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Research: TMT
YouGov’s year-end update indicates that performance has been in line with expectations and it has yet to see any material impact from COVID-19. Our estimates are unchanged ahead of results on 6 October. Data Products remains the main driver, notably in its more established UK and US markets, as brands keep close track of their standing with customers. The group’s wide spread of sector verticals will have been helpful, with strong tech and e-commerce offsetting weaker retail performance. YouGov’s share price has recovered from the initial pandemic mark-down, with the rating now reflecting its premium growth and strong market positioning.
YouGov |
Data Products stand out |
Year-end update |
Media |
31 July 2020 |
Share price performance
Business description
Next events
Analyst
YouGov is a research client of Edison Investment Research Limited |
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YouGov’s year-end update indicates that performance has been in line with expectations and it has yet to see any material impact from COVID-19. Our estimates are unchanged ahead of results on 6 October. Data Products remains the main driver, notably in its more established UK and US markets, as brands keep close track of their standing with customers. The group’s wide spread of sector verticals will have been helpful, with strong tech and e-commerce offsetting weaker retail performance. YouGov’s share price has recovered from the initial pandemic mark-down, with the rating now reflecting its premium growth and strong market positioning.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
EV/EBITDA (x) |
P/E |
Yield |
07/18** |
116.6 |
16.3 |
10.8 |
3.0 |
38.9 |
74.1 |
0.4 |
07/19 |
136.5 |
20.4 |
13.8 |
4.0 |
24.4 |
58.0 |
0.5 |
07/20e |
147.0 |
23.1 |
15.4 |
4.0 |
25.7 |
51.9 |
0.5 |
07/21e |
159.0 |
26.9 |
17.2 |
5.0 |
23.2 |
46.5 |
0.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **FY18 restated for the change in treatment of amortisation and share-based payments.
Product power
Our recent Outlook report described YouGov’s operations in some detail. Data Products continues to be the key engine, with Plan & Track increasingly embedded into clients’ workflows, with the product offering continuing to evolve. Data Services has been holding steady. Here the type of project work normally undertaken has understandably been less buoyant but has been compensated for by the large amount of COVID-19-specific research. In Custom Research, the group has successfully managed the tail end of the Kurdistan project. YouGov Sport (bought as SMG Insight) has done better than might have been expected as major sporting bodies look to catch up for lost time in their marketing programmes. The US presidential elections in November 2020 should give further opportunity to market the YouGov brand to a wider audience.
Some COVID-19 opportunities
The pandemic is offering some additional opportunities, both in COVID-19 and health-related work for governments and commercial entities, and in the competitive landscape, where others have been operating with legacy business models less suited to the circumstances. No specifics are given on numbers in the update, beyond results being in line and the year-end cash position described as ‘comfortable’. Our modelling suggests end-July cash of c £34m. For FY21e, we have pencilled in 8% top-line growth, below the 10-year CAGR of 12%, but there is obviously a far greater degree of uncertainty than normal.
Valuation: Premium price for strong positioning
The share price has recovered the initial losses as the COVID-19 situation developed and the stock is one of only two of the global peers to have shown a positive performance over the year. YouGov’s valuation multiples are at the top end of this peer set, reflecting the group’s strong market positioning and balance sheet.
Exhibit 1: Financial summary
£'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 July |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
116,559 |
136,487 |
147,000 |
159,000 |
Cost of Sales |
(21,495) |
(24,206) |
(24,748) |
(27,098) |
||
Gross Profit |
95,064 |
112,281 |
122,251 |
131,903 |
||
EBITDA |
|
|
20,907 |
31,698 |
32,041 |
36,120 |
Operating Profit (before amort. and except.) |
|
|
12,650 |
18,492 |
21,657 |
25,511 |
Intangible Amortisation |
(7,026) |
(8,809) |
(8,809) |
(8,809) |
||
Share based payments |
(3,571) |
(2,401) |
(1,250) |
(1,250) |
||
Exceptionals |
(892) |
1,529 |
0 |
0 |
||
Other |
66 |
200 |
0 |
0 |
||
Operating Profit |
11,824 |
20,221 |
21,657 |
25,511 |
||
Net Interest |
(51) |
(665) |
154 |
137 |
||
Profit Before Tax (norm) |
|
|
16,302 |
20,428 |
23,062 |
26,898 |
Profit Before Tax (FRS 3) |
|
|
11,773 |
19,356 |
21,812 |
25,648 |
Tax |
(3,615) |
(5,086) |
(5,638) |
(6,657) |
||
Profit After Tax (norm) |
12,687 |
15,342 |
17,424 |
20,241 |
||
Profit After Tax (FRS 3) |
8,158 |
14,270 |
14,924 |
17,741 |
||
Average Number of Shares Outstanding (m) |
105.4 |
105.4 |
107.1 |
108.4 |
||
EPS - normalised (p) |
|
|
10.8 |
13.8 |
15.4 |
17.2 |
EPS - FRS 3 (p) |
|
|
7.7 |
14.1 |
13.9 |
16.4 |
Dividend per share (p) |
3.0 |
4.0 |
4.0 |
5.0 |
||
Gross Margin (%) |
81.6 |
82.3 |
83.2 |
83.0 |
||
EBITDA Margin (%) |
17.9 |
23.2 |
21.8 |
22.7 |
||
Operating Margin (before GW and except) (%) |
10.9 |
13.5 |
14.7 |
16.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
78,019 |
108,534 |
121,683 |
120,380 |
Intangible Assets |
65,357 |
82,374 |
90,013 |
90,204 |
||
Tangible Assets |
12,471 |
26,160 |
31,670 |
30,176 |
||
Investments |
191 |
0 |
0 |
0 |
||
Current Assets |
|
|
66,735 |
72,581 |
71,121 |
71,123 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
34,672 |
33,726 |
36,324 |
39,289 |
||
Cash |
30,621 |
37,925 |
33,867 |
30,904 |
||
Current Liabilities |
|
|
(41,445) |
(48,504) |
(48,797) |
(52,318) |
Creditors |
(41,445) |
(48,504) |
(48,797) |
(52,318) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(11,238) |
(14,060) |
(14,060) |
(14,060) |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(11,238) |
(14,060) |
(14,060) |
(14,060) |
||
Net Assets |
|
|
92,071 |
118,551 |
129,947 |
125,125 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
23,617 |
35,230 |
27,890 |
32,019 |
Net Interest |
22 |
183 |
154 |
137 |
||
Tax |
(5,501) |
(4,520) |
(3,651) |
(4,936) |
||
Capex |
(8,181) |
(12,166) |
(15,000) |
(16,500) |
||
Acquisitions/disposals |
(885) |
(6,583) |
(7,448) |
(8,600) |
||
Financing |
259 |
(3,652) |
(1,500) |
0 |
||
Dividends |
(2,106) |
(3,327) |
(4,504) |
(5,084) |
||
Net Cash Flow |
7,225 |
5,165 |
(4,058) |
(2,964) |
||
Opening net debt/(cash) |
|
|
(23,219) |
(30,621) |
(37,925) |
(33,867) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
177 |
2,138 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(30,621) |
(37,925) |
(33,867) |
(30,903) |
Source: Company accounts, Edison Investment Research
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Research: Investment Companies
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