YouGov reports strong growth as it integrates CPS acquisition
By Josh White
Date: Tuesday 26 Mar 2024
(Sharecast News) - YouGov reported 9% growth in revenue in its first-half results on Tuesday, to £143.1m, with underlying growth at 2% compared to the prior year.
The AIM-traded firm said adjusted operating profit leapt 23% to £27.9m for the six months ended 31 January, primarily driven by the successful completion of the CPS acquisition, albeit with an underlying change of -4% due to slightly lower gross margins.
Its adjusted operating profit margin increased by 200 basis points to 19%, attributed to accretive margin contribution from CPS.
However, statutory operating profit declined 53% to £9.5m, primarily due to exceptional costs related to the CPS acquisition and related debt financing.
Adjusted earnings per share increased 4% to 20.4p, while statutory earnings per share decreased from 14.7p to 3.7p.
The company said it maintained a robust balance sheet position, with cash at period end of £53.4m and a leverage ratio of 1.6x net debt-to-EBITDA.
Operationally, despite a slow start to the year, YouGov reported a resurgence in sales momentum, particularly for its panel-based custom tracking solutions.
Demand for its syndicated data remained stable, while the technology sector saw a return to high levels of sales momentum akin to the prior year.
Geographically, the UK and US markets continued to be key growth drivers, with an anticipated acceleration in the US in the second half.
Investments were made to meet client research demand and foster further innovation, including significant allocations toward product innovation, panel expansion, and strategic acquisitions such as KnowledgeHound and CPS.
Regarding the CPS integration, YouGov said progress had been notable, with collaborative efforts underway to capitalise on the enhanced value proposition.
The acquisition had been trading ahead of expectations, supported by investments and strong client renewals.
Looking ahead, YouGov said it was confident in achieving current market expectations for the full year, despite potential challenges posed by macroeconomic sentiments.
The company said it was maintaining a disciplined investment approach while optimising its cost base for margin improvement.
Furthermore, revised medium-term targets included a medium-term revenue goal of £650m and an unchanged adjusted operating profit margin of 25%.
Leadership changes were also noted, with Tom Fisher appointed as chief commercial officer and Lynda Vivian succeeding Sundip Chahal as chief operating officer.
"YouGov delivered a resilient performance in the first half of the financial year, with continued growth momentum in a challenging macroeconomic environment," said chief executive officer Steve Hatch.
"In line with our strategy, we have continued to invest in the business to drive sustainable growth and expand our technological capabilities both organically and through acquisitions made during the period.
"We were delighted to welcome the brilliant CPS and KnowledgeHound employees to our team."
Hatch confirmed that the CPS integration was progressing well, with positive responses from both clients and the combined teams.
"We are collaborating on commercial opportunities, with active cross-sell projects beginning to come through post period end, as we create more value for our clients.
"As we enter the second half, our clients are increasingly looking for high-quality, data-driven solutions.
"The quality of our products and services, the accelerated sales momentum seen in the second quarter, and our robust sales pipeline gives us confidence that YouGov can achieve growth for the full year in line with current market expectations."
At 1418 GMT, shares in YouGov were down 7.09% at 1,087p.
Reporting by Josh White for Sharecast.com.
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