July 21, 2024

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YouGov gets shock poll result from consultancy slowdown

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YouGov plies its trade working out what people think. Intricate polling is not necessary to gauge the sentiments of its shareholders: a profit warning in an unscheduled trading update sent shares tumbling as much as 35 per cent on Thursday. The biggest year for democracy, with half the global population heading to the polls, hasn’t ticked the right boxes for one of the best-known names in the opinion business. 

Political polling in fact makes only a tiny contribution to YouGov financially. Its bread and butter is providing businesses with insights into customer behaviour. The headline-grabbing political stuff is just a good way for YouGov to showcase what it does.

The irony is that the uncertainty being whipped up by 2024’s endless elections helps explain belt tightening by YouGov’s clients. But the shock warning also raises questions about the success of its acquisition of GfK’s Consumer Panel Services business, which completed earlier this year.

Either way, adjusted operating profits will be between £41-44mn for the financial year that ends next month. That is about 30 per cent lower than consensus forecasts. If earnings expectations for next financial year hold up, then YouGov’s London-listed shares are the cheapest they have been in more than a decade, at about 10.5 times 2025 earnings.

YouGov’s drubbing owes more to the broader slowdown in consultancy services than politics. Spending on outside expertise is expected to flatline in 2024 after a boom that followed the pandemic, according to estimates by Source Global Research. The Big Four, as well as companies such as Accenture and McKinsey, have cut jobs in response to the squeeze.

YouGov’s woes mirror this trend. It points to a particular slowdown in “fast turnaround research”, the type of ad hoc projects or soul searching that businesses commission when the going…

2024-06-20 07:54:40

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