Making money from personal data is an activity which has come under intense scrutiny in recent weeks. In the wake of revelations that a political communications company mined information off Facebook and employed it to allegedly sway the US presidential election, regulators and individuals are calling for tighter laws surrounding the use of personal information by corporations. In Europe, the upcoming introduction of new data protection laws (GDPR) makes it even more important for companies to keep information safe, less they want to potentially pay out 4 per cent of their revenue in fines.
Stephan Shakespeare, chief executive of profiling and polling group YouGov (YOU) isn’t worried. Following the release of another set of excellent half-year results he said: “if you follow GDPR not only with reluctant compliance but embrace it enthusiastically, it is going to have a massively positive effect”. Indeed, GDPR seems to have increased the market opportunity for those who know how to collect and store data safely. In February, YouGov announced that it was developing a new digital advertising platform which uses blockchain technology to verify data exchanges between consumers and advertisers. This is expected to give companies more insight into the preferences of their customers without exploiting personal data.
Investment in the new platform is one of the ways YouGov is spending its cash. In the six months to January 2018, it spent £1.7m on tech development and a further £1.4m recruiting new data contributors from around the world. This, and foreign exchange headwinds, resulted in a net cash outflow in the period; still, net cash at the end of January was £6.3m higher than the comparable figure in 2017.
YouGov has successfully transitioned its portfolio so that revenues from its products and custom research services are equally weighted. This sent operating margins up to 16 per cent in the period, from 11 per cent in 2017. Adjusted operating profits were therefore up 56 per cent to £8.8m, from a 12 per cent increase in constant currency revenues. Chief financial officer Alex McIntosh thinks there is further to go in enhancing the margins, by selecting only the higher quality custom research contracts. Broker Numis has therefore increased its 2018 pre-tax profits and EPS forecasts to £21.5m and 14.6p respectively (2017: £16.4m and 10.4p).
| YOUGOV (YOU) | ||||
| ORD PRICE: | 383p | MARKET VALUE: | £ 403m | |
| TOUCH: | 375-390p | 12-MONTH HIGH / LOW: | 383p | 246p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 74 | |
| NET ASSET VALUE: | 77p* | NET CASH: | £21.3m | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 51.4 | 2.5 | 1.4 | nil |
| 2018 | 56.3 | 4.5 | 2.2 | nil |
| % change | +10 | +78 | +57 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £53m, or 50p a share | ||||
