cetera. But ultimately, it's accretive to -- again, to Omar's question, the whoppers, you may have the initial sort of revving up period, but ultimately, it becomes accretive. But the land-and-expand is probably more satisfying for the clients than for ourselves. And it's probably easier for us to do. So all the whopper analysis that's been done by Amy and others inside our client groups, are on the assumption that these are incremental projects and expansion that we get not through big year-long pitches, but through land-and-expand opportunities. Okay. Any more? No?Okay. Thank you, everybody. We have another call, I think, at 1:00 with the U.S. analysts, if anybody wants to join again. I'm sorry, Michael, Lewis and DJ, but maybe you grab an hour shut in get up again. All right. Thank you very much, and thank you for doing it. Thanks, everybody, for joining us. Thank you.
Thank you.
Thank you very much to our speakers. Ladies and gentlemen, this does conclude today's call. Thank you very much for your participation. You may now disconnect.