YouGov in huge sales push

Pollster YouGov has had a difficult summer, certainly in terms of the share price which has slumped by more than a fifth since the spring. There seems, however, little in the numbers to justify such pessimism and earnings are tipped to grow fast.

Adjusted operating profit - which excludes over £1 million of extra restructuring and acquisition-related costs - jumped by almost a quarter in the year ended 31 July 2014 to £7.4 million on revenue up 8%, or 10% at constant currency, to £67.4 million. Once again, top line growth easily exceeded global market growth of 2-3%.

Strip out forecast year-end net cash of £8.6 million, or 9p a share, and YouGov shares trade on a 13.4 times forward earnings. That appears modest for a business Numis Securities expects to grow adjusted earnings per share (EPS) by 16% both this year and next. A footprint in the under-developed Chinese and South East Asian markets, acquired after buying Decision Fuel in January, should help.

Numis thinks the shares are worth 142p. But they're currently sitting at a key technical support level at just under 100p, and require a catalyst. Thankfully, the omens are good.

"We have started the current year well in terms of sales to new and existing clients," said chairman Roger Parry. And it is sales that are the big focus for 2014/15.

"We now have scalable products that can be sold very efficiently by an enthusiastic sales force in a way that market research has not been sold in the past," chief executive Stephan Shakespeare told Interactive Investor.

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And it's clear this strategy can work. BrandIndex, YouGov's measure of brand perception among the public, grew full-year revenue by 53% to £8 million and now works for big players like Bank of America, KFC and Subway. "It's not a different product, we've just focused on sales," Shakespeare told us.

There are high hopes for the new YouGov Profiles product, too. It gives subscribers, mostly marketing departments, access to data on target audiences - what they're watching on TV, what social media they're using etc - and will be launched next month. YouGov has made some initial sales with beta clients, and Shakespeare says there's a "real buzz" around it.

And management is certainly incentivised. A new long term incentive plan (LTIP) for the three executive directors and up to 15 senior managers will include targets "significantly higher" than the current scheme. Compound growth in adjusted EPS over the five years to 31 July 2019 must exceed 10%, or top brass get nothing. Earnings must grow by 25% a year to get the full payout.

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