• by Larissa Faw , August 7, 2017

MDC Partners significantly outpaced the industry in second-quarter 2017 with revenue up 15.9% to $390.5 million, beating industry estimates by $21.85 million. This performance was accelerated with organic revenue growth of 11.7% and net new business wins totaling $26 million (in terms of revenue) during the quarter. 

For the first half of the year, MDC's revenue increased 13.8% to $735.2 million with organic revenue growth of  8.7%. Net new business totaled $51.6 million thanks to wins from Amazon, Electrolux and IKEA.

Rival Omnicom, by comparison, reported 3.5% organic growth for the second quarter and 3.9% growth for the first half (albeit from a much larger revenue base). IPG reported 0.6% second-quarter and 1.5% for the half. And Publicis Groupe posted 0.8% second-quarter organic growth and 0.2% growth for the first half.

"This industry-leading growth is testament to MDC's modern and flexible operating model, and our unique culture and entrepreneurial mindset," said Scott Kauffman, chairman/CEO, MDC Partners. "As we look ahead, we are well positioned to remain a leader as our industry continues to evolve at a time of accelerated change for advertising, content and commerce."

"Keep one thing in mind: Marketers are fed up with the status quo and our agencies represent change," said Kauffman on an investor call Monday afternoon. MDC is not "caught up in challenges" faced by legacy holding companies. We are designed for a "post-digital world" by offering a full-range of services, such as product innovation, design, technology, omnichannel marketing, as well as analytics. 

"We have been consultants all along," said Kauffman. Each agency delivers specific expertise, but MDC's secret sauce is its ability to work together via "unmatched creativity," he said. 

MDC's cash flow helped to strengthen its balance sheet during the first half. The firm’s net loss attributable to MDC Partners common shareholders improved to $-1.7 million vs $-22.8 million last year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first six months of 2017 was $82.8 million, an increase of 10.8% compared to $74.7 million in the first six months of 2016.

Looking forward, the firm is upgrading its guidance for organic growth for the full year. It is now targeting approximately 7% organic revenue growth for the period, versus the 4% gain it projected when it released Q1 results. But the firm has tapered its projected Improvement in adjusted EBITDA margin a bit, to  0.6% from the 1% it forecast after Q1. 

The firm got a nice bump in its stock price Monday evening during after-hours trading, when it rose nearly 14% to $10.65 on the unexpected results.