12 October 2021

YouGov plc

("YouGov" or the "Group")

Trading update for the year ended 31 July 2021 and update on timing of FY21 results

- Strong performance across all divisions and geographies driven by continuous client demand

- Ongoing investment in all business areas to support strategic growth

- Sales pipeline remains encouraging, giving YouGov confidence in its FY22 growth prospects

Update on timing on FY results

Due to unforeseen circumstances arising late in the audit process, the Group requires additional time to finalise its full-year preliminary results. These numbers are not expected to change from those presented below and the finalisation of the audit may result in a reduction of the anticipated Group tax charge. YouGov will now announce its preliminary results for the year ended 31 July 2021 on 19 October 2021. As the audit is at an advanced stage, the Group is today providing a detailed full-year trading update.

Trading update 

1 Defined as growth in business excluding impact of current and prior period acquisitions and business closures, and movement in exchange rates.

2 Defined in the explanation of non-IFRS measures below.

Financial highlights

·      Revenue growth of 11% (FY20: 12%) with underlying¹ growth of 18% on the back of strong delivery in the second half of the financial year

·      Underlying¹ operating profit (excluding impact of planned Kurdistan closure and foreign exchange movements) was up by 32%, representing an underlying¹ operating profit margin of 16% (FY20: 14%)

o  This growth was driven by all three divisions and despite absorption of an increased non-cash share-based payment charge of 5.1m (FY20: £2.8m)

·      Statutory operating profit up 25% to £19.0m (FY20: £15.2m) including separately reported items charge of £6.5m in respect of completed acquisitions

Operational Highlights

·      Strong momentum continues in Data Products and Custom Research, with bundling of sales between these two divisions, resulting in larger and more strategic long-term deals signed during the period, while Data Services saw excellent growth

o  Data Products revenue increased by 13% (18% from underlying¹ business) to £58.0m following a good recovery in the second half of the year and strong contribution from Mainland Europe

o  Data Services revenue increased by 20% (22% from underlying¹ business) to £45.5m, following continued strong client demand for more tactical, fast turnaround projects across all geographies

o  Custom Research revenue increased by 2% (12% from underlying¹ business) to £65.6m, as the planned closure of the Kurdistan operations was offset by stellar performance in the US

·      Broad-based growth across all geographies, with the US and Mainland Europe continuing to perform exceptionally well on the back of large contract wins  

·      Number of investments made during the year to drive growth:

o  Increased investment of £9.4m (FY20: £8.6m) towards the development of our technology and tools that will drive future growth

o  Launched several new products throughout the year including YouGov Safe, our fully opt-in, GDPR & CCPA³ compliant data marketplace

o  Significant investment of £11.7m (FY20: £8.9m) in the expansion of our panel into 15 new markets resulting in the number of registered members growing 53% to 17.5m

o  Continued to invest prudently in new geographies to expand our regional capabilities and better serve global clients by establishing our presence in Latin America via commencement of operations in Brazil

o  Completed several bolt-on acquisitions such as Open Banking start-up Lean App and research and data insights companies in Turkey, Australia and Canada

Post-period highlights

·      Acquisition of the UK-based ad tech company, Rezonence, as we continue to enhance our ethical activation capabilities and expand our potential reach

·      Successful completion of the first phase of the development of the YouGov Platform, including the unification of our Direct member base with the traditional YouGov panel and rollout of our new member app

Outlook

·      Encouraging start to the new financial year, with a healthy sales pipeline and continued strong momentum  

·      Investment in our panel, technology and platforms to continue, albeit in line with FY21

·      Trading in the current year has started in line with the Board's expectations

Stephan Shakespeare, Chief Executive, said:

"We are pleased to end this financial year in line with our expectations, demonstrating sustained growth despite the continuing disruption caused by the pandemic. This is testament to the resilience of our business model, the hard work of our people and heightened demand for YouGov's tailored solutions, providing valuable opinions and consumer insights to help our clients make informed decisions.  

"YouGov also continues to demonstrate momentum on the stated strategy as we enter the third year of our second long-term strategic growth plan. We believe that the investments we made in the first half of our plan have placed us in a strong position for the final two years.

"We have started off the new financial year well. We expect current positive trends to continue in the coming months which gives us confidence for the future."

Enquiries:

Operational Review

We are proud to deliver another year of strong growth for YouGov. Despite the ongoing pandemic throughout the year, we were able to continue to achieve underlying¹ growth in line with pre-pandemic levels. YouGov reported revenue of £169.0m, up 11% and adjusted operating profit² of £25.5m, up 17%. Our strong performance was driven by ongoing demand for our syndicated data products, solid uptake of our fast-turnaround survey services, and large client wins utilising our connected data research solutions.

We continue to see strong renewal rates for our subscription products and have successfully reorganised our sales structure to ensure we are able to capitalise on the cross-sell opportunities that will support our long-term growth.

The key drivers of our robust performance include:

·      Our resilient business model: Our ability to meet clients' research needs despite the uncertainties caused by the pandemic has helped strengthen our existing client relationships and expand our client base.

·      Our global expansion: Expanding our reach into 15 new markets has given us the required scale to target long-term, strategic projects with large, multi-national accounts.

·      Our sector expertise: The recruitment of several new sector heads with deep knowledge of their respective industries has allowed us to enhance the YouGov Cube with sector-specific data and win new clients.

·      Our global infrastructure: Furthering the use of our Centres of Excellence has enabled us to realise operational efficiencies and manage our cost base more effectively.

As the data analytics and market research industry continues its shift towards the increased use of technology, we are advancing our technological capabilities to ensure we remain ahead of the market. As part of this, we continued the evolution of our product suite by bringing all our products and services under the umbrella of a unified YouGov Platform. Once fully rolled out, this will allow clients to seamlessly move between our data products, run research surveys, analyse the findings, view custom trackers and conduct marketing activation, all within a single sign-on platform.

Current trading and outlook

Strong trading momentum has continued across all our divisions in the new financial year, giving us confidence in our strategy. This momentum is supported by positive market trends and a healthy sales pipeline.

We believe the investments we have made this financial year have put us in a strong position and we are now focussed on monetising those investments. Given the strength of our business model, strong cash balances and no debt, we will continue to invest prudently where necessary but expect capital expenditures to stabilise going forward.

1 Defined as growth in business excluding impact of current and prior period acquisitions and business closures, and movement in exchange rates.

2 Defined in the explanation of non-IFRS measures below.

Financial Review

Total Group revenue in the period rose to £169.0m, compared to £152.4m in the 12 months to 31 July 2020, driven by all three reporting divisions and all geographies on an underlying¹ basis. Growth was 18% on an underlying¹ basis compared to the prior period (but 11% in reported terms due to the planned closure of the Kurdistan business and the appreciation of the UK Sterling against the US Dollar).

Performance by division

YouGov's lines of business fall into three divisions: Data Products, Data Services and Custom Research.

Data Products

Our syndicated data products suite includes YouGov BrandIndex and YouGov Profiles as well as newer sector-specific modules.

While the performance of our Data Products division was off to a slower start at the beginning of the year due to a shift in the sales structure, it has recovered well in the second half of the year. Revenue from Data Products increased by 13% (18% growth in underlying¹ terms) in the period. The adjusted operating profit² from Data Products increased by 8% to £19.4m and the adjusted operating margin declined slightly to 33%.

Geographically, the US remains the largest Data Products market and grew by 10% in the period (18% from the underlying¹ business). Mainland Europe saw considerable revenue growth of 30% on the back of recent client wins, while the UK was more subdued at 9% growth.

Data Services

Our Data Services division consists of our fast-turnaround research services, including our market-leading YouGov Omnibus (known as YouGov RealTime in the UK and US).

Revenue from Data Services increased by 20% (22% in underlying¹ terms) to £45.5m, as the division has capitalised on strong client demand for tactical PR work throughout the year. This revenue growth was broad-based across all geographies, including a 25% increase in reported revenue in the US (35% increase in underlying¹ terms), and a 18% increase in the UK, where YouGov RealTime is the market leader. Mainland Europe, the largest market for the division, also saw strong performance with 22% reported growth for the period.

The division's robust performance led to a 26% growth in adjusted operating profit and the operating margin increased from 18% to 19%, benefitting from operating leverage.

Custom Research

Our Custom Research division includes tailored research projects and tracking studies.

During the period, the division's revenue grew by 2% in reported terms and by 12% in underlying¹ terms to £65.6m. The adjusted operating profit² increased by 9% to £13.6m and the operating margin expanded to 21%, despite the closure of the Kurdistan business.

The reported performance of the Custom Research division was impacted by the expected closure of operations in Kurdistan resulting in a £4.3m reduction in revenue in the Middle East. In the UK, revenue increased by 8% to £23.9m, while the US saw solid performance, helped in part by the US election, recording 17% growth (24% increase in underlying¹ terms) to £38.6m. 

Performance by geography

YouGov's geographic footprint spans the UK, Mainland Europe, the Americas, Asia Pacific and the Middle East.

Panel development by geography

We continued to invest in our consumer panel, undertaking the largest simultaneous expansion of the panel into 15 new markets across Europe, South America, the Middle East and North Africa during the year. This was largely on the back of client demand and provides the Group with the global reach required to win large, multi-national accounts. As at 31 July 2021, the total number of registered panellists had increased to 17.5 million, compared to 11.5 million at 31 July 2020, as set out in the table below.

Adjusted operating margins and organic growth

Gross margins remained stable at 84%, as higher operational leverage from the Data Products division was offset by higher contribution from our lower-margin Data Services business.

Group operating costs (excluding separately reported items) of £117.3m (FY20: £107.2m) increased by 9% in reported terms. Adjusted operating profit² increased by 17% to £25.5m, representing an improvement in the adjusted operating margin to 15.1% (FY20: 14.3%), despite the impact of the Kurdistan business closure.

Underlying¹ operating profit (excluding FX, acquisitions and Kurdistan impacts) increased to £27.1m, representing growth of 32% over the prior year period. Underlying¹ operating profit margin has increased from 14% in FY20 to 16% in FY21. The statutory operating profit increased to £19.0m (FY20: £15.2m), after charging other separately reported items of £6.5m (FY20: £6.6m).

1 Defined as growth in business excluding impact of current and prior period acquisitions, Kurdistan business closure, and movement in exchange rates.

2 Defined in the explanation of non-IFRS measures below.

Amortisation of intangible assets

In the 12 months to 31 July 2021, amortisation charges for intangible assets of £15.3m were £4.6m higher than the previous year. Amortisation of the consumer panel increased by £2.9m to £7.1m, reflecting the increased investment made in the year to expand the geographic reach of our panel. Amortisation of software increased by £1.9m to £7.9m. £4.9m (FY20: £4.9m) of the total software development charge related to assets created through the Group's own internal development activities, £0.6m (FY20: £0.3m) related to separately acquired assets and £2.4m (FY20: £0.8m) was for amortisation on assets acquired through business combinations.

Separately reported items

Acquisition-related costs in the period comprise £6.5m of contingent consideration treated as staff costs in respect of the acquisitions of SMG Insight Limited, InConversation Media Limited, Portent.io Limited, Charlton Insights Inc., Lean App Limited and Faster Horses Pty Limited, and £0.3m of transactions costs in respect of the newly acquired entities, offset by £0.3m income from insurance rebate for SMG

Insight Limited litigation costs.

Impairment of goodwill in the prior year is in respect of the Nordic business.

Acquisition-related costs in the prior year comprise £3.7m of contingent consideration treated as staff costs in respect of the acquisitions of Galaxy Research Pty Limited, SMG Insight Limited, InConversation Media Limited and Portent.io Limited, a decrease of £0.1m in contingent transaction costs in respect of Portent.io Limited, a £0.2m increase in SMG consideration and a £0.7m reduction in the fair value of the acquired SMG Insight Limited net assets. 

Capital expenditure and technology investment 

The Group invested £7.8m (FY20: £7.9m) in the continuing development of our technology platform and increased the investment in panel recruitment to £11.7m (FY20: £8.9m) for the year to support continued global expansion. The geographic footprint of our panel was broadened as new panels were established in 15 new markets, mainly in Europe and Latin America, to meet the research needs of our multi-national clients. Our investment in technology continued across three main areas: websites and mobile applications £1.1m, survey systems £1.9m, and £2.9m on our Crunch data analytics tool. £1.6m (FY20: £0.7m) was also invested on separately-acquired software tools. In addition £1.2m (FY20: £1.1m) was spent on the purchase of property, plant and equipment, resulting in a total investment in fixed assets of £23.8m (FY20: £18.6m).

Total expenditure on intangible assets and property, plant and equipment is shown below:

Currency

The Group's results were affected by the net appreciation of the UK Sterling, as its average exchange rate was 8% higher against the US Dollar in this period than in the 12 months to 31 July 2020. Movement against the Euro was effectively flat for the period. The net impact of foreign exchange on the Group's adjusted operating profit² was a decrease of £1.1m compared to calculation in constant currency terms.

1 Defined as growth in business excluding impact of current and prior period acquisitions and business closures, and movement in exchange rates.

2 Defined in the explanation of non-IFRS measures below.

Explanation of non-IFRS measures

Forward looking statements

Certain statements in this financial report are forward looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. As these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

About YouGov

YouGov is an international research and data analytics group.

Our mission is to supply a continuous stream of accurate data into what the world thinks, so that organisations can better serve the communities that sustain them. 

Our over 17 million registered members provide us with a highly engaged proprietary panel that delivers thousands of data points on consumer opinions, attitudes and behaviour on a daily basis. We combine this continuous stream of data with our research expertise to provide insights that enable intelligent decision-making and informed conversations.

YouGov's integrated suite of products, services and tools operates as a systematic platform serving YouGov data and intelligence for all stages of the marketing workflow. Our ground-breaking syndicated Data Products include the daily brand perception tracker, YouGov BrandIndex, and the media planning and segmentation tool, YouGov Profiles. Data Services comprises our market-leading YouGov RealTime service which provides a fast and cost-effective solution for reaching nationally representative and specialist samples. YouGov's Custom Research division offers a wide range of quantitative and qualitative research, tailored by sector specialist teams to meet clients' specific requirements.

With operations in the UK, the Americas, Europe, the Middle East, India and Asia Pacific, YouGov has one of the world's largest research networks.

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