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Sustained momentum

YouGov 22 March 2022 Update
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YouGov

Sustained momentum

Interim results

Media

22 March 2022

Price

1140p

Market cap

£1,269m

Net cash (£m) at 31 January 2022

20.1

Shares in issue

111.3m

Free float

89.8%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(14.5)

(15.6)

16.9

Rel (local)

(14.0)

(15.6)

7.8

52-week high/low

1600p

970p

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

Y/E trading update

29 July 22

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

YouGovYouGov is a research client of Edison Investment Research Limited

YouGov’s H122 results show impressive underlying revenue growth of 25%, led by strong progress in Data Products and Custom Research, with the United States and Europe the best-performing regions. Sales momentum has continued in H222 and FY22 results are expected to be slightly ahead of earlier guidance. We increase our revenue forecasts by £5m for FY22 and FY23, keeping our operating margin assumptions unchanged (raise in gross margin offset by higher costs). As with other high-growth stocks, the share price has retrenched over the year to date but the shares retain their premium rating, reflecting management’s ambitious growth aspirations.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/EBITDA
(x)

P/E
(x)

07/20

152.4

24.7

15.7

5.0

30.2

72.7

07/21

169.0

30.5

17.6

6.0

26.8

64.6

07/22e

215.0

41.4

24.6

7.5

21.5

46.4

07/23e

255.0

53.4

32.7

10.0

17.6

34.9

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

Data Products and Custom Research leading

Underlying group revenues were up 25% with Data Products (34% group H122 revenues) up by 32% and Custom Research (42%) up by 28%, boosted to a gain of 39% including acquisitions. Data Services posted (still good) underlying growth of 9%, as government and non-profit spend settled as COVID-19 pandemic concerns eased. Operating margins progressed for both Data Services (17% to 18%) and Custom Research (16% up to 19%), off slightly for Data Products from 33% in H121 to 32%. Some underlying cost pressure, partly from scaling up, partly from inflation, shows more clearly in the geographic operating margin breakdown where the UK figure dipped from 30% to 26%, while the benefits of scale boosted the US margin from 29% up to 35% as revenues grew 36% underlying, now representing 46% of group.

Elements to lift margins coming into place

The increasing utilisation of the global Centres of Excellence and standardisation of both the offering and the delivery should help continue to boost operating margin, which is one of the three targets set by management under FYP2, its long-term growth plan which runs through to end FY23. This comprises ambitious targets of doubling revenue and group operating margin over the period FY19–23e. Meeting this in full would equate to revenues of £273m and an adjusted operating margin of 27.0%. An EPS CAGR target of 30% over the same period (the metric for vesting on management’s LTIPs) would take EPS to 39.4p on our basis of adjustment.

Valuation: Reflects growth and prospects

In common with other high-growth stocks, the share price has retrenched sharply over recent weeks, falling 29% year to date. Nevertheless, YouGov continues to trade at the high end of the (wide) range of ratings accorded to other global data-led research and analytics groups on both EV/EBITDA and P/E, which we believe reflects its good growth record and prospects and financial strengths.

Progress on revenue, margin and cash conversion

The revenue growth appears to be broadly based, with new business wins and growth in the volume of business transacted with existing clients.

Exhibit 1: H122 performance by segment

£m

Rev H122

Underlying rev gth

Adj Op margin H122

Adj Op margin H121

Data Products

34.8

+32%

32%

33%

Data Services

23.7

+9%

18%

17%

Custom Research

42.0

+28%

19%

16%

Central costs

0.7

u/c

-

-

Group

101.2

+25%

14%

13%

Source: Company

The figures include some contribution from acquisitions, particularly LINK, which is included in the Custom Research segment. Working backwards from the difference between revenue growth and underlying revenue growth for Custom Research and from mainland Europe (LINK is based in Switzerland) suggests a contribution of £2.8–3.5m from acquisitions.

Geographic highlights are the strong US performance particularly notable in both Data Products and Custom Research, boosted by strong spend from clients in the technology sector. Mainland Europe, where the group has previously struggled to get the business into shape, now looks to be building a robust and coherent business offering.

The management of operating margin is centred on expanding the YouGov Platform, now in its second phase, which we believe should facilitate standardisation across geographies and the bolstering of the various Centres of Expertise, termed CenX, to drive efficiency in delivery of client projects.

Overall group adjusted operating profit of £14.0m is up 33% (36% underlying) from H121. Adjusted EPS were up 11%. These results were achieved despite a currency headwind, with a(n unrealised) foreign exchange loss on intercompany loans of £1.4m.

Exhibit 2: H122 performance by geography

£m

Rev H122

Underlying rev gth

Adj Op margin H122

Adj Op margin H121

UK

26.7

+10%

26%

30%

Americas

46.1

+36%

35%

29%

Mainland Europe

20.0

+23%

13%

13%

Middle East

2.8

+25%

18%

(5%)

Asia Pacific

9.3

+26%

6%

1%

Central items

(3.7)

+30%

-

-

Group

101.2

+25%

14%

13%

Source: Company

Cash resource in place to fund growth plans

At the end of 2021, YouGov took on a new three-year revolving credit facility, with an option to extend for two years and an initial draw down of £20m. The period end net cash figure of £20.1m is after the payments for LINK of £21.7m in cash, which represented 1.1x FY20 revenue and 13.2x adjusted PBT and for Rezonance of £4.1m, which are helping scale up automated data collection. The reorganisation of the group sales and account management function is now broadly completed.

Cash conversion was very strong in the first half at 120%, so the group still has plenty of resource to continue investing in its panel, technology and platform, which we believe will drive both the top-line growth and the intended margin expansion. We now expect a year-end cash figure of £24.5m (was £23.7m).

Exhibit 3: Financial summary

£'000s

2019

2020

2021

2022e

2023e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

136,487

152,441

169,000

215,000

255,000

Cost of Sales

(24,206)

(23,375)

(26,200)

(34,400)

(44,304)

Gross Profit

112,281

129,067

142,800

180,600

210,696

EBITDA

 

 

31,698

39,215

45,900

58,100

71,100

Operating Profit (before amort. and excepts.)

 

 

18,492

21,830

25,500

36,500

48,500

Intangible Amortisation

(8,809)

(12,885)

(15,300)

(16,500)

(17,500)

Share based payments

(2,401)

(2,900)

(5,100)

(5,000)

(5,000)

Exceptionals

1,529

(6,630)

(6,500)

(3,600)

(2,500)

Other

200

0

0

0

0

Operating Profit

20,221

15,200

19,000

32,900

46,000

Net Interest

(665)

7

(100)

(150)

(125)

Profit Before Tax (norm)

 

 

20,428

24,737

30,500

41,350

53,375

Profit Before Tax (IFRS16)

 

 

19,356

15,207

18,900

32,750

45,875

Tax

(5,086)

(5,812)

(7,400)

(9,644)

(12,845)

Profit After Tax (norm)

15,342

18,925

23,100

31,706

40,530

Profit After Tax (IFRS16)

14,270

9,395

11,500

23,106

33,030

Average Number of Shares Outstanding (m)

105.4

106.7

109.7

111.3

111.3

EPS - normalised (p)

 

 

13.8

15.7

17.6

24.6

32.7

EPS - IFRS 16 (p)

 

 

14.1

9.0

10.5

20.8

29.7

Dividend per share (p)

4.0

5.0

6.0

7.5

10.0

Gross Margin (%)

82.3

84.7

84.5

84.0

82.6

EBITDA Margin (%)

23.2

25.7

27.2

27.0

27.9

Operating Margin (before GW and except) (%)

13.5

14.3

15.1

17.0

19.0

BALANCE SHEET

Fixed Assets

 

 

108,534

108,122

113,491

140,400

133,709

Intangible Assets

82,374

84,611

89,611

116,111

119,911

Tangible Assets

26,160

23,511

23,813

24,222

13,731

Investments

0

0

67

67

67

Current Assets

 

 

72,581

70,255

82,409

81,081

116,562

Stocks

0

0

0

0

0

Debtors

33,726

34,239

40,700

50,381

59,862

Cash

37,925

35,309

35,509

24,500

50,500

Current Liabilities

 

 

(51,395)

(52,813)

(67,200)

(79,049)

(90,556)

Creditors

(51,395)

(52,813)

(67,200)

(79,049)

(90,556)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(22,277)

(16,226)

(16,700)

(16,700)

(16,700)

Long term borrowings

0

0

0

0

0

Other long term liabilities

(22,277)

(16,226)

(16,700)

(16,700)

(16,700)

Net Assets

 

 

107,443

109,338

112,000

125,732

143,014

CASH FLOW

Operating Cash Flow

 

 

38,115

38,411

56,600

62,468

73,127

Net Interest

183

(7)

(300)

150

125

Tax

(4,520)

(3,184)

(7,100)

(9,644)

(12,845)

Capex

(12,166)

(18,559)

(23,800)

(23,800)

(23,800)

Acquisitions/disposals

(6,583)

(7,451)

(12,600)

(31,200)

0

Financing

(3,652)

(4,739)

(2,200)

(2,000)

(2,000)

Dividends

(3,327)

(4,298)

(5,500)

(6,679)

(8,349)

Net Cash Flow

8,050

173

5,100

(10,705)

26,258

Opening net debt/(cash)

 

 

(30,621)

(37,925)

(35,309)

(35,509)

(24,500)

HP finance leases initiated

0

0

0

0

0

Other

(747)

(2,789)

(4,900)

(304)

(258)

Closing net debt/(cash)

 

 

(37,925)

(35,309)

(35,509)

(24,500)

(50,500)

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

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

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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