YouGov — US and UK powering on

YouGov (AIM: YOU)

Last close As at 27/03/2024

902.00

−34.00 (−3.63%)

Market capitalisation

990m

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Research: TMT

YouGov — US and UK powering on

YouGov’s pre-close trading update indicates that it will have outperformed market estimates for the year ended July, with particularly strong growth from the UK and US. We have raised our numbers to reflect this and May’s acquisition of SMG Insight. The focus on driving higher-margin products and services is showing through in the numbers and the improving quality of earnings. The custom business is being reoriented towards more scalable and repeatable work, also with a beneficial impact on margin. The premium rating reflects the growth record and positive outlook.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

YouGov

US and UK powering on

Year-end trading update

Media

30 July 2018

Price

492p

Market cap

£519m

£1/US$1.37

Net cash (£m) as at 31 January 2018

21.3

Shares in issue

105.5m

Free float

73.7%

Code

YOU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.0

25.4

91.1

Rel (local)

6.1

22.1

84.2

52-week high/low

500.0p

259.5p

Business description

YouGov is an international market research and data and analytics group offering a data-led suite of products and services including YouGov BrandIndex, YouGov Profiles, YouGov Omnibus and custom research.

Next event

Preliminary results

9 October 2018

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Neil Shah

+44 (0)20 3077 5715

YouGov is a research client of Edison Investment Research Limited

YouGov’s pre-close trading update indicates that it will have outperformed market estimates for the year ended July, with particularly strong growth from the UK and US. We have raised our numbers to reflect this and May’s acquisition of SMG Insight. The focus on driving higher-margin products and services is showing through in the numbers and the improving quality of earnings. The custom business is being reoriented towards more scalable and repeatable work, also with a beneficial impact on margin. The premium rating reflects the growth record and positive outlook.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

07/16

88.2

14.4

8.5

1.4

57.9

0.3

07/17

107.0

17.9

10.5

2.0

46.9

0.4

07/18e

116.5

23.0

14.3

2.5

34.4

0.5

07/19e

128.6

26.2

15.8

2.8

31.1

0.6

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

Data products and Services momentum

Our pre-tax and EPS forecasts are raised by 9% (on top of a 6% increase in March), in part reflecting the acquisition of SMG in May but more from the strong trading outlined in the statement, despite a currency headwind from the US dollar. This gives FY18 forecast year-on-year growth in adjusted EPS of 36% (on 10% revenue growth), with current numbers showing 10% further EPS growth in FY19e. The momentum in BrandIndex, Profiles and Omnibus continues, driving operating margins in the products and services segments. A degree of caution had been built into our custom research numbers regarding the strategic reorientation away from one-off, bespoke projects (often sizeable) towards higher-margin projects. At the interim stage, custom research operating margins had reached 24%.

Investment in building scale

YouGov is a highly cash-generative business (FY17 cash conversion of 130%; FY16: 130%). Net cash at the half year was £21.3m and our year-end estimate is for £26.4m, giving plenty of scope for further investment. This has been focused on technology but also on broadening the geographic base of the group. There are new offices in Spain and Italy, increasing the group’s ability to offer pan-European coverage, along with the opening of a Mumbai office, announced in February this year. The acquisition of the outstanding 80% in SMG Insight in May has given the group a strong position in sport. It can now develop further products in this vertical, measuring and evaluating media and sponsorship deals.

Valuation: Premium rating for premium growth

YouGov’s rating remains at the top of the ranking of global peers, with much of the traditional market research sector still struggling with legacy infrastructure. YouGov continues to refine and productise its offerings, driving a higher earnings CAGR than the sector and funding a progressive dividend stream. The group’s clear and consistent strategy is translating into profits and, at least as importantly, into cash.

Exhibit 1: Financial summary

£'000s

2016

2017

2018e

2019e

Year end 31 July

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

88,202

107,048

116,500

128,574

Cost of Sales

(19,476)

(21,339)

(22,156)

(22,829)

Gross Profit

68,726

85,709

94,344

105,745

EBITDA

 

 

12,874

17,210

22,312

25,487

Operating Profit (before amort., except & SBP).

 

 

12,059

16,036

21,112

24,262

Intangible Amortisation

(5,478)

(6,483)

(7,150)

(7,150)

Share based payments

(1,138)

(1,508)

(1,802)

(1,802)

Exceptionals

(1,108)

(488)

0

0

Other

(4)

103

0

0

Operating Profit

4,331

7,660

12,160

15,310

Net Interest

1,199

254

120

136

Profit Before Tax (norm)

 

 

14,392

17,901

23,034

26,201

Profit Before Tax (FRS 3)

 

 

5,530

7,914

12,280

15,447

Tax

(2,111)

(4,933)

(5,414)

(6,954)

Profit After Tax (norm)

11,139

13,116

15,818

17,445

Profit After Tax (FRS 3)

3,415

4,637

6,664

8,493

Average Number of Shares Outstanding (m)

103.9

105.5

105.5

105.5

EPS - normalised (p)

 

 

8.5

10.5

14.3

15.8

EPS - FRS 3 (p)

 

 

3.3

4.4

6.3

8.1

Dividend per share (p)

1.4

2.0

2.5

2.8

Gross Margin (%)

77.9

80.1

81.0

82.2

EBITDA Margin (%)

14.6

16.1

19.2

19.8

Operating Margin (before GW and except & share-based payments) (%)

12.4

13.6

16.6

17.5

BALANCE SHEET

Fixed Assets

 

 

62,366

64,637

67,037

67,037

Intangible Assets

53,140

54,960

57,360

57,360

Tangible Assets

8,984

9,332

9,332

9,332

Investments

242

345

345

345

Current Assets

 

 

45,339

54,918

60,696

70,529

Stocks

0

0

0

0

Debtors

28,643

30,699

32,741

36,135

Cash

15,553

23,481

26,434

32,873

Current Liabilities

 

 

(27,823)

(34,177)

(35,106)

(38,745)

Creditors

(27,823)

(33,915)

(35,106)

(38,745)

Short term borrowings

0

(262)

0

0

Long Term Liabilities

 

 

(5,793)

(4,905)

(5,905)

(5,905)

Long term borrowings

0

0

0

0

Other long term liabilities

(5,793)

(4,905)

(5,905)

(5,905)

Net Assets

 

 

74,089

80,473

86,722

92,916

CASH FLOW

Operating Cash Flow

 

 

14,139

18,914

19,600

24,100

Net Interest

11

4

120

136

Tax

(2,365)

(2,487)

(5,053)

(5,799)

Capex

(6,076)

(7,661)

(8,250)

(8,250)

Acquisitions/disposals

(171)

0

(1,000)

(1,000)

Financing

16

175

0

0

Dividends

(1,028)

(1,470)

(2,205)

(2,732)

Net Cash Flow

4,526

7,475

3,212

6,455

Opening net debt/(cash)

 

 

(10,017)

(15,553)

(23,219)

(26,434)

HP finance leases initiated

0

0

0

0

Other

1,010

191

(0)

0

Closing net debt/(cash)

 

 

(15,553)

(23,219)

(26,431)

(32,889)

Source: Company accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by YouGov and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “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.

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by YouGov and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “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.

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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