Online model advantages

YouGov 24 March 2020 Update
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YouGov

Online model advantages

Half year trading update

Media

24 March 2020

Price

400p

Market cap

£423m

$1.16/£

Net cash (£m) at end January 2020

27.2

Shares in issue

105.7m

Free float

61.8%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(47.2)

(37.5)

(16.5)

Rel (local)

(20.1)

(3.1)

20.7

52-week high/low

763p

400p

Business description

YouGov is a global research data and analytics group, with over 9.5 million online panellists across 42 countries. It offers a complementary data-led suite of products and services including YouGov BrandIndex, YouGov Profiles, YouGov Omnibus, YouGov Direct and custom research.

Next events

Year-end update

end July 2020

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Russell Pointon

+44 (0)20 3077 5700

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*
(£m)

EPS*
(p)

DPS
(p)

EV/EBITDA (x)

P/E
(x)

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


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 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

1,185 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

1,185 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 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

1,185 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

1,185 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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