YouGov has updated on good H120 figures, with underlying revenue up 15% and adjusted operating margins increasing from 13% to 15% as the mix shifts further to the higher-margin Data Products segment. The group had cash of £27.2m at end January (lease liabilities only). With an online culture since the group’s inception 20 years ago, it is better placed than many to satisfy the increased desire to understand what is happening in populations by corporate and state at this time of uncertainty. We have reflected a more cautious outlook for the remainder of the year and will revert with FY21 estimates when the outlook is clearer.
The ability to handle large quantities of online data, with a workforce that is accustomed to working remotely, means that YouGov can continue its business with far less disruption than many others. Much of its business is contracted and new contracts continue to be signed, including a strategic multi-year contract with a German financial services company signed post period end. However, the nature of the project work being done is shifting to reflect the need of healthcare departments and others to understand the dynamics in this fast-moving pandemic. The group has a global panel of over 9.5 million people, giving highly permissioned data, making it a particularly valuable resource for decision makers. It is staying close to its clients through weekly trend reports, which should also act as ‘door openers’ to additional clients once the crisis has passed.
While management reports that it has seen no material impact from COVID-19 to date, there are bound to be areas of the business where demand softens, such as travel and retail. We have adjusted our H220 forecasts to reflect a 10% softening of revenues in the remaining four months of YouGov’s financial year, taking revenue from £152m to £147m. At the earnings level, there should be some mitigation from cost savings initiatives, although these are not yet quantified. We will reinstate FY21 forecasts once the picture clarifies. As at the end of January, YouGov had £27.2m of cash on the balance sheet with no debt.
YouGov’s share price has retrenched from a peak of 763p in the last week of February, a decline of 48% against the fall in the FTSE AIM All-Share of 37%. Comparison with ratings of other quoted stocks is not useful when forecasts are under review, but the share prices of Ipsos, Forrester, Gartner and Nielsen have fallen by an average of 42% over the same period.