YouGov chief to step down

Shares in data analytics group YouGov (YOU) slipped by 5 per cent in the wake of its annual results. The wobble is unlikely to have been caused by its financial performance – revenue is up by almost a third, margins are widening and demand is still strong. Instead, a boardroom shake-up seems to have rattled investors.

Stephan Shakespeare – who co-founded YouGov with Conservative minister Nadhim Zahawi in 2000 – has revealed that he will step down as chief executive next August and take up the role of chair, replacing Roger Parry. The board aims to select a new chief executive by spring 2023 to allow sufficient time for a hand-over period.

Analysts at Peel Hunt expect the “strategic direction” of the company to be maintained, regardless of changes at the top. This is reassuring, as YouGov’s current strategy seems to be going swimmingly. 

Sales were strong in the year to 31 July, with all three divisions reporting double-digit growth. The group’s custom research arm – which conducts tailored research projects and tracking studies – is expanding the fastest, with sales up 46 per cent year on year. Encouragingly, its operating margin is also widening, meaning that divisional adjusted operating profit shot up by 54 per cent to £21mn. 

Data services had a trickier year after a “stellar” 2021. A muted first half, combined with investment in panel and technology costs, led to a 13 per cent decline in adjusted operating profits. Across the group as whole, however, margins have increased from 15.1 per cent to 16.4 per cent. This follows several years of improved profitability, with margins widening from 11 per cent in 2018 to their current level.

In terms of geography, YouGov continues to make rapid progress in the Americas, growing revenue and operating profit by 33 per cent and 40 per cent, respectively. Increased brand awareness is helping matters, allowing YouGov to take on rivals such as IHS Markit (US:INFO) and Gartner (US:IT).

YouGov said its new financial year has “started off well across all divisions”, adding that no material changes in client behaviour have been experienced to date. While a recession could affect demand, management stressed that strong subscription renewal rates and new longer-term deals have provided better visibility. Over a third of its revenue target for 2023 has already been secured.

YouGov isn’t cheap, but a tough year for equities means it’s better value than it has been for some time, with a forward price-to-earnings ratio of roughly 22. Buy.

Last IC View: Buy, 1,180p, 22 Mar 2022