YouGov outperforms

The UK General Election is a little over six weeks away, but YouGov has been in overdrive for months. The pollster is in hot demand at this point in the political cycle, and although it makes little money from the election itself, the media exposure is invaluable. But YouGov is already outperforming the market, driven by its US business, and its new Profiles product launched in November is selling well, too.

Adjusted pre-tax profit jumped by 17% to £3.5 million in the six months ended 31 January on revenue up by 11% to £36.2 million. Almost all of that growth was organic, well ahead of the market at about 3%.

Sales surged by 28% in the US where YouGov works for Coca-Cola, Facebook, Google, and underlying operating profit doubled to £3.1 million. Management tells Interactive Investor that the firm's Profiles product will be launched in the US "before too long," which should underpin growth there.

Profiles is YouGov's "ground-breaking" new media planning and segmentation tool for brand owners and the agencies who serve them. The company has collected data on brand usage and perception, TV viewing habits and website usage from 190,000 panellists for the UK version. First sales were made to ad and media agencies early this year.

And it was investment in staff for Profiles that hit UK profit - down £0.5 million, or 23% to £1.4 million. However, that gap is expected to fill as sales of the new product gather momentum and drop down to the bottom line through the second half.

"We believe that not only does Profiles have the capability over time to deliver revenues (£10 million) and profits (30%+ margin) comparable in scale to BrandIndex and Omnibus, but that due to the integrated nature of the data products, services and custom research offered by the group, it should drive revenues across YouGov's entire portfolio," says Paul Richards at Numis Securities.

YouGov's cash pile should rebuild, too. It fell by 39% to £3.7 million during the first half due to a "very large client debt in the Middle East". The money came through on 8 February, we’re told, so that will show up in the year-end figure. So, too, will money from the US where activity is high. Finance chief Alan Newman tells us he expects cash conversion - just £0.3 million of cash was generated from operations versus £3.5 million a year ago - will return to the historical range of 80-120%.

The fledgling Asia Pacific and French operations did well during the half, and Germany returned to revenue growth and grew profits. That should continue and help drive underlying pre-tax profit up to £9 million in the year to July 2015 from £7.7 million last year, giving earnings per share of 6.7p, up 15%.

However, even after stripping out forecast year-end net cash worth 7.6p per share, YouGov shares trade on 18 times forward earnings - not cheap - dropping to 15 in 2016. Currently, Numis reckons the shares are worth 142p.

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