YouGov |
Online model advantages |
Half year trading update |
Media |
24 March 2020 |
Share price performance
Business description
Next events
Analysts
YouGov is a research client of Edison Investment Research Limited |
YouGov has updated on good H120 figures, with underlying revenue up 15% and adjusted operating margins increasing from 13% to 15% as the mix shifts further to the higher-margin Data Products segment. The group had cash of £27.2m at end January (lease liabilities only). With an online culture since the group’s inception 20 years ago, it is better placed than many to satisfy the increased desire to understand what is happening in populations by corporate and state at this time of uncertainty. We have reflected a more cautious outlook for the remainder of the year and will revert with FY21 estimates when the outlook is clearer.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
EV/EBITDA (x) |
P/E |
Yield |
07/18** |
116.6 |
16.4 |
10.8 |
3.0 |
18.7 |
37.1 |
0.8 |
07/19 |
136.5 |
20.5 |
13.9 |
4.0 |
12.9 |
28.8 |
1.0 |
07/20e |
147.0 |
23.1 |
15.4 |
4.0 |
12.0 |
26.0 |
1.0 |
07/21e |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **FY18 restated for change in treatment of amortisation and share-based payments.
Data remains in demand
The ability to handle large quantities of online data, with a workforce that is accustomed to working remotely, means that YouGov can continue its business with far less disruption than many others. Much of its business is contracted and new contracts continue to be signed, including a strategic multi-year contract with a German financial services company signed post period end. However, the nature of the project work being done is shifting to reflect the need of healthcare departments and others to understand the dynamics in this fast-moving pandemic. The group has a global panel of over 9.5 million people, giving highly permissioned data, making it a particularly valuable resource for decision makers. It is staying close to its clients through weekly trend reports, which should also act as ‘door openers’ to additional clients once the crisis has passed.
Cash positive balance sheet
While management reports that it has seen no material impact from COVID-19 to date, there are bound to be areas of the business where demand softens, such as travel and retail. We have adjusted our H220 forecasts to reflect a 10% softening of revenues in the remaining four months of YouGov’s financial year, taking revenue from £152m to £147m. At the earnings level, there should be some mitigation from cost savings initiatives, although these are not yet quantified. We will reinstate FY21 forecasts once the picture clarifies. As at the end of January, YouGov had £27.2m of cash on the balance sheet with no debt.
Valuation: Trading on lower multiples
YouGov’s share price has retrenched from a peak of 763p in the last week of February, a decline of 48% against the fall in the FTSE AIM All-Share of 37%. Comparison with ratings of other quoted stocks is not useful when forecasts are under review, but the share prices of Ipsos, Forrester, Gartner and Nielsen have fallen by an average of 42% over the same period.
H120 figures robust
The divisional results are set out below:
Exhibit 1: Half-year summary results
£m |
H119 |
H219 |
FY19 |
H120 |
change vs H119 |
Revenue |
|||||
Data Products |
19.4 |
22.1 |
41.5 |
25.1 |
29% |
Data Services |
17.8 |
19.4 |
37.2 |
18.3 |
3% |
Custom Research |
30.4 |
29.6 |
60.0 |
33.9 |
12% |
Eliminations |
(1.0) |
(1.2) |
(2.2) |
(0.5) |
-56% |
Total |
66.5 |
70.0 |
136.5 |
76.9 |
15% |
Adjusted operating profit |
8.4 |
9.9 |
18.3 |
11.4 |
35% |
Group operating margin |
12.6% |
14.1% |
13.4% |
14.8% |
Source: Company data
Sales of the group’s data products were well ahead: 27% on an underlying basis. The results from Data Services, principally Omnibus, were less robust, with revenue up 3% (7% underlying) as the period included a restructuring of the Nordics business, a tougher comparison in Asia-Pacific (there was an election benefit in the prior period) and a more difficult German market.
Continued growth in the proportion of higher-margin project work in Custom Research helped propel adjusted operating profit to £8.0m, representing an operating margin of 23.6% in H120 from 22.0% in the comparative period.
The group continues to expand in the US (20% of H1 operating profit), where interest in the presidential elections should build over H220 and H121.
Adjustments to FY20 forecast
Making authoritative adjustments at this stage is obviously not possible in light of the COVID-19 pandemic. However, YouGov is already eight months through its financial year, so the impact will be less pronounced than it will be for many. As the H120 results were in line with expectations (our half-year forecasts are not published), we have shown an indicative full year forecast, taking 10% off revenues for the remainder of the financial year. We have not made any adjustments to costs beyond those implied by the lower revenue, or made changes to plans for capital expenditure, which is likely to be reined in. On these forecasts, net cash flow remains positive even if capex is maintained at the previously projected level.
Our FY20 forecast revenue moves from £152m to £147m, with a decrease in EBITDA from £35.4m to £32.0m. These are self-evidently subjective forecasts and we will undertake more sophisticated analysis when the situation becomes clearer, at which point we will reinstate our FY21 projections.
Exhibit 2: Financial summary
£'000s |
2017 |
2018 |
2019 |
2020e |
||
Year end 31 July |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
107,048 |
116,559 |
136,487 |
147,000 |
Cost of Sales |
(21,339) |
(21,495) |
(24,206) |
(24,748) |
||
Gross Profit |
85,709 |
95,064 |
112,281 |
122,251 |
||
EBITDA |
|
|
15,702 |
20,907 |
28,578 |
32,041 |
Operating Profit (before amort., except.) |
|
|
14,528 |
12,650 |
18,288 |
21,657 |
Intangible Amortisation |
(6,483) |
(7,026) |
(8,809) |
(8,809) |
||
Share based payments |
(1,508) |
(3,571) |
(2,401) |
(1,250) |
||
Exceptionals |
(488) |
(826) |
1,529 |
0 |
||
Other |
103 |
204 |
200 |
0 |
||
Operating Profit |
6,152 |
12,028 |
20,017 |
21,657 |
||
Net Interest |
254 |
(51) |
(361) |
168 |
||
Profit Before Tax (adj) |
|
|
16,393 |
16,374 |
20,528 |
23,075 |
Profit Before Tax (FRS 3) |
|
|
6,406 |
11,773 |
19,456 |
21,825 |
Tax |
(3,273) |
(3,615) |
(5,085) |
(5,653) |
||
Profit After Tax (norm) |
13,120 |
12,759 |
15,443 |
17,423 |
||
Profit After Tax (FRS 3) |
3,133 |
8,158 |
14,371 |
14,923 |
||
Average Number of Shares Outstanding (m) |
104.8 |
105.4 |
105.4 |
105.6 |
||
EPS - normalised fully diluted (p) |
|
|
7.8 |
10.8 |
13.9 |
15.4 |
EPS - FRS 3 (p) |
|
|
3.0 |
7.7 |
14.2 |
14.1 |
Dividend per share (p) |
2.0 |
3.0 |
4.0 |
4.0 |
||
Gross Margin (%) |
80.1 |
81.6 |
82.3 |
83.2 |
||
EBITDA Margin (%) |
14.7 |
17.9 |
20.9 |
21.8 |
||
Operating Margin (before GW and except & share-based payments) (%) |
12.2 |
7.8 |
11.6 |
13.9 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
64,637 |
78,019 |
98,006 |
98,197 |
Intangible Assets |
54,960 |
65,357 |
82,374 |
82,565 |
||
Tangible Assets |
9,332 |
12,471 |
15,632 |
15,632 |
||
Investments |
345 |
191 |
0 |
0 |
||
Current Assets |
|
|
54,918 |
66,735 |
72,581 |
76,564 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
30,699 |
34,672 |
33,726 |
36,324 |
||
Cash |
23,481 |
30,621 |
37,925 |
39,310 |
||
Current Liabilities |
|
|
(34,177) |
(41,445) |
(48,503) |
(48,796) |
Creditors |
(33,915) |
(41,445) |
(48,503) |
(48,796) |
||
Short term borrowings |
(262) |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(4,905) |
(11,238) |
(11,238) |
(11,238) |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(4,905) |
(11,238) |
(11,238) |
(11,238) |
||
Net Assets |
|
|
80,473 |
92,071 |
110,846 |
114,727 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
18,914 |
23,617 |
35,230 |
27,875 |
Net Interest |
4 |
22 |
183 |
168 |
||
Tax |
(2,487) |
(5,501) |
(4,520) |
(3,654) |
||
Capex |
(7,661) |
(8,181) |
(12,166) |
(10,000) |
||
Acquisitions/disposals |
0 |
(885) |
(6,583) |
(7,000) |
||
Financing |
175 |
259 |
(3,652) |
(1,500) |
||
Dividends |
(1,470) |
(2,106) |
(3,327) |
(4,504) |
||
Net Cash Flow |
7,475 |
7,225 |
5,165 |
1,385 |
||
Opening net debt/(cash) |
|
|
(15,553) |
(23,219) |
(30,621) |
(37,925) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
191 |
177 |
2,138 |
0 |
||
Closing net debt/(cash) |
|
|
(23,219) |
(30,621) |
(37,925) |
(39,310) |
Source: Company accounts, Edison Investment Research
|
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