Data Services takes up the H121 running

YouGov 29 January 2021 Update
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YouGov

Data Services takes up the H121 running

Half-year trading update

Media

29 January 2021

Price

1,087.5p

Market cap

£1,203m

$1.37/£

Net cash (£m) at end July 2020

35.3

Shares in issue

110.6m

Free float

91.3%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

10.6

15.5

70.0

Rel (local)

10.4

(1.5)

90.9

52-week high/low

1,100p

400p

Business description

YouGov is an international 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

Interim results

23 March 2021

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

YouGov is a research client of Edison Investment Research Limited

YouGov’s pre-close update indicates trading in line to meet the full-year target of its growth plan, with a heavier weighting towards H2. This reflects several larger, more strategic projects won by Data Products and Custom Research over autumn and winter to date, which will start to contribute in H221 and provide good momentum into FY22. H121 results will show a pick-up in Data Services as clients looked to tactical projects to inform their marketing strategies. Our full-year forecasts are unchanged except for a minor adjustment to the share count. YouGov is valued towards the top of its peer set, reflecting its strong market positioning, attractive cash generation and cash-positive balance sheet.

Year end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/EBITDA
(x)

P/E
(x)

Yield
(%)

07/19

136.5

20.4

13.8

4.0

33.6

78.8

0.4

07/20

152.4

24.7

15.7

5.0

28.4

69.4

0.5

07/21e

163.0

28.5

17.2

5.5

27.6

63.2

0.5

07/22e

175.0

34.2

20.8

6.5

23.7

52.3

0.6

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

H2 to see greater impact from new, large projects

The implied shift in mix for H121 towards Data Services will affect the reported margin, as both gross and operating margin are lower than those achieved for Data Products (FY20: 83% vs 91% at the gross level and 35% to 19% at the operating line). By the full year, we would expect that this margin impact would be reversed by the new, larger projects coming through. These are likely to be along the lines of the previously announced contract with a major German financial services company, so a combination of custom research and connected data product subscription, playing to YouGov’s strengths in permissioned data. Good progress is also being made with the initiatives described in our note on the capital markets day in November, notably the YouGov Safe aggregated data proposition.

Forecasts unchanged

FY21 results will be affected by a technical change to the accounting treatment of the share-based payments (non-cash). Under the previous scheme, charges were weighted to the end of the five-year period, whereas for this scheme the accounting will be smoothed. This is built into our modelling, but the level may be higher due to the increase in the share price. We will revisit this with the interims in March. Our forecasts are unchanged at this point.

Valuation: Towards the top end of the global peer set

YouGov’s valuation multiples remain towards the top end of the global peer set, where the more data and analytics-weighted groups trade at a clear differential. YouGov’s rating also reflects the group’s strong market positioning, attractive cash generation (104% conversion of adjusted EBITDA in FY20) and cash-positive balance sheet.

Exhibit 1: Financial summary

£'000s

2018

2019

2020

2021e

2022e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

116,559

136,487

152,441

163,000

175,000

Cost of Sales

(21,495)

(24,206)

(23,375)

(24,604)

(26,103)

Gross Profit

95,064

112,281

129,067

138,396

148,897

EBITDA

 

 

20,907

31,698

39,215

41,322

47,697

Operating Profit (before amort. and except.)

 

 

12,650

18,492

21,830

25,740

31,415

Intangible Amortisation

(7,026)

(8,809)

(12,885)

(10,782)

(10,782)

Share based payments

(3,571)

(2,401)

(2,900)

(2,900)

(2,900)

Exceptionals

(892)

1,529

(6,630)

0

0

Other

66

200

0

0

0

Operating Profit

11,824

20,221

15,200

25,740

31,415

Net Interest

(51)

(665)

7

(175)

(150)

Profit Before Tax (norm)

 

 

16,302

20,428

24,737

28,465

34,165

Profit Before Tax (IFRS16)

 

 

11,773

19,356

15,207

25,565

31,265

Tax

(3,615)

(5,086)

(5,812)

(9,771)

(11,949)

Profit After Tax (norm)

12,687

15,342

18,925

18,694

22,216

Profit After Tax (IFRS16)

8,158

14,270

9,395

15,794

19,316

Average Number of Shares Outstanding (m)

105.4

105.4

106.7

109.5

110.6

EPS - normalised (p)

 

 

10.8

13.8

15.7

17.2

20.8

EPS - IFRS 16 (p)

 

 

7.7

14.1

9.0

14.4

17.5

Dividend per share (p)

3.0

4.0

5.0

5.5

6.5

Gross Margin (%)

81.6

82.3

84.7

84.9

85.1

EBITDA Margin (%)

17.9

23.2

25.7

25.4

27.3

Operating Margin (before GW and except) (%)

10.9

13.5

14.3

15.8

18.0

BALANCE SHEET

Fixed Assets

 

 

78,019

108,534

108,122

106,068

105,286

Intangible Assets

65,357

82,374

84,611

83,829

83,047

Tangible Assets

12,471

26,160

23,511

22,239

22,239

Investments

191

0

0

0

0

Current Assets

 

 

66,735

72,581

70,255

77,891

89,417

Stocks

0

0

0

0

0

Debtors

34,672

33,726

34,239

36,611

39,306

Cash

30,621

37,925

35,309

40,574

49,405

Current Liabilities

 

 

(41,445)

(51,395)

(52,813)

(55,070)

(55,080)

Creditors

(41,445)

(51,395)

(52,813)

(55,070)

(55,080)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(11,238)

(22,277)

(16,226)

(13,206)

(13,206)

Long term borrowings

0

0

0

0

0

Other long term liabilities

(11,238)

(22,277)

(16,226)

(13,206)

(13,206)

Net Assets

 

 

92,071

107,443

109,338

115,683

126,418

CASH FLOW

Operating Cash Flow

 

 

23,617

38,115

38,411

41,615

48,031

Net Interest

22

183

(7)

175

150

Tax

(5,501)

(4,520)

(3,184)

(7,328)

(11,949)

Capex

(8,181)

(12,166)

(18,559)

(18,000)

(16,000)

Acquisitions/disposals

(885)

(6,583)

(7,451)

(3,428)

(3,020)

Financing

259

(3,652)

(4,739)

(2,000)

(2,000)

Dividends

(2,106)

(3,327)

(4,298)

(5,420)

(6,081)

Net Cash Flow

7,225

8,050

173

5,615

9,131

Opening net debt/(cash)

 

 

(23,219)

(30,621)

(37,925)

(35,309)

(40,574)

HP finance leases initiated

0

0

0

0

0

Other

177

(747)

(2,789)

(350)

(300)

Closing net debt/(cash)

 

 

(30,621)

(37,925)

(35,309)

(40,574)

(49,405)

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 £49,500 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 2021 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.

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Frankfurt +49 (0)69 78 8076 960

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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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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 £49,500 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 2021 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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