YouGov tries to top the polls after challenging first half

A large corporate action can sometimes overshadow the operational side of a business, and YouGov (YOU) spent a good portion of its first half integrating its chunky €315mn (£269mn) acquisition of German firm Consumer Panel Services (CPS) into its business structure. While that process has proceeded smoothly, it wasn’t without its costs.

Although the general benefits from the acquisition are in the pipeline – the deal has already lifted the underlying operating margin by 2 percentage points to 19 per cent – short-term costs affected the reported results. These included £18mn of separately reported acquisition costs, plus debt financing costs, which combined to chop 50 per cent from reported pre-tax profits.

There was also some evidence of customer belt-tightening, which affected YouGov’s data products segment in particular. Revenue there was flat at £41.1mn as cost-cutting meant lower subscriptions for the service. It was a similar picture for the research business, which saw reported revenues decline by 2 per cent to £86.1mn, although management did point to forex headwinds as a reason for the indifferent top-line performance.     

Peel Hunt described the first half as “challenging”, although full-year expectations for earnings of 46p a share have not changed. The broker notes the group now has 75 per cent of revenue visibility in place for the year and values the shares at 17 times earnings. YouGov will scarcely leave the headlines as the UK general election nears, giving it an enviable amount of free advertising. If it maintains momentum after the CPS acquisition, as seems likely given that business’s higher profitability, there is no material change to our recommendation. Buy.  

Last IC view: Buy, 830p, 10 Oct 2023