Ipsos ($IPS.PA) is a €2.2 billion market research company that conducts survey-based research services for companies and institutions globally across a number of different areas such as audience measurement, brand tracking and ad testing.
It was founded in 1975 by Didier Truchot with the goal “to deliver high value-added information that is accurate, reliable and can be used immediately”. For example, in 1979 Ipsos launched the “France des Cadres Actifs” (“The French Businessmen Survey”), a tool that measured readership among business executives. As it convinced a consortium of the country’s newspapers and news magazines to share the costs of conducting the FCA, Ipsos had successfully recognised a trend, in France but not only: a growing need for financial and economic information.
After a decade of rapid domestic growth, in the 1990s the company started expanding beyond France, first by acquiring local companies in Southern Europe, Germany and the UK, and later in the US. To fund the expansion, Ipsos brought in new investors, including selling a 40% stake in 1997 to Artémis Group (the holding company of François Pinault) and the Amstar Fund.
Ipsos was listed on what today is Euronext in 1999, with the two institutional funds (Artemis and Amstar) selling almost their entire stake, and in the 2000s, the group became a multi-specialist organisation, expanding into qualitative research and online and innovation research.
Today, Didier Truchot is still Chairman and holds directly and indirectly ~11% of the shares (but roughly 20% of voting rights), with another 2.5% held by employees and the rest free float.
Business activities
Market research is the collection and analysis of data to determine factors that influence customers’ decisions and purchasing patterns. It involves surveys and interviews from population samples, combined with an understanding of demographics and historical consumption of products and services and, increasingly, big-data analytics.
Ipsos works with over 5,000 clients in all sectors, with 20,000 employees, offices in 90 countries and operations in 130 markets, making it one of the few market research firms that can respond globally and locally.
At the heart of Ipsos' strategy is a unique vision: to provide in-depth analysis of the individual - whether consumer, customer, citizen or employee - to gain a deep understanding of society, markets and people. This is made possible by 75+ proprietary services split across 16 services lines: often used in combination, these services allow it to carry out custom studies that are tightly tailored to client needs.
In 2022 it recorded €2.4 billion in revenues, of which 43% in EMEA, 40% in the Americas and 17% in Asia Pacific. More specifically:
Ipsos claims to have expertise in all spheres of market and opinion research, and to be the only player to offer a complete set of products/services.
Consumers (47% of revenues)
Brand Health Tracking helps marketing decision-makers understand how their brands are performing in their competitive environment
Creative Excellence fuels brand growth by supporting advertisers throughout the entire creative development process
Innovation aims to identify, qualify and forecast the business potential of innovations for consumer goods, durables, tech, and financial services
Ipsos UU is dedicated to qualitative studies and provides clients with a deep understanding of consumers, patients, and citizens through cultural intelligence and cognitive empathy
Marketing Management & Analytics (MMA) enables companies to measure and optimise their marketing, sales, and operations investments
Market Strategy & Understanding helps clients understand the underlying logic behind consumer decisions, identify market opportunities, optimise brand positioning, target consumers, and define shopper paths-to-purchase
Observer offers clients intelligent survey design and access to real consumers, citizens and B2B audiences, locally or globally, by giving external clients direct access to the Ipsos data collection infrastructure and research expertise
Social Intelligence Analytics provides companies, brands, and agencies with the most complete, accurate, and actionable picture of their markets and buyers
Strategy3 brings advisory and consulting expertise to help develop relevant, impactful, and differentiated growth strategy based on insights
Customers & Employees (20%)
Automotive & Mobility Development is a full suite of services across the entire vehicle lifecycle, from concept evaluation to post launch in-market tracking
Audience Measurement provides a competitive intelligence service to media owners, media agencies and advertisers, to estimate the number of people exposed to specific content and their profile
Customer Experience designs, evaluates and develops customer experience management programs
Channel Performance partners with clients to understand channel opportunities, shopping behaviours and attitudes and drive sales conversion across all channels (physical, contact centre and digital)
Media Development Capabilities
Doctors & Patients (17%)
Healthcare is a global insight (quantitative & qualitative), analytics and advisory partner to the pharma sector
Citizens (16%)
Public Affairs conducts opinion research on social, public and political issues for clients in the public and private sectors and the media
Corporate Reputation helps organisations build resilient reputations and stronger relationships with their key internal and external stakeholders
It considers its services a unique mix of digital sources with the best of human intelligence: it has the largest face-to-face interviewing capabilities in the market, as in many countries speaking to people in real life remains a necessity (i.e. relying on digital surveys alone would exclude a significant portion of the population, thus skewing the results). Ipsos also brands itself as the only multi-specialist one-shop for decision makers from all sectors.
A trend that has heavily impacted the research market is the emergence of new technologies, specifically software related to artificial intelligence, machine learning and virtual reality that has led to the automation of a number of processes such as the coding of text, images and video.
At this year’s Investor Day (June 2023) Ipsos launched its in-house, end-to-end proprietary generative AI platform. Generative AI is considered a major driver for profitability improvements and Ipsos produces tons of data that is unique:
“Our unmatched understanding of data is integral to success in the era of Artificial Intelligence and Generative AI. Whether leveraging existing models for desk research or scenario gaming, or applying data to a model for a practical use case, we are able to analyse the benefits and limitations of these new technologies.” (2022 Highlights presentation)
Ipsos has already identified 12 immediate use cases:
The market for market research: size, moat, competition
The increasing importance that companies place on customer data to gain insights into consumer behaviour has driven demand for quality market research. Economic, political and social uncertainty are the growth drivers as clients seek out real-time data to gauge public and consumer attitudes to a wide range of issues: the most recent example is the Covid pandemic and the responses of consumers, governments and citizens.
Depending on the sources and sub-segments included, worldwide market research spending stands at anything between US$45 billion and US$150 billion.1
According to Esomar, the global market research market is today worth around US$130 billion, growing at 5% annually: of these, around US$50 billion is represented by the “core market research” (which includes traditional activities such as quantitative research online, via mobiles, face-to-face, by phone, audience figures and ethnography), with the rest being digital data analysis, social media listening, DIY research platforms, consulting firms, so-called vertical searching and comment management solutions.
Statista uses a different definition and pegs the total addressable market at ~US$84 billion: not sure what happened in 2017, but the chart in the link implies a growth rates of 6.5% since 2008 and somewhat slower at 4% since 2017. Still according to Statista, the US alone represents 55% of the market, followed by Europe (24%, of which UK 9%) and Asia Pac (14%).
Ipsos own history shows that before the financial crisis it routinely produced organic growth of 8%-12%; since then, organic growth has slowed significantly to just 1% to 3% (with the exception of the Covid years). Market research companies typically pass through data collection costs to their customers as “cost of goods sold”: as these costs are coming down due to online surveys and data gathering - as well as outsourcing of this function to lower cost labour markets -, gross revenues are indeed coming down.2 Other issues include generally weak economies in many developed markets since 2008 and the shift in consumer buying away from branded goods towards private labels, which has led to rounds of cost cutting at consumer goods companies.
Growth is slower in Europe, with many IT professionals pointing to the implementation of the EU General Data Protection Regulation (GDPR) laws in 2018: strict limits on what companies can pass on to third parties reduces the amount of data available to researchers compared to other regions.3
Similar to the advertising market, to which it is closely intertwined, the market research universe is very fragmented with a myriad of companies competing on different assignments. In terms of 2022 revenues, the world biggest market research companies are:
Gartner ($5.5bn)
IQVIA ($5.4bn)
Kantar Media ($3.7bn - private)
Nielsen ($3.6bn - private)
Ipsos ($2.5bn)
Circana ($2.2bn - private)4
One of the main underlying trends impacting the market - like many others - is the digitalisation of activities, which is profoundly changing the way people buy, consume, interact with each other, express themselves on different subjects and engage with brands. The most common type of traditional quantitative research methods globally are today online surveys, used by over 90% of market research professionals. But the same surveys reveal that phone and face-to-face interviews still account for 80% and 39% of quantitative research methods, respectively.
Similar to advertising agencies, the only real moat for market research companies is client retention.
The question is not: “Is it easy to create one new market research company?”, but rather: “How much damage can competitors (whether it’s Nielsen, Kantar or a company that does exist yet) do to Ipsos business (i.e., how much can they affect its intrinsic value)?” In this sense, barriers to entry are low (it’s not that expensive to set up a new market research shop), but moats are high: the market is best described as a stable oligopoly, where relative market share does not change much from year to year.
Clients almost never leave their ad and/or market research agency: customer retention is remarkably close to 100%. New business wins are (relatively) unimportant to success in any one year: the world’s largest users of market research stay with the same market research companies for decades (again: similar to advertisers). Switching costs are high because most customers just don’t like changing their market research providers due to their need for a consistent methodology. A big consumer brand (say Apple, Unilever or BNP Paribas) might use a market research company to conduct periodic surveys to track how its brands are performing in various markets. If after few years it switched to a competitor, the new survey data may no longer be consistent and easy to compare across time. This makes customers very reluctant to switch, even if they could save money. Moreover, there typically isn’t much of an economic incentive to switch: every new contract has substantial start-up costs, which gives the incumbent a cost advantage over competitors. New entrants such as Survey Monkey have a lower-end, inferior offering and tend to compete for a different set of customers to the Top 5. Repeat revenue accounts for around 80%-90% of annual sales, and some contracts are for five years or longer.5
Consolidation is the leading cause of losing a once loyal client (see below). And for Ipsos, client satisfaction is quite high, hitting a record high in 2022 with an overall score of almost 9 out of 10.6
Ongoing consolidation
The market research market has been through a couple of “turbulent” decades, which culminated in 2022 with Elliott Management and Brookfield buying Nielsen for $16 billion: this deal highlighted the potential value situation in the industry, as Nielsen itself had gone through a series of deals and transformations.
ACNielsen (founded in 1923) was first acquired by the Dutch publishing and market research giant VNU in 2000 for US$2.3 billion: the deal put ACNielsen back together with Nielsen Media Research, which were separated in 1999 when VNU acquired the latter.
Then in 2006 the entire VNU was acquired by a consortium of “who’s who” private equity funds (Blackstone, Carlyle, KKR, Thomas H. Lee, AlpInvest, Permira and Hellman & Friedman!) for almost $11 billion including debt. VNU had become a takeover target after it was forced to abandon the acquisition of IMS Health for $8bn the previous year. After more changes, in January 2011 the private equity owners listed Nielsen Holding on the NYSE (ticker NLSN) in a US$1.5bn IPO that valued the entire company at US$7.3bn. This is the company that was acquired by Elliott and Brookfield in 2022.
However, before that, in 2020 Nielsen spun off its data and analytics branch Global Consumer Business as a new company called NielsenIQ which was sold to Advent International for US$2.7bn.
And in 2022 Advent combined NielsenIQ with GfK (a German company) to create a leading global provider of information and analytics in consumer and retail measurement. GfK, which was spun off from Nuremberg Institute for Market Decisions (NIM) in 1984, had previously merged with Britain's Taylor Nelson Sofres in 2008 in a deal valued at about US$4 billion, and was later taken private in 2017 by NIM and KKR, which today remain minority shareholders in the combined entity with Advent being the majority owner.
Further, in 2019 Bain Capital acquired 60% of Kantar Media from WPP (which retains the remaining 40%) valuing the business at around US$4 billion.
Last but not least, in 2021 Hellman & Friedman bough The NPD Group and in 2022 offered US$5bn for Information Resources Inc. (backed by Vestar Capital Partners and New Mountain Capital): the two companies have now been merged to form Circana, valued at $8bn.
Ipsos’ “growth by acquisition” strategy
For research firms, more data and sources are today available to be collected. It follows that an increasing share of a company's value lies in its ability to combine the data it collects itself with external data, and requires significant expertise in data analysis, as well as business acumen to ensure that the external data is reliable. Reinforced by increasing market and media fragmentation, this also encourages the rise of the “local” over the “global”, recognising that each national market is different. New technologies and their application have indeed led to the emergence of new competitors, who - generally speaking - have highly specialised offerings in a particular market segment or a given region.
Recognising these trends, Ipsos itself is an acquisition machine with the stated goal to broaden its expertise and expand its footprint in all major markets. New services are expected to contribute 30% of revenues by 2025.
In the first decade of the 2000s Ipsos made 12 acquisitions in North America (including Angus Reid, the leading opinion research company in Canada); 12 in Western Europe (including MORI, a leading opinion research company in the UK); 10 in Latin America and 8 in the Middle East (which made Ipsos the leading provider of survey-based research in these two regions). Ipsos also made 12 acquisitions in the Asia-Pacific region and established a solid foothold in China, South-East Asia, Japan and South Korea.
Then, it continued its spending spree:
2010: US company OTX (thereby consolidating its expertise in online research and social media)
2011: Synovate, the research arm of the advertising company Aegis Group, its largest acquisition ever at €600 million which enabled Ipsos to expand its commercial offering in areas such as the healthcare sector
2013-2015: Herrarte (El Salvador); Consultor Apoyo (Ecuador); Market Watch (Israel); and RDA Group (US), thus reinforcing its market leadership in quality monitoring for the automotive industry
2018: Clintelica (Sweden), an information and communication technology with expertise in e-commerce platforms. In the same year it acquired four GfK Research global divisions (“Customer Experience”; “Experience Innovation”; “Health” and “Public Affairs”) and Synthesio, a leading social media listening platform with offices in New York, Paris, London, Singapore and Brussels.
2019: Data Liberation (UK, majority stake), specialised in the creation of tables with a user-friendly design
2020: Maritz Mystery Shopping, one of the largest providers of this type of service in North America, and Askia (France, majority stake), a next-generation data collection platform
2021: FistNet DotMetrics, to develop Ipsos' web and mobile audience measurement solutions; MGE Data, a major player in out-of-home audience measurement and geolocation data collection solutions; Intrasonics, a key partner for the development of the MediaCell solution, which integrates new audio watermarking capabilities using echo modulation; Infotools, a digital service provider specialised in the harmonisation, analysis, visualization and sharing of market research data; Karian and Box, the UK's leading specialist in employee experience research
2022: WeCheck, a specialist in mystery shopping solutions in Canada
2023: xperiti (US); CBG Health Research (New Zealand); Behaviour & Attitudes (Ireland); New Vehicle Customer Study (US); Omedia (West Africa); Big Village (Australia); Shanghai Focus RX Research (China)
Most of these acquisitions are quite small (often less than €5 million), and underlying fundamentals and equity values are rarely disclosed in details (just some references in the annual reports).
Ipsos’ biggest acquisitions (and implied deal multiples) in chronological order are:
MORI (2005): £88m, EV/sales 2.0x
Synovate (2011): €600m, EV/sales 1.0x
GfK divisions (2018): €105m, EV/sales 3.5x
Synthesio (2018): $50m, EV/sales 3.0x
Financials and valuation
Growth in Ipsos’ revenues has been 6.2% p.a. over the last 5 years, with 4.0% organic and 2.2% from acquisitions. It’s somewhat higher over the last 20 years at 7.8% p.a. (5.6% organic). So nominal growth is “global GDP+”, but also cyclical depending on underlying macroconditions.
Again similarly to advertising agencies, market research companies are considered asset-light. This is largely true in terms of annual capex, but that does not necessarily translate into high operating margins or investment returns. Operating margins for Ipsos are in the 10% to 12% range, while ROIC hovers around 10% (Return on Operating Assets is much better at around 25%).7 Using another French company, advertising giant Publicis, for comparison shows a not dissimilar situation: operating margins at around 15%, ROIC at 10%-12% and RoOA at much higher rates (mostly thanks to negative working capital).8
However, while a stable ROIC on legacy assets is positive and desirable (it means the company can keep competition out of its markets, thus not driving returns down), what is more important is ROIIC, Return on Incremental Invested Capital.
From 2005 to 2022, Ipsos revenues are up 235%, while gross profits are up 270% and NOPAT 425%. Over that period, Ipsos spent €1.6bn on capex and acquisitions, while NOPAT increased by ~€190 million for a ROIC of 12% (and even better, 21%, over the past 5 years): not exceptional, but at least these growth investments are not destroying value. These are mostly small, targeted acquisitions in niche, new services that Ipsos that does not (yet) cover and that would be more expensive and uncertain to build from scratch, but which are necessary to remain competitive. In addition, only Synovate was partially paid in shares (with a dilution of existing shareholders at the time of around 20%): all others were cash-only acquisitions with a significant component in deferred earn-outs. There has been no dilution since 2012, and outstanding shares are indeed roughly down by 3% over the period.
As previously said, operating margins are definitely not at the tech sector level, dragged down mostly by SG&A expenses rather than the direct costs of surveys/projects. On the other hand, for the reasons discussed in the market section, both gross and operating margins are very, very stable (slightly increasing), although EBIT contribution does not really scale much with size.
Leverage at Ipsos is very low: net debt is €270 million as at June 2023 (with €350 million in cash), much lower than just few years ago before Covid.9 80% of gross debt is fixed rate, with the only significant repayments being a €300 million bond that matures in 2025, easily covered by cash from operations and exiting liquidity (plus there is an extra €500 million in undrawn credit facilities).
And finally, cash flows are robust and well above total annual capex (which is largely maintenance capex as “growth” is achieved through acquisitions rather than tangible/intangible capex).
As detailed at the Investors Day in June, Ipsos growth plan aims for revenues of €3 billion in 2025, 5%-7% stable organic growth and >13% operating margins (so, slightly better than what they are doing right now, see below). The structural drivers for profitability are an increase in online data collection, process streamlining on operations and a changing business mix.
2022 was a strong year: revenues were up 12%, gross profits up 15% and operating margin was close to 13%: similar to 2021, post-pandemic reopening sped up demand for the brand and market research business, and Ipsos also pointed to continued organic growth (5.6%) and a healthy order book while expanding its footprint in the Americas and Asia.
But 2023 started with a false note: while not completely a surprise, the communication services sector has been under pressure this year with Ipsos dropping in line with its advertising/marketing brethren, with client spending lessening especially among technology and telecom customers. Revenues in Q1 2023 were down -2.9%, another -3.3% in Q2 and a further -2.3% in Q3. Overall, revenues are down -2.8% in the first nine months of 2023 (but +0.8% organic, including +4.3% in Q3). Part of the decrease is that 2022 was still boosted by COVID-related market research: excluding the impact of COVID-related contracts, organic growth in the first 9 months of 2023 would have been +2.2%.
Additionally, the company pointed to a temporary slowdown in the commissioning of new research and polls from tech clients:
“[…] the profile of 2023 is just very, very different to 2022. We've known that for a long time. So 2022, remember, we saw very rapid growth in the first six months of the year and then a deceleration at the back end of the year. This year, we start(ed) slowly and then accelerate(d). And that, of course, has effects on the revenue that we're announcing today. So really important to understand that difference and also the comparative for the numbers that we're now looking at for the first half compared to the first half of 2022.” (Ipsos Q2 earnings call)
“And there are three drivers, three factors, which weigh down on the trading, the first is what Ben mentioned, the unfavourable base effect due to the fact that the first half of 2022 was very strong, with growth up 12%, weighing down on trading on business activity. The second factor was the termination of the large COVID contracts, which in the first half of 2022 generated some €25 million for the first quarter, mainly when you lose these COVID contracts, it weighs down on growth. So 1.1% of organic growth, excluding COVID contracts with the same momentum between the first and second quarter. The third factor, weighing down on the results is a large Big Tech clients restructuring, where we lost some 18% of revenue in the first quarter of 2023 year-on-year.” (Ipsos Q2 earnings call)
However, the situation is not completely dire:
“[…] And what's interesting as you go around the world is just how different one region is from another. So, if we go from China, which is slowly rebounding, to India, in India, 23% revenue growth in Q2, a dynamic market. Overall, the economy growing around 6%, the market research industry there growing around 10%. We are now number two in India. Again, we can see lots of growth in places like CPG, in government and in healthcare. And we have opportunities in our developing public sector practice there, healthcare advisory services, tech and certainly looking at some acquisitions that we would hope to be able to announce in the second half of this year. Again, a very, very dynamic market and just so different from China.” (Ipsos Q2 earnings call)
Management also highlighted the time lag between signing new contracts and actually generating revenues, using China as an example: the Q1 revenue in China decreased by almost 4% but the order book increased by in excess of 13% and those new orders will be completed at a later date, indicating we would likely see a serious uptick in the China-derived revenue later this year and into 2024.
After almost tripling from the Covid lows, the stock price is now down -12% for the year, although it recovered nicely since October.
The stock has traded mostly sideways for two decades, with periodic 40%+ drawdowns, and only caught investors’ attention in the last three years. However, it is still trading at very reasonable multiples: EV/EBITDA 6x, EV/EBIT of 8x, P/E of 10x and FCF yield of ~9% on NTM consensus numbers, much cheaper than direct competitors for fundamentals that are not that materially worse and are often better (except for recent growth).
Looking at historical transactions, the private equity consortium paid 12x LTM EBITDA for VNU in 2006 and Elliot/Brookfield paid ~11x LTM EBITDA for Nielsen (this would imply a roughly 50%-60% upside for Ipsos), but Bain Capital “only” paid ~8.2x LTM EBITDA for the controlling stake in Kantar (a mere +16% upside from Ipsos’ current 7.3x EBITDA multiple).10
Using sales as the reference metric is even trickier: it’s true that Ipsos is currently trading at a much lower EV/sales multiple than direct competitors, but it has also been growing slower recently. VNU was taken out at 2x sales, other smaller deals (in the €200m-€300m range) were consummated at multiples between 1.5x and 4.5x. but Kantar – probably the closest competitor – was again acquired at only 1.25x.11
On capital allocation, Ipsos expects to generate €1.5 billion in funds through to 2025 (note: this is the plan laid out in mid-2022), including increasing €600 million from additional debt, which will be used for:
One third to one half (€500m to €700m) for more acquisitions, depending on the available opportunities
€200 million for capex
Up to €600 million (40%) will be returned to shareholders, including a new buyback programme in addition to the “standard” repurchases to finance the free shares programs for employees (in H1 2023 they repurchased €64m for employees shares and an additional €27m for the buyback programme)
My final two cents
Plus
One of the largest market research and polling companies in the world and, after the recent deals, the only publicly-listed pure market research company
Decent - albeit not spectacular - organic growth (i.e. not in secular decline = value trap)
Not reliant on a single economic sector or region, although still broadly impacted by macroeconomic conditions
The asset-light model reduces capex requirements and provides robust cash flows
Business risk is limited despite AI, disruption, …, : it’s unlikely that someone can come and steal all clients
Excellent compensation structure for management12
Cons
Revenues are quite concentrated: Top 10 clients account for 17% and Top 20 for 26%. Economic problems or just a “change of hearth” at a single client can have a significant impact (see the tech client in H1 2023)
Very dependent on acquisitions to foster growth and add new technical skills: these have been small so far, but could Ipsos be tempted to “bet the farm” on a bigger, evolutionary deal?
Did Ipsos over-earn post-Covid? The answer is “yes, but not really that much”.
Ipsos is not a one-hit Covid-beneficiary, as the impact has been mostly positive (specific pandemic monitoring projects for governments in 2021 and 2022) BUT ALSO negative (contracts could not be executed because of the health situation, in particular in China last year).
Allowing for the recent weakness and normalising for the pandemic years, in 2024 Ipsos should still be able to generate €180m-€200m in unlevered free cash flows (for reference, they were €230m, €260m and €240m in 2020, 2021 and 2022, respectively), for an 8% to 9% FCF yield at current market cap.
Problem is, over the last 10+ years Ipsos has always been cheap: even in a zero-rate environment, the market never gave it much credit!
A potential catalyst to unlock value could be Didier Truchot to partner with a PE firm to take Ipsos private: the several recent deals shows that there is a lot of interest in the industry (but this is just blue sky thinking from me, no idea whether this is even on his mind, and if it were he could have done it at any time in the past 10 years…). The current capital structure could well support the extra debt necessary to pay a premium above the current price: leverage is low and management itself stated that it would re-leverage the company to return more capital to shareholders. Although in a completely different rate environment, Kantar was leveraged in excess of 6x EBITDA when acquired by Bain in 2019.
So, nothing is certain, and guidance alone is not a guarantee:
“We still have the tech companies, and they have plenty of disruption going on in their markets with AI. We depend on the United States as a large part of our global revenues to pick up the pace in the second half of the year. The order book is suggesting that they will, which is good. We still have disruption in Europe with the war in Ukraine, a technical recession, but again, some strong performances in individual countries.” (Ipsos Q2 earnings call)
But with an outlook that is not disastrous and a solid balance sheet, the current valuation seems quite compelling. Ipsos would be even more attractive should it drop below €40 just for macroeconomic considerations (i.e. we enter into a soft recession). [I also like YouGov, btw, despite it being much more expensive]
PS: I have a huge to-do list of companies to analyse and write about, but I don’t mind getting new suggestions. I can’t promise I will look into each one of them (some will be immediately excluded because they are not interesting, not investable or outside of my circle of competence), but feel free to add you suggestions either here or on Twitter.
Some sources include all “non-traditional advertising” and “diversified marketing services” - CRM, PR, and specialty other communications – within market research.
However, net revenues (the base from which operating costs are drawn) are largely unaffected.
However, Ipsos’ numbers do not show significant differences in growth rates in the regions in which it operates; rather, EMEA is growing faster than Asia Pacific.
Gartner operates as a research and advisory company through three segments: Research (85% of revenues), Conferences, and Consulting. The research segment is focused on global technology and delivers its products through a subscription service that include on-demand access to published research content, data and benchmarks, and direct access to a network of research experts.
IQVIA engages in the provision of advanced analytics, technology solutions, and clinical research services specifically to the life sciences industry. Revenues in the list above are for the Research division only (approximately 40% of total), with Research & Development Solutions and Contract Sales & Medical Solutions for pharma companies providing the rest.
Other competitors in some segments include Euromonitor International and YouGov. More loosely defined, the ranking could also include divisions of Salesforce ($4.5bn), Adobe ($4.4bn) and S&P Global ($2bn).
True story: I personally receive once a year a call from an Ipsos’ marketers, they have been commissioned by Google an annual survey on the brand’s perception vs the other Big Techs (Apple, Microsoft, Amazon, Meta), and this has been ongoing for at least the last 8 years with almost always exactly the same questions.
According to Ipsos’ Client Satisfaction Monitor (CMS), which surveys clients at the end of each project. The Global Client Survey (GCS), which measures the satisfaction of Ipsos' clients on an annual basis, is also high but slightly lower at 8.1/10.
In my formulas, both measures have NOPAT at the numerator. ROIC is calculated from the “liabilities side” and uses equity plus net debt as the denominator; Return on Operating Assets is calculated from the “assets side” and has as the denominator net PPE plus net working capital (this is the metric used by Joel Greenblatt). So ROIC measures returns on “accounting legacy capital that shareholders and bondholders have historically put into the business”, while RoOA measures returns on “accounting value of assets in operations”. Both have pros and cons in their use.
Other companies in the same sectors have better/worse ROICs depending on their capital structure: Omnicom, for example, buys back huge amounts of shares every year, which Publicis does not. YouGov also has better ROICs as it’s not incumbered by historical acquisitions.
This is higher than the net debt figure of €130m reported by Ipsos in the H1 2023 presentation, as the company only considers bonds and bank loans, while I also include lease liabilities. I understand the latter are directly related to right-of-use assets, but it’s never a good sign when management under-report the financial exposure.
I have not been able to find the transactions multiples for the H&F deals for The NPD Group and IRI.
The smaller deals include WPP buying Ibope in 2014 and a 20% stake in Comscore in 2015, and Experian acquiring Hitwise in 2007.
I didn’t discuss it in detail, but it is essentially as follow. For the Chairman, a fixed annual salary of around €280k and no annual or long-term variable compensation at all. For the CEO: 1) annual fixed salary of €715k; 2) annual variable compensation of up to 90% of fixed salary based on meeting specific criteria (revenues growth, operating margin and FCFs); 3) long-term variable bonus with no upside cap but paid in shares that vest over a three-year period.