NEW YORK: MDC Partners posted a 16.4% drop in Q3 organic revenue to $283.4 million, but said it is making progress in its proposed merger with Stagwell Group.
The revenue drop was “primarily due to reduced spending by clients in connection with COVID-19,” the holding company said in an earnings statement.
Overall Q3 revenue, including acquisitions and currency fluctuations, dropped 17.3%. Third quarter net income attributable to common shareholders was $400,000 compared with a net loss of $5.1 million a year ago.
Q3 revenue for MDC’s “all other” business segment, which includes Allison + Partners, Bruce Mau, Forsman & Bodenfors, Hello, Team and Vitro, dropped 35.4% to $50.6 million.
Group B, which contains the Constellation group (72andSunny, CPB, Instrument and Redscout) and Doner Partner Network (6degrees, Doner, KWT, Union, Veritas and Yamamoto), saw a Q3 revenue drop of 13.1% to $112.2 million.
In Group A, which is comprised of the Anomaly Alliance (Anomaly, Concentric Partners, Hunter, Mono, Y Media Labs) and Colle McVoy operating segments, Q3 revenue declined 12.3% to $87.1 million.
Third quarter revenue in the U.S. dropped 16% to $228.3 million, and in Canada by 21.6% to $20.3 million. In all other locations, revenue dropped 23.1% to $34.9 million.
MDC has been in reorganization mode since 2019, when CEO Mark Penn took the helm in the wake of a $100 million investment in the company by Stagwell Group, where Penn is managing partner.
“We continue to implement and make progress on our strategic plan that has brought our partners together into newly formed networks and collaborative holding company pitches,” Penn said in the earnings statement. “We launched our first major digital marketing product, and expanded profitability and margins as we continued to centralize back-office operations and consolidate real estate.”
Earlier this month, MDC launched an AI-driven platform called PRophet.
In June, Stagwell proposed a merger with MDC to create a company with more than $2 billion in 2019 net revenue. Lead independent director and special committee chairman Irwin Simon said in an earnings statement that the two companies have “reached an agreement in principle on certain key aspects of the proposed merger.”