YouGov plc (LON:YOU)’s strategy to focus on its scalable products and services is paying back handsomely in revenue growth and margin improvement. Margin is being further boosted by the reorientation of custom business to greater use of data already held in the Cube, the group’s multi-dimensional database. We have edged our FY18 and FY19 earnings forecasts up 4-7% to reflect the strong H1. The £21m of net cash (end January) is being used to fund continuing investment in panel, applications and new markets. It also supports a progressive dividend and allows for bolt-on acquisitions. The premium rating reflects the growth record and positive outlook.
UK and US strongest markets
Despite already being large and relatively long-established, the US and UK operations continue to grow very fast, with H118 revenues up 25% y-o-y (at constant currency, CC) and 15% respectively. Between them, they accounted for 65% of H118 revenues. Adjusted operating margins in these regions also made substantial gains, with the US up from 25.8% to 33.9% and the UK from 24.6% to 40.4%, reflecting the prevalence particularly of BrandIndex/Profiles data products and Omnibus data service in the mix. Results from other markets were more varied, with Germany and the Middle East down by 18% and 16% (CC) respectively as they restructured, with the latter improving its operating margin as it moves away from bespoke custom projects. New operations are being launched in Italy and Spain and the Asia-Pacific region has moved into profit. A small bolt-on acquisition in Australia in December 2017 should help accelerate regional growth.
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