Market research and polling outfit YouGov (YOU:AIM) has seen its shares dive nearly 50% since the company issued a profit warning on 20 June.
Amid lower client bookings than anticipated, the company now expects group revenue for the full year 2024 to be in the range of £324 million to £327 million compared with the consensus forecast of more than £340 million.
In response Liberum analyst Andrew Ripper has downgraded forecasts for pre-tax profit by 40% and 54% for full year 2024 and full year 2025, respectively, the latter to below the new consensus.
‘The real killer in the warning was the adjusted profit guidance, which implies a profit of just £13 million to £16 million in the second half of 2024 estimated after share-based payments,’ observes Liberum’s Ripper.
This encompasses increased spend on third party data in custom research, partly relating to B2B (business-to-business) survey work with Facebook-owner Meta Platforms (META:NASDAQ).
On 24 June YouGov shares hit a 52-week low – a far cry from its 12-month high of £12.30 and miles away from the heights above £16 reached in 2021.
In the company’s trading update on the 20 June, it blamed slow sales of data products alongside challenges in the EMEA (Europe, Middle East, Africa) region, but the former is probably a bigger problem.
Although data products profit has increased by 30% on a CAGR (compound annualised growth rate) between 2018 and 2023, profit fell by 9% in the first half of the July 2024 financial year with the company citing ‘continued pressure on client budgets and higher price competition’ at the time.
YouGov competitors include Morning Consult in North America – a peer of Brand Index and BGWI in the UK. This competition is not new, but they have been investing more in their offering than YouGov.
‘We’re unsure of the outlook for data products, there is a wide range of potential outcomes for next year and the balance sheet doesn’t leave much room for error,’ says Ripper at Liberum.
Other trouble spots for YouGov include senior management changes in the EMEA and DACH (Germany, Austria, and Switzerland) region, even if there is an ongoing recruitment process in place to appoint new heads for EMEA.
On a brighter note, the company’s recently acquired CPS (consumer panel services) business performed ‘in line with expectations’ and it continued to see increased demand for customised research solutions.
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