10th Oct 2023 10:57
(Alliance News) - There were "no surprises" in YouGov PLC's annual results on Tuesday, according to Peel Hunt, as YouGov upped its dividend amid a 77% surge in pretax profit.
Analyst Jessica Pok said the "no surprises" results would provide "relief" to the market, especially as shares in the London-based research and data analytics are down 30% in the last three months alone.
YouGov was up 20% at 826.10p on Tuesday morning in London.
Pretax profit surged by 77% to GBP44.7 million in the financial year ended July 31 from GBP25.3 million a year earlier.
Revenue climbed 17% to GBP258.3 million from GBP221.1 million, driven by growth across all of geographies. YouGov said this was despite macroeconomic challenges and difficult trading conditions in some markets during the period.
Fiona Orford-Williams at research house Edison noted good progress from YouGov's Data Products, such as BrandIndex, which delivered underlying revenue growth of 10%. She also noted a "particularly strong showing" from Custom Research, where underlying revenue climbed 17% year-on-year.
"This area is not as labour-intensive as the name might imply, being a combination of long-term trackers and ad-hoc projects. Data Services, such as Omnibus, had a tougher time, retrenching 8% underlying," she said.
"Interestingly, the statement indicates signs of improvement in business from the tech sector, which has been an issue across the marketing sector for the last few quarters."
Edison's Orford-Williams said YouGov's new growth plan was focused on getting "more value" from existing client relationships, particularly in Data Products and Custom Research, with the more "bread-and-butter work" being put through the YouGov platform on a self-serve basis. This, she said, would "obviously" be better for margin.
Looking ahead, YouGov said it remains confident in its prospects for financial 2024 and in meeting current market expectations "on a stand-alone basis". It added that trading for the current financial year has started off in line with expectations.
"Building on the momentum we saw in the first half of the year, YouGov has delivered another year of strong performance in [financial 2023] against a challenging macroeconomic backdrop. We have continued to invest for sustainable growth, in line with our strategy, while delivering further margin expansion and robust cash generation," said Chief Executive Steve Hatch.
Against the positive backdrop, YouGov hiked its annual dividend by 25% to 8.75p from 7.00p.
Analysts at Berenberg said it has been a "smooth and orderly transition" for YouGov from the previous CEO Stephan Shakespeare to Steve Hatch. It noted "early momentum" in the company delivering on its strategic initiatives, particularly in the commercial teams, and noted YouGov's "clear plan" to increase "share of wallet" with existing clients.
In response to Tuesday's results, Berenberg updated its financial 2024 forecast for YouGov, bringing them in line with the wider market consensus. It now expects underlying revenue growth of 9% and adjusted earnings before interest and tax of 34%.
"We flag the recent weakness [in share price] as a buying opportunity. YouGov is benefiting from structurally growing end-markets, and it continues to take share and deliver above-market growth," Berenberg concluded.
By Heather Rydings, Alliance News senior economics reporter
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