YouGov in hot demand

A bullish update in August had already prepared investors for stunning full-year numbers, and pollster YouGov did not disappoint. Results were indeed better than expectations mid-summer, and business remains in line with ambitious growth forecasts. The upcoming US election can only improve its profile among investors and clients both here and in the US.

Yes, the figures were helped by foreign exchange gains - America is YouGov's largest market - but organic growth is easily ahead of the wider market, and the weak pound is not the story here.

Revenue in the year to 31 July rose by 16% to £88.2 million, or 12% at constant currency, while adjusted operating profit grew by 27% to £10.9 million, still up a stonking 21% assuming unchanged currency rates.

That 100-basis point increase in margin to 12% was driven largely by the shift from traditional market research to data products and services. These two together generated £35 million of group revenue in the past year, which is 38% of the total, up from 32% previously.

YouGov chiefs want this higher margin work to eventually generate half of all revenue, probably within the next few years. "We have a five-year strategy and we'd be very disappointed if we didn't make it to that number," founder and chief executive Stephan Shakespeare told Interactive Investor Monday.

Data Products, which includes flagship brand intelligence tracker BrandIndex, increased the top line by 40% and almost doubled profit to £4.5 million for a 27% margin. Revenue was up by a quarter at Services, home to YouGov's online fast-turnaround Omnibus service, where profit grew by 15% to £5.2 million for margin of 29%.

Shakespeare claims around half of Silicon Valley are YouGov clients, and he does admit to working for San Francisco-based room rental website Airbnb. Understandably, it's these areas where YouGov is "increasing energy and spend".

YouGov continues to generate more money in America than anywhere else. Sales there jumped by 20%, or 12% at constant currency, to £31 million last year compared with 9% growth in the UK to £24.9 million.

US profit of £6 million still lags the UK where YouGov made £7.2 million. However, the British firm could do very well out of what is turning out to be one of the most vicious US presidential elections in modern history. Its polls have already been widely featured in the American media, showing off its brand to good effect.

With YouGov shares surging a further 6% Monday to another record high at 225p, they are certainly not cheap. They trade on 23 times earnings per share (EPS) estimates for 2017, currently 9.6p at broker Numis Securities. That's a big premium to smaller peer Brainjuicer, but a big discount to larger data and analytics firm GlobalData, and Numis tips EPS to rise 16% to 11.1p in 2018.

Keep growing at this rate - and management's past record suggests it will - and YouGov will justify that nosebleed rating. Numis is looking There's £15.6 million of net cash available for acquisitions, too.

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