Strong US momentum continues in H215
Brainjuicer Group's (L:BJU) pre-close update confirms that it should deliver FY15 19 January 2016 results in line with market expectations. Growth has stayed strong in the key US market, where H2 revenues grew by 23%, offsetting a weaker performance in other overseas markets. The group is improving its quality of earnings by building its recurring revenues in brand tracking studies, now 7% of the group, replacing the more volatile qualitative project work. The current EV/EBITDA valuation is at a sizeable discount to market research peers.
Adding a creative element to the mix
With an industry tendency to projects being commissioned by clients in the final weeks of the year, delivering profits in line with expectations set earlier in the year is always somewhat fraught. FY15 figures are also after one-off operational costs related to the H115 relocation of the head office of around £0.3m. We are therefore being cautious in our estimates for FY16 until the success of recent initiatives is more apparent. The group has invested in setting up a creative agency based on its core System 1 behavioural science ethos. This agency will effectively crowd-source ideas from a pool of individual talent, rather than have a fully staffed agency with all associated overheads, led by a newly recruited creative industry individual. Other projects may emerge as the year progresses, laying the ground work for a step change upwards in the top line. Our FY16 numbers are unchanged and our newly published FY17 estimates are for the business as currently configured.
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