Shareholder Goes Public over YouGov 'Disaster'

Gatemore Capital Management, a 1.3% shareholder in YouGov, has published an open letter to the research firm's Board complaining of 'management missteps' over eighteen months amounting to a 'disaster', and urging the return of co-founder Stephan Shakespeare as an interim CEO.

Gatemore says it believes that YouGov 'is an attractive business with strong fundamentals and exceptional potential', citing historical performance, market opportunity and its strong data products, but believes that 'a number of management missteps have created a critical and widening gap between its intrinsic value and lacklustre share price performance'. The polling and consumer profiling data firm's shares are currently languishing at a price of GBP 378, having briefly touched GBP 1600 at the end of 2021. A key moment came in mid-June last year when the company issued a warning regarding lower than expected sales and profits - between June 14th and 28th shares lost more than half their value to sit at GBP 406. The acquisition a year ago of the European Consumer Panel Services business of GfK, while presenting a substantial opportunity, has inevitably caused turbulence, not least in the difficulty of revenue forecasting for the vastly-enlarged and ambitious company.

The open letter is heavily critical of current CEO Steve Hatch, citing conversations with a number of other stakeholders who share Gatemore's 'disappointment with [his] tenure and overwhelming frustration over the poor operating performance under his leadership'. Perceived 'missteps' include budgeting failures, with a 'clear disconnect between the sales and finance functions' culminating in a significant profit warning in H2 2024; mishandled investor communications, with no investor call following the initial profit warning, leading to a revised profit estimate just six weeks later; volatile financial guidance; and a lack of strategic clarity, especially regarding 'the path to achieving the mid-term targets of GBP 650 million in revenue and a 25% operating profit margin... in light of the underwhelming 2024 performance'.

The letter demands 'urgent, decisive action to address these issues', with the appointment of an interim CEO and a comprehensive strategic review and possible sale. It suggests 'We believe that Stephan Shakespeare is best positioned to drive the necessary changes at the Company given his deep understanding of YouGov and the media research industry, his impressive track record during his previous tenure as YouGov's CEO, and his substantial personal shareholding in the Company, which ensures strong alignment with the broader shareholder base'. It also notes that 'Mr. Shakespeare's significant investment in the Company contrasts sharply with the minimal holdings of the current Non-Executive Directors, who collectively own only 0.05% of the Company'.

The full letter is at https://gatemore.com/yougov-letter .