YouGov — Resilience in a more difficult macro environment

YouGov (AIM: YOU)

Last close As at 28/05/2024

902.00

−34.00 (−3.63%)

Market capitalisation

990m

More on this equity

Research: TMT

YouGov — Resilience in a more difficult macro environment

YouGov’s trading update covering the six months to end January confirms that the group is on track to meet the full year market revenue consensus of £264m, 19% ahead of the prior year. This is a little ahead of our modelling (£255m), so we have adjusted accordingly. Our operating profit forecast is unchanged, reflecting a slight shift in mix towards Custom Research, which runs with structurally lower operating margins than Data Products. The search for a new CEO is ongoing, with current CEO Stephan Shakespeare set to step across to be non-executive chair in August. YouGov’s strategic plan for FY24–26 remains in the preparation phase.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

YouGov

Resilience in a more difficult macro environment

Trading update

Media

27 January 2023

Price

1,000p

Market cap

£1,103m

Net cash (£m) at 31 July 2022

37.4

Shares in issue

110.0m

Free float

89.4%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.2

7.5

(23.1)

Rel (local)

(2.8)

(2.3)

(24.2)

52-week high/low

1,400p

770p

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

Half year results

21 March 2023

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

YouGov is a research client of Edison Investment Research Limited

YouGov’s trading update covering the six months to end January confirms that the group is on track to meet the full year market revenue consensus of £264m, 19% ahead of the prior year. This is a little ahead of our modelling (£255m), so we have adjusted accordingly. Our operating profit forecast is unchanged, reflecting a slight shift in mix towards Custom Research, which runs with structurally lower operating margins than Data Products. The search for a new CEO is ongoing, with current CEO Stephan Shakespeare set to step across to be non-executive chair in August. YouGov’s strategic plan for FY24–26 remains in the preparation phase.

Year end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/EBITDA (x)

P/E
(x)

07/21

169.0

31.1

21.1

6.0

22.1

47.4

07/22

221.1

34.6

23.2

7.0

16.5

43.2

07/23e

264.0

51.4

33.0

10.0

13.8

30.3

07/24e

300.0

60.0

38.9

11.0

12.3

25.7

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

Expansion at the operating margin level

The increasing level of productisation, the growing use of YouGov’s various Centres of Excellence globally to support regional operations and the greater use of internal panel for custom work are all helping to lift the operating margin. Despite the shift in mix, our modelling anticipates a FY23 operating margin of 18.4%, up from 16.5% in FY22, moving to 19.0% in FY24e (previously 19.0% followed by 19.7%). This is a little short of the target built into the expiring strategic plan to double operating margin across FY19–23. The potential for future margin expansion remains good as the group moves more of its work onto a self-serve platform basis, alongside the custom research offering.

The United States remains major driver

The new strategic plan is likely to be presented in the spring and will cover a shorter period, from FY24–26, and will also likely have an associated long-term incentive plan for senior management. However, this is structured, it is likely to require the group to continue to grow its US presence and client reach. Short-term, the United States is presenting some encouraging opportunities (of scale) and there are some signs of recovery in the UK, but it is not yet clear if this is sustainable. The mood music should be clearer by the time of the results in March.

Valuation: Off lows, but still well off the peak

YouGov’s share price is now around 30% above the low it hit around the time of the publication of the full year results (October 2022) as the market has become more nuanced in its valuations of high growth and tech stocks. Over 12 months, however, it is down 19%, while global peers’ share prices have declined 31%. Shakespeare has confirmed that he has no intention of selling his 7.9% shareholding, which should provide comfort that there is no associated overhang.

Exhibit 1: Financial summary

£'000s

2020

2021

2022

2023e

2024e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

152,441

169,000

221,100

264,000

300,000

Cost of Sales

(23,375)

(26,200)

(33,700)

(41,520)

(47,114)

Gross Profit

129,067

142,800

187,400

222,480

252,887

EBITDA

 

 

39,215

45,900

61,600

73,200

82,400

Operating Profit (before amort. and excepts.)

 

 

21,830

26,100

36,400

48,500

57,100

Intangible Amortisation

(12,885)

(15,300)

(20,400)

(20,000)

(20,000)

Share based payments

(2,900)

(5,100)

(2,900)

(3,000)

(3,000)

Exceptionals

(6,630)

(6,500)

(6,300)

(2,500)

(2,500)

Other

0

0

0

0

0

Operating Profit

15,200

19,600

30,100

46,000

54,600

Net Interest

7

(100)

(4,700)

(125)

(125)

Profit Before Tax (norm)

 

 

24,737

31,100

34,600

51,375

59,975

Profit Before Tax (IFRS16)

 

 

15,207

19,500

25,400

45,875

54,475

Tax

(5,812)

(6,400)

(7,800)

(12,845)

(15,253)

Profit After Tax (norm)

18,925

24,700

26,800

38,530

44,722

Profit After Tax (IFRS16)

9,395

12,500

17,500

33,030

39,222

Average Number of Shares Outstanding (m)

106.7

109.7

109.9

111.5

111.5

EPS - normalised (p)

 

 

15.7

21.1

23.2

33.0

38.9

EPS - IFRS 16 (p)

 

 

9.0

11.5

15.7

29.6

35.2

Dividend per share (p)

5.0

6.0

7.0

10.0

11.0

Gross Margin (%)

84.7

84.5

84.8

84.3

84.3

EBITDA Margin (%)

25.7

27.2

27.9

27.7

27.5

Operating Margin (before GW and except) (%)

14.3

15.4

16.5

18.4

19.0

BALANCE SHEET

Fixed Assets

 

 

108,122

116,091

145,200

152,900

155,167

Intangible Assets

84,611

89,611

118,355

125,755

127,755

Tangible Assets

23,511

26,413

26,791

27,091

27,358

Investments

0

67

54

54

54

Current Assets

 

 

70,255

82,409

95,200

128,975

170,147

Stocks

0

0

0

0

0

Debtors

34,239

40,700

53,700

61,974

71,247

Cash

35,309

35,509

37,400

62,900

94,800

Current Liabilities

 

 

(52,813)

(67,200)

(90,500)

(97,361)

(108,238)

Creditors

(52,813)

(67,200)

(90,500)

(97,361)

(108,238)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(16,226)

(19,300)

(24,900)

(24,900)

(24,900)

Long term borrowings

0

0

0

0

0

Other long term liabilities

(16,226)

(19,300)

(24,900)

(24,900)

(24,900)

Net Assets

 

 

109,338

112,000

125,000

159,613

192,176

CASH FLOW

Operating Cash Flow

 

 

38,411

45,100

68,800

77,833

84,950

Net Interest

(7)

(500)

(900)

125

125

Tax

(3,184)

(7,100)

(6,900)

(12,845)

(15,253)

Capex

(18,559)

(21,100)

(17,500)

(23,300)

(24,500)

Acquisitions/disposals

(7,451)

(2,800)

(25,400)

(6,100)

0

Financing

(4,739)

(2,200)

(9,900)

(2,000)

(2,000)

Dividends

(4,298)

(5,500)

(6,679)

(7,802)

(11,172)

Net Cash Flow

173

5,900

1,521

25,911

32,149

Opening net debt/(cash)

 

 

(37,925)

(35,309)

(35,509)

(37,400)

(62,900)

HP finance leases initiated

0

0

0

0

0

Other

(2,789)

(5,900)

370

(411)

(250)

Closing net debt/(cash)

 

 

(35,309)

(35,309)

(37,400)

(62,900)

(94,800)

Source: Company reports, 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 2023 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 2023 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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