Shares in research and polling outfit YouGov (YOU:AIM) are down 1.6% to 470p despite first half results coming in ahead of expectations.
Revenue is up 18%, and stripping out acquisitions is up 10% (against 9% forecast), while adjusted earnings came in at £12.5m against a forecast £10m. The company also outlines an ambitious new five-year plan for the business.
As AJ Bell investment director Russ Mould notes: ‘Although best known for polling work, YouGov’s growth story is actually the higher margin Data Products & Services business, selling subscription-based insights based on an online panel made up of millions of individual respondents.’
Why then is the stock trading lower. There look to be two reasons. First, today’s fall comes in the context of a strong year-to-date showing.
READ MORE ON YOUGOV HERE
Second, a planned accounting change is expected to have an impact on adjusted profit and earnings per share going forward.
UNDERSTANDING THE ADJUSTMENTS
Historically there has been a significant difference between the unadjusted and adjusted versions of these metrics. This is mainly thanks to the amortisation of intangible assets, whether generated through acquisitions or organic investment.
It could certainly be argued that amortisation of acquired assets would obscure the underlying performance of the business but this argument is less compelling when it comes to internally generated intangibles - which you could see as a cost of doing business.
The company seems to be acknowledging this and will in the future include these internally generated intangibles in its adjusted profit and earnings per share figures.
Numis analyst Steve Liechti outlines the impact on full year figures for the July 2020 financial year with adjusted pre-tax profit down from £28.2m to £21.7m and adjusted earnings per share down from 18.7p to 11.8p. Mould says the move should ‘make the story easier to understand for investors’.
