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Cautiously optimistic for FY23

YouGov 8 August 2022 Update
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YouGov

Cautiously optimistic for FY23

Year-end trading update

Media

8 August 2022

Price

1,060p

Market cap

£1,181m

Net cash (£m) at 31 January 2022

20.1

Shares in issue

111.4m

Free float

89.4%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

17.2

(15.2)

(14.5)

Rel (local)

17.2

(14.5)

(15.0)

52-week high/low

1,600p

850p

Business description

YouGov is an international online research data and analytics group. Its data-led offering supports and improves a wide spectrum of marketing activities of a customer base including media owners, brands and media agencies. It works with some of the world’s most recognised brands.

Next events

Full year results

11 October 2022

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

YouGov is a research client of Edison Investment Research Limited

YouGov’s year-end trading update (to end-July) indicates results in line with management expectations, with underlying growth across all segments and a ‘modest’ step up in operating margin. Our FY22 forecasts are therefore unchanged, as are those for FY23. We now also publish our first thoughts on FY24, showing continuing progress on revenue and margin as the increased productisation drives efficiencies. YouGov’s share price performance year-to-date has been affected by the rotation away from and derating of higher-growth and tech stocks. Its valuation remains at the higher end of peers, reflecting its continued positive prospects.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/EBITDA (x)

P/E
(x)

07/21

169.0

30.5

17.6

6.0

23.8

60.1

07/22e

215.0

41.4

24.6

7.5

18.8

43.1

07/23e

255.0

53.4

32.7

10.0

15.4

32.4

07/24e

290.0

62.0

38.5

11.0

13.5

27.5

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Progress across the client offerings

The update highlights the continuing success of panel-based Custom Research, where the connected data offering has outstripped expectations. In H122 divisional revenues grew 28%, boosted to 39% with acquisitions, so it seems that momentum has continued in H222, with client expansion in technology, retail and gaming. Data Products continues to benefit from last year’s sales reorganisation, while growth has improved in Data Services in H222. The US market is highlighted as the key growth driver, with the progress in delivering trackers and more scalable custom research supporting the margin expansion. The recent acquisitions, Rezonence and LINK, are reported to be performing well and in line with expectations.

Positive momentum versus macro uncertainty

Management is not seeing any significant change in client behaviour regarding macroeconomic prospects at this stage but remains alert to the possibility. The combination of the current positive momentum and this element of uncertainty lead us to leave our forecasts unchanged ahead of the results in October. We also now publish our initial thoughts on FY24e, with top-line growth of 14% and a further nudge up in operating margin as the degree of productisation increases across group activities. We envisage net cash continuing to build, to c£50m by end FY23 and £80m at end FY24, giving scope for additional M&A as opportunities arise.

Valuation: Reflects growth and prospects

YouGov’s share price is 34% below the level at which it began the year, while global peers have fallen by 21% on average. Nevertheless, it still trades towards the higher end of the (wide) range of ratings accorded to other global data-led research and analytics groups on both EV/EBITDA and P/E. We believe this reflects its good growth record, premium margins, balance sheet strength and continued positive prospects.

Exhibit 1: Financial summary

£'000s

2020

2021

2022e

2023e

2024e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

152,441

169,000

215,000

255,000

290,000

Cost of Sales

(23,375)

(26,200)

(34,400)

(44,304)

(50,318)

Gross Profit

129,067

142,800

180,600

210,696

239,683

EBITDA

 

 

39,215

45,900

58,100

71,100

80,833

Operating Profit (before amort. and excepts.)

 

 

21,830

25,500

36,500

48,500

57,100

Intangible Amortisation

(12,885)

(15,300)

(16,500)

(17,500)

(18,633)

Share based payments

(2,900)

(5,100)

(5,000)

(5,000)

(5,000)

Exceptionals

(6,630)

(6,500)

(3,600)

(2,500)

(2,500)

Other

0

0

0

0

0

Operating Profit

15,200

19,000

32,900

46,000

54,600

Net Interest

7

(100)

(150)

(125)

(125)

Profit Before Tax (norm)

 

 

24,737

30,500

41,350

53,375

61,975

Profit Before Tax (IFRS 16)

 

 

15,207

18,900

32,750

45,875

54,475

Tax

(5,812)

(7,400)

(9,644)

(12,845)

(15,253)

Profit After Tax (norm)

18,925

23,100

31,706

40,530

46,722

Profit After Tax (IFRS 16)

9,395

11,500

23,106

33,030

39,222

Average Number of Shares Outstanding (m)

106.7

109.7

111.3

111.3

111.3

EPS - normalised (p)

 

 

15.7

17.6

24.6

32.7

38.5

EPS - IFRS 16 (p)

 

 

9.0

10.5

20.8

29.7

35.2

Dividend per share (p)

5.0

6.0

7.5

10.0

11.0

Gross Margin (%)

84.7

84.5

84.0

82.6

82.6

EBITDA Margin (%)

25.7

27.2

27.0

27.9

27.9

Operating Margin (before GW and except) (%)

14.3

15.1

17.0

19.0

19.7

BALANCE SHEET

Fixed Assets

 

 

108,122

113,491

140,400

133,709

138,142

Intangible Assets

84,611

89,611

116,111

119,911

123,278

Tangible Assets

23,511

23,813

24,222

13,731

14,798

Investments

0

67

67

67

67

Current Assets

 

 

70,255

82,409

81,081

116,562

155,454

Stocks

0

0

0

0

0

Debtors

34,239

40,700

50,381

59,862

68,872

Cash

35,309

35,509

24,500

50,500

80,381

Current Liabilities

 

 

(52,813)

(67,200)

(79,049)

(90,556)

(101,625)

Creditors

(52,813)

(67,200)

(79,049)

(90,556)

(101,625)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(16,226)

(16,700)

(16,700)

(16,700)

(16,700)

Long term borrowings

0

0

0

0

0

Other long term liabilities

(16,226)

(16,700)

(16,700)

(16,700)

(16,700)

Net Assets

 

 

109,338

112,000

125,732

143,014

175,272

CASH FLOW

Operating Cash Flow

 

 

38,411

56,600

62,468

73,127

82,891

Net Interest

(7)

(300)

150

125

125

Tax

(3,184)

(7,100)

(9,644)

(12,845)

(15,253)

Capex

(18,559)

(23,800)

(23,800)

(23,800)

(24,500)

Acquisitions/disposals

(7,451)

(12,600)

(31,200)

0

0

Financing

(4,739)

(2,200)

(2,000)

(2,000)

(2,000)

Dividends

(4,298)

(5,500)

(6,679)

(8,349)

(11,132)

Net Cash Flow

173

5,100

(10,705)

26,258

30,131

Opening net debt/(cash)

 

 

(37,925)

(35,309)

(35,509)

(24,500)

(50,500)

HP finance leases initiated

0

0

0

0

0

Other

(2,789)

(4,900)

(304)

(258)

(250)

Closing net debt/(cash)

 

 

(35,309)

(35,509)

(24,500)

(50,500)

(80,381)

Source: Company accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by YouGov and prepared and issued by Edison, in consideration of a fee payable by YouGov. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by YouGov and prepared and issued by Edison, in consideration of a fee payable by YouGov. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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