MDC Partners organic revenue drops but profits rise in Q1

MDC Partners is the latest holding company to report Q1 earnings, with organic revenues down 6.9% year over year in Q1 to $307.6 million globally. In the U.S., organic revenue declined 8.3% compared to the same period in 2020, to $242.6 million.

Net income, however, was $0.9 million, up from a $2.4 million net loss in Q1 2020, marking the company’s highest net income in 11 years. 

The results are significantly better than Q4’s 13.7% drop. Other holding companies including WPP, IPG and Publicis all delivered positive organic growth in Q1.

MDC does expect to continue to rebound, pointing to growth from CPG, healthcare and financial services clients, which make up a third of its business. The company projects 7% to 9% organic revenue growth for the full year, compared to 2020’s 14% decline.

“This momentum sets us up well for the next major step in our strategic transformation, the proposed combination of MDC and Stagwell, which we believe promises to disrupt the industry and provide value for all our stakeholders,” CEO Mark Penn said in a statement.

Still, certain client sectors, including auto, retail, tech, transportation and travel, communications and food and beverage, continued to decline. Overall, MDC’s revenue from top clients decreased to 21.7% of total revenue from 22.4% last year.

The holding company, which breaks its agencies into groups, reported that Group A, which consists of creative agencies in the Anomaly Alliance (Anomaly, Concentric Partners, Hunter, Mono, Y Media Labs) and Colle McVoy, grew year-over-year organic revenue 11.8% in Q1, to $90.6 million.

Group B, which houses the Constellation group (72andSunny, CPB, Instrument and Redscout) and Doner Partner Network (6degrees, Doner, KWT, Union, Veritas and Yamamoto), saw Q1 organic revenues decline 6.3% compared to the same period last year, to $117.7 million.

MDC’s media and data network declined 12.2% to $41.1 million, while its “other” agency segment, which includes Allison+Partners, Bruce Mau, Forsman & Bodenfors, Hello, Team and Vitro, dropped 26.6% to $78.4 million.

MDC, which is pending a merger with Stagwell Group, the other marketing services company led by Penn, has big ambitions to grow into a scaled alternative to the global holding companies.

In February, the group launched an affiliate program to expand its reach into underrepresented markets, with the goal of adding 50 independent agencies by the end of the year. Most recently, MDC added nine global affiliates in Latin America.