Strategic and operational highlights27 Mar 2024 07:13
Strategic and operational highlights
¤ After four years of very strong growth (like-for-like net revenue growth of 44.0% in 2019, 19.4% in 2020, 43.7% in 2021 and 25.9% in 2022), 2023 was a difficult year with a like-for-like decline of 4.5% in net revenue. After growth in the first half of the year, the third and fourth quarters were more challenging. This reflects global macroeconomic conditions and client caution and fear of recession, a difficult year for new business and lower seasonal uplift than in previous years. We saw longer sales cycles, particularly for larger transformation projects and whilst all practices saw some impact, this was most evident in Content with some technology clients, a reduction in smaller project-based assignments and with local and regional clients. The final results for 2023 were in line with our revised targets.
¤ Our stated 'whopper' strategy of building broad scaled relationships with leading enterprise clients continues to drive our revenue. Revenues from our top clients are subject to the same global macroeconomic pressures, however, we saw better performance in our top 20 and top 50 clients. We closed 2023 with 10 'whoppers', that is clients delivering over $20 million of revenue per annum, the same number as in 2022 and against our target of 20.
¤ Profitability came under pressure due to lower revenue than budgeted and significant cost reductions were made to deliver an operational EBITDA margin of 10.7%, in line with revised targets. Margins improved in the second half as cost reductions took effect. While we have seen some salary and related benefits inflation, we continue to maintain a disciplined approach to cost management, including headcount and discretionary costs. These controls have resulted in 7,707 Monks at year end, down over 13% from 8,891 at the same time in 2022. The Group continues to manage costs tightly, given the current uncertain market outlook.
¤ The Content practice's net revenue was down 10.0% like-for-like and down 9.2% on a reported basis, with Data&Digital Media down 3.1% like-for-like and down 4.4% on a reported basis. Technology Services was up 21.6% like-for-like and up 48.6% on a reported basis. Content had a very challenging year and was particularly impacted in the second half by lower spending by certain technology clients, lower regional and local opportunities, a difficult year for new business and lower seasonal uplift. Data&Digital Media had modest growth in the first half, but declined in the second half, highlighting tougher end markets. Technology Services had good growth in the first half, but slowed significantly in the second half of the year due to longer sales cycles for transformation projects, phasing of work and a reduction in activity from some larger clients.
¤ Geographically, on a like-for-like basis, Americas net revenue was down 2.8% and now accounts for 79% of total net revenue, primarily reflectin
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