YouGov sets sight on US and Germany

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YouGov, the online pollster best known for its political surveys, is looking to make acquisitions in both Europe and North America as part of its bid to become an international player in the market research world.

The group, which acquired Siraj in Dubai earlier this year to add scale to its fast-growing Middle East division, said Germany and the US were among the countries where it has been actively eyeing acquisition targets.

Although it declined to disclose what resources it had available, YouGov said it was looking at companies with a market capitalisation of £5m-£20m.

“We are very open to the size [of the potential acquisitions],” Nadhim Zahawi, the joint chief executive, said. “We have £5.5m in cash and no debts.”

Mr Zahawi spoke as YouGov unveiled a forecast beating four-fold increase in pre-tax profits. In its first full year result since it floated on Aim last year, the cash-flushed pollster said profit before tax surged from £1m to £4.1m, while revenues more than tripled to £9.5m.

In the UK, where YouGov has been challenging bigger rivals Mori and NOP for shares in the country’s $2.4bn (£1.28bn) market research industry, the client base grew from 130 to 211.

The group said its reputation has been boosted by the prediction that David Cameron would beat David Davis by 67 per cent to 33 per cent in the Conservative party leadership contest. The actual result was 67.6 per cent and 32.4 per cent.

Business has been buoyed by the success of new product launches. This includes BrandIndex – a £25,000 a year online tracking service that provides clients with public opinion changes on more than 1,100 brands on a day-to-day basis.

Numis Securities raised its 2007 earnings forecast for the group from £4.5m to £4.9m, noting that YouGov is in a unique position to cash in on the structural shift of research spending away from telephone or face-to-face based surveys towards online ones.

“Online research is cheaper and faster and YouGov has proved it can be more accurate,” said analyst Richard Hitchcock.

Comment

At a time when earnings at traditional pollsters are either flat or falling, YouGov showed that there’s cash to be made online. Any expansion into the US and continental Europe would be a natural progression for the group, which already makes half of its revenues and profits from the Middle East. The stock, which closed up 2.29p at 707.29p, is trading on 25.9 times 2007 expected earnings – a hefty premium to the sector average. But with the growth of online research expected to accelerate in coming years, there could still be room for further upside.

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