21 March 2023

YouGov plc

("YouGov" or the "Group")

Results for the six months to 31 January 2023

- Strong H1 performance with continued growth momentum against a difficult macro environment

-  Significant margin improvement despite ongoing investment in technology and international reach

- Continued confidence in achieving FY23 market expectations

 

 

YouGov, the international research and data analytics group, announces its results for the six months ended 31 January 2023.

 

 

Summary of Results
	Unaudited six months to 31 January 2023   £m	Unaudited six months to 31 January 2022   £m	Change %	Underlying Change¹ %
Revenue	131.4	101.2	30%	13%
Adjusted Operating Profit2	22.1	14.0	58%	32%
Adjusted Operating Profit Margin (%)2	17%	14%	300bps	-
Statutory Operating Profit	20.4	10.8	89%	-
Adjusted Profit before Tax2	26.5	15.4	72%	49%
Statutory Profit before Tax	21.0	9.2	128%	-
Adjusted Earnings per Share2	19.2p	10.6p	81%	50%
Statutory Basic Earnings per Share	14.7p	5.7p	158%	-

 

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

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

 

 

Financial highlights

 

·	Revenue growth of 30% (HY22: 28%) to £131.4m, with underlying¹ business growth of 13%, reflecting continued growth well ahead of the industry.
·	Adjusted operating profit2 up by 58% (HY22: 33%) to £22.1m, with underlying¹ business growth of 32%, as business efficiencies and operational leverage benefits continue to come through.
·	Adjusted operating profit margin2 up 300 basis points (bps) to 17%, strong margin expansion despite continued investment in the business for future growth.
·	Statutory operating profit up by 89% £20.4m (HY22: £10.8m).
·	Adjusted earnings per share2 up by 81% to 19.2p (HY22: 10.6p).
·	Robust balance sheet position maintained with net cash at period end of £41.4m (31 January 2022: £20.1m).

 

Operational highlights

 

·	Continued sales growth in panel-based Custom Research with increasing opportunities for multi-year contracts and trackers, building on the strong momentum seen in H2 2022.
·	High-quality data products remain embedded across clients' workflows resulting in increased customer stickiness and retention.
	o  Data Products revenue increased by 9% on an underlying¹ basis (20% on a reported basis) to £41.9m, driven by strong subscription renewal rates.
	o  Data Services revenue decreased by 9% on an underlying¹ basis (3% decline on a reported basis) to £23.0m as general market softness continued to delay some clients' more discretionary spending.
	o  Custom Research revenue increased by 28% on an underlying¹ basis (55% on a reported basis) to £65.3m, driven by continued sales momentum globally, as clients prioritise strategic research projects, resulting in the expansion of several client relationships.
·	Broad-based growth across all geographic segments, with the US remaining the key growth driver with large market opportunities continuing to accelerate in important sectors.
	o  Demand in the UK has picked up despite recessionary market conditions, while Mainland Europe posted a weaker performance due to lower tactical PR activity impacting Data Services.
·	Investments made during the period to meet client demand and further strengthen our technological capabilities included:
	o  Technology: Continued investment of £4.4m (HY22: £3.7m) in technologies to drive long term growth, including the development of our self-serve tool, YouGov Surveys.
	o  Panel: Ongoing investment of £4.8m (HY22: £4.4m) in the build-out of our panel and allocation of resources to high growth areas such as the US and Europe, to meet demand for customised research.
	o  Centres of Excellence (CenX): Remain operationally integral to our platform strategy as we increase the number of functions with representation in a CenX.

 

 

Current trading and outlook

 

·	Driven by continued investment in our technological capabilities and our international reach, the Group's sales pipeline remains healthy and continues to provide good visibility as we go into the second half of the financial year.
·	While the Group has seen some slower client decision making on more discretionary spend, we continue to see large strategic opportunities in key markets and have not experienced any other material changes in client behaviour to date.
·	We remain disciplined in our investment approach and will continue to optimise our cost base to ensure we are poised for further margin improvement.
·	Capital expenditures, which are aimed at positioning the business for further growth in the next strategic growth plan (SP3), are expected to be maintained at a similar level to the prior year.
·	While the overall weakness in macro sentiment may impact the speed and level of some client spending, our strong performance in the first half gives us confidence in maintaining the current sales momentum to end the financial year in line with current market expectations3.

 

Board Succession Planning

 

·

In line with the previously disclosed Board succession plan, Roger Parry will be standing down from the role of Non-Executive Chair. Stephan Shakespeare will assume the role of Non-Executive Chair, upon a new CEO commencing in post, currently anticipated to be on 1 August 2023, subject to the outcome of the CEO search process. The Board's Nomination Committee is considering a wide variety of both external and internal candidates as part of an international search process. A further update will be provided in due course.

·

On 23 February 2023, the Group announced the appointment of Shalini Govil-Pai and Devesh Mishra as Non-Executive Directors. Shalini Govil-Pai has over 25 years' experience in the consumer technology space, particularly in the US, while Devesh Mishra brings over 25 years of global operating leadership experience across technology, product, and business operations. The addition of our two new Non-Executive Directors in Shalini and Devesh, ensures a majority of independent members on the Board following the Chair transition.

 

Stephan Shakespeare, Chief Executive Officer, said:

 

"YouGov delivered a strong performance in the first half of our financial year, against a difficult macro environment. In line with our strategy, top-line growth momentum has continued across all geographic segments, and we achieved significant margin expansion and good cash generation during the period.

 

Our demand environment remains robust with increasingly sticky, long-term relationships with existing customers, and growing opportunities for multi-year contracts and trackers with new customers. This sales momentum has continued into the second half of the year, giving us confidence that YouGov can achieve top-line growth for the full year in line with current market expectations.³

 

As we approach the final stretch of our current long-term strategic growth plan, I am more confident than ever that we are investing in the right areas to realise the full potential of our business. We look forward to showcasing the results of our efforts alongside our plans for SP3 at our upcoming Capital Markets Day."

 

3. Based upon the average of 6 analyst estimates, the Company-compiled consensus estimate for FY23 Group revenue is £265 million.

 

Analyst presentation

 

A copy of the presentation will be available online at
https://corporate.yougov.com/investors/presentations/ shortly after the half-year results announcement is live on the Regulatory News Service (RNS).

 

Capital Markets Day

 

The Company will host a Capital Markets Day for institutional investors and analysts in London on Wednesday 17th May 2023 where we will present the next strategic growth plan and our continued evolution into a leading market research platform. The day will be hosted by CEO Stephan Shakespeare, CFO Alex McIntosh, and COO Sundip Chahal and will include presentations from leaders within the Group.

 

 

Forward looking statements

 

Certain statements in this full year 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.

 

Enquiries:

YouGov plc Stephan Shakespeare / Alex McIntosh / Hannah Jethwani	020 7012 6000
FTI Consulting Charles Palmer / Tom Blundell / Jemima Gurney	020 3727 1000
Numis Securities Limited (NOMAD and Joint broker) Nick Westlake / Iqra Amin	020 7260 1000
Berenberg (Joint Broker) Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff	020 3207 7800

 

 

About YouGov

YouGov is an international online research data and analytics technology group. 

Our mission is to offer unparalleled insight into what the world thinks. 

Our innovative solutions help the world's most recognised brands, media owners and agencies to plan, activate and track their marketing activities better.

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

At the core of our platform is an ever-growing source of consumer data that has been amassed over our twenty years of operation. We call it Living Data. All of our products and services draw upon this detailed understanding of our 24+ million registered panel members to deliver accurate, actionable consumer insights. 

As innovators and pioneers of online market research, we have a strong reputation as a trusted source of accurate data and insights. Testament to this, YouGov data is regularly referenced by the global press, and we are the second most quoted market research source in the world. 

YouGov. Living Consumer Intelligence.

For further information, visit business.yougov.com 

 

Chief Executive Officer's Review

YouGov has delivered another strong performance in the first half of the current financial year as demand for our products and services remains robust. While the overall macro environment remains uncertain, the Group has continued to demonstrate the value of its data to clients thereby maintaining strong renewal rates and expanding several key relationships. Following a concerted focus on limiting cost growth, the Group has seen significant improvement in its operating profit margin in the period, while investing in areas that will drive future growth.

 

Factors contributing to our positive performance in the period include:

·    Key geographies: Solid performance was seen in the US, particularly in Custom Research, and recovery in the UK as overall market sentiment has improved.

·    New products: Initial contribution from early-stage products, YouGov Safe and FreeWall®, that are gaining encouraging traction with clients.

·    Operational leverage: Investments in recent years to expand our sales teams, central functions and CenX operations are beginning to deliver margin benefits as our top-line expands.

 

Delivering on our strategic priorities

 

Based on our strategy, we have previously identified five key priorities that will be a focus in the near term. The key progress made under each of these priorities over the first half of the financial year has been set out below.

 

 

Product development and technology

 

·	Launched YouGov Surveys, our self-serve tool allowing users to build surveys with granular targeting capabilities.
·	Continued the development of the YouGov Platform with the launch of free audience and brand data tools that enable individuals and businesses to experience the power of YouGov's data.

 

Panel

 

·	Growth in our global research panel of 20% to 24 million registered members, while lowering global cost per acquisition through diversification and optimisation of our acquisition channels, including the use of YouGov Chat to recruit hard-to-reach groups.
·	Utilised our latest technology acquisition, YouGov FreeWall®, to expand our panel reach through publisher networks to deliver targeted digital campaigns.

 

Global accounts

 

·	Increased share of wallet with several key clients globally, particularly in the technology and gaming sectors in the US, through panel-based Custom Research projects.
·	Achieved strong renewal rates for our subscription products in an increasingly uncertain macro environment.

 

 

 

 

 

Global infrastructure

 

·	Continued to expand the role played by our CenX and improve the efficiency with which we deliver our services, through the creation of client service and survey management teams in India.
·	Ongoing build out of staff in our newest CenX in Mexico City to ensure the US research business is well supported through the addition of sales and client service capabilities over the coming months.

 

Acquisitions

 

·	Collaboration with the LINK team on social research and financial services clients yielding good results and initial sales of syndicated data products recorded.
·	Rezonance's FreeWall® product is effectively supplementing the Group's ongoing panel recruitment efforts.

 

 

Strategic growth plan

 

We are in the final stage of our current long-term strategic growth plan ("FYP2") and continue to make progress in its execution. As previously announced, the ambitious long-term incentive plan ("LTIP") performance targets accompanying FYP2 to incentivise senior management over the plan period (FY19-FY23) are:

 

·	double Group revenue;
·	double Group adjusted operating profit margin1; and
·	achieve an adjusted earnings per share1 compound annual growth rate in excess of 30%.

 

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

 

With the substantial investments in our panels and support functions now largely complete, we are beginning to reap the benefits of operational leverage as the business scales, as demonstrated by the margin expansion in the first half of the year. We have sustained the investment in our technological platforms to ensure we continue to innovate, improve the panellist experience and further the development of the YouGov Platform.

 

We remain committed to driving top-line growth in the medium-term, with a continued focus on improving our profitability margin. Looking ahead, we believe there is substantial headroom for growth in our existing business lines and further upside potential stemming from our evolution into a platform company. As we navigate the current macro environment, we are reassured by the stickiness of our client base and the strong, long-term relationships we have built that will continue to drive the business forward.

 

Current trading and outlook

 

·    Driven by continued investment in our technological capabilities and our international reach, the Group's sales pipeline remains healthy and continues to provide good visibility as we go into the second half of the financial year.

·    While the Group has seen some slower client decision making on more discretionary spend, we continue to see large strategic opportunities in key markets and have not experienced any other material changes in client behaviour to date.

·    We remain disciplined in our investment approach and will continue to optimise our cost base to ensure we are poised for further margin improvement.

·    Capital expenditures, which are aimed at positioning the business for further growth in the next strategic growth plan (SP3), are expected to be maintained at a similar level to the prior year.

·    While the overall weakness in macro sentiment may impact the speed and level of some client spending, our strong performance in the first half gives us confidence in maintaining the current sales momentum to end the financial year in line with current market expectations². 

 

2. Based upon the average of 6 analyst estimates, the Company-compiled consensus estimate for FY23 Group revenue is £265 million.

 

Stephan Shakespeare

Chief Executive Officer

21 March 2023

 

Chief Financial Officer's Review

 

The Group has delivered a strong performance in the six months to 31 January 2023 as we continue to deliver sustainable, profitable growth.

 

Total Group revenue rose 30% to £131.4m in the period, compared to £101.2m in the six months to 31 January 2022, with continued growth across all geographic segments and on the back of currency tailwinds, primarily the US Dollar.

 

Underlying¹ revenue growth (excluding foreign exchange movements and contribution from acquisitions) was 13% over the prior year period.

 

The diversity in our client base and the strategic value of our data to key clients has enabled us to deliver a good performance in the context of volatile trading conditions.

 

Gross margins increased by 30 basis points (bps) to 84.8% as a higher proportion of sales was derived from panel-based custom research projects.

 

Group operating costs (excluding separately reported items) of £89.4m (HY22: £71.5m) increased by 25% in reported terms, and 18% in constant currency terms. Group adjusted operating profit (excluding separately reported items) increased to £22.1m (a 58% increase from £14.0m in HY22). Underlying¹ operating profit increased by 32%, when excluding the impact of acquisitions and FX, on the back of tighter cost control, benefits of operational leverage and lower growth in amortisation of intangibles. Adjusted operating margins increased 300 basis points from 13.8% to 16.8%. 

 

The statutory operating profit (which is after charging other separately reported items of £1.7m) increased by 89% to £20.4m (HY22: £10.8m).

 

Performance by Division

 

Data Products

 

Our syndicated data products suite includes YouGov BrandIndex and YouGov Profiles as well as newer sector specific offerings and our latest cross-device tracker, YouGov Safe.

 

Our Data Products division saw slower growth in the period, despite healthy renewal rates, due to fewer new subscription sales. This was in part due to greater focus from our commercial teams on custom projects, which limited the sale of new subscriptions. Revenue from Data Products increased by 20% in reported terms (9% growth in underlying terms) in the period. The adjusted operating profit from Data Products increased by 60% to £17.8m and the operating margin increased to 42%. This significant increase in margins can be attributed to inherent operational leverage benefits of syndicated products and higher cost allocations to the Custom Research division.

 

Geographically, the US remains the largest Data Products market and grew by 10% in the period on an underlying basis. The UK delivered 15% growth for the period on the back of strong demand from the technology and media sector.

 

 

 

 

 

Data Services

 

Our Data Services division consists of our fast-turnaround research services, including our market-leading YouGov RealTime Omnibus.

 

In the period, revenue from Data Services declined by 3% in reported terms and by 9% in underlying terms to £23.0m. This was mainly driven by a sharp decline in Mainland Europe due to several factors including lower tactical PR activity in light of geopolitical instability in the region, phasing of projects into H2 and some reclassification of work to the Custom Research division. Additionally, the division saw low single-digit growth in the period in the UK and continued to see flat performance in the US.

 

This division's profitability recorded a 26% decrease to £3.2m (HY22: £4.3m) and the operating margin contracted from 18% to 14% due to the division's weak performance.

 

Custom Research

 

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

 

During the period, the division's revenue increased by 55% in reported terms, including contribution from the LINK acquisition in December 2021, while growth in underlying terms was 28% to £65.3m. This significant acceleration in the division was largely driven by the US, as our commercial teams demonstrated the benefits of our global panel coverage, high-quality data and innovative tools to help expand several client relationships. New clients wins in Mainland Europe and work around the US mid-term elections have also contributed to this strong performance.

 

This strong performance, greater focus on margin-enhancing projects and increased efficiencies through the use of CenX has resulted in the division's adjusted operating profit increasing to £14.2m (HY22: £8.0m) representing an operating margin of 22% (HY22: 19%).

 

 

Revenue	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	Revenue growth %	Underlying1 revenue change %
Data Products	41.9	34.8	20%	9%
Data Services	23.0	23.7	(3%)	(9%)
Custom Research	65.3	42.0	55%	28%
Central Items	1.2	0.7	71%	-
Group	131.4	101.2	30%	13%

 

 

Adjusted Operating Profit1	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	Operating Profit growth %	Operating Margin
				Six months to 31 Jan 2023	Six months to 31 Jan 2022
Data Products	17.8	11.1	60%	42%	32%
Data Services	3.2	4.3	(26%)	14%	18%
Custom Research	14.2	8.0	78%	22%	19%
Central Costs	(13.1)	(9.4)	39%	-	-
Group	22.1	14.0	58%	17%	14%

 

Performance by Geography

Revenue	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	Revenue growth %	Underlying1 revenue change %
UK	31.4	26.7	18%	18%
Americas	64.0	46.1	39%	18%
Mainland Europe	28.3	20.0	41%	3%
Middle East	4.4	2.8	59%	38%
Asia Pacific	11.0	9.3	19%	11%
Central Items	(7.7)	(3.7)	109%	60%
Group	131.4	101.2	30%	13%

 

Adjusted Operating Profit1	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	Operating Profit growth %	Operating Margin
				Six months to 31 Jan 2023	Six months to 31 Jan 2022
UK	6.6	6.9	(4%)	21%	26%
USA	21.7	16.0	36%	34%	35%
Mainland Europe	1.4	2.6	(46%)	5%	13%
Middle East	1.3	0.5	160%	30%	18%
Asia Pacific	1.0	0.5	100%	9%	6%
Central Costs	(9.9)	(12.5)	(21%)	-	-
Group	22.1	14.0	58%	17%	14%

 

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

 

Panel Development

 

We continue to invest in our online panel to increase our research capabilities, both in our newer geographies and in the US on the back of strong client demand. At 31 January 2023, the total number of registered panellists had increased by 20% to over 24 million, compared to 20 million at 31 January 2022, as set out in the table below.

 

Region	Panel size at 31 January 2023 millions	Panel size at 31 January 2022 millions
UK	2.79	2.55
Americas	8.76	7.20
Mainland Europe	5.36	4.31
MENA and India	2.92	2.53
Asia Pacific	4.18	3.36
Total	24.01	19.95

 

 

Group financial performance

 

Amortisation of intangible assets and central costs

 

Amortisation charges for intangible assets totalled £10.8m in the period (HY22: £9.4m) of which £5.4m (HY22: £4.8m) relates to the consumer panel and £4.6m (HY22: £4.2m) to our software and technology development activities. Growth in amortisation of intangibles has slowed versus the prior year following the completion of the build out of new panel markets.

 

Central costs, which include support functions and contribution from incubator projects, have increased to £13.1m (HY22: £9.4m).

 

Separately reported items

 

Acquisition related costs in the period comprise £1.5m of contingent consideration treated as staff costs in respect of the acquisitions of Charlton Insights Inc, Faster Horses Pty Limited and YouGov Finance Limited (renamed from Lean App Limited) and £0.2m of bonus-related costs in respect of LINK Marketing Services AG (LINK).

 

Profit before tax and earnings per share

 

Adjusted profit before tax was £26.5m, increasing by 72% compared to £15.4m in HY22, largely in line with the increase in adjusted operating profit. The adjusted tax rate decreased from 23.5% in HY22 to 21.0%. Statutory profit before tax increased to £21.0m compared to £9.2m in the six months ended 31 January 2022.

 

During the period adjusted earnings per share has increased by 81% from 10.6p to 19.2p, driven by the growth in the business, and statutory earnings per share has more than doubled from 5.7p to 14.7p.

 

Technology investment and global expansion

 

The Group invested £4.4m (HY22: £3.7m) in the continuing advancement of our technology platform while investment in panel recruitment amounted to £4.8m (HY22: £4.4m) as spend has normalised following our new panel markets expansion in 2021. £0.6m (HY22: £0.6m) was spent on the purchase of property, plant and equipment. Other cash outflows included £5.6m spent on purchase of treasury shares, taxation payments of £1.6m (HY22: £2.8m) and the annual shareholder dividend payment of £7.7m (HY22: £6.7m) in December 2022.

 

The Group is expecting £9.6m of deferred consideration payable in respect of future earn-outs related to acquisitions, of which £6.6m is expected to be paid in the next twelve months.

 

There was a net cash inflow of £4.7m in the period, compared to an inflow of £6.0m in the six months to 31 January 2022. Net cash balance of £41.4m was higher than at 31 January 2022 (£20.1m). No exposure or affiliation with Silicon Valley Bank or its UK subsidiary.

 

Currency

 

The Group's results were affected by the net depreciation of £ Sterling as its average exchange rate was 13% lower against the USD in this period than in the six months to 31 January 2022. Also, the £ Sterling was 2% lower against the EUR in this period than in the six months to 31 January 2022. The net impact of foreign exchange on the Group's adjusted operating profit¹ was an increase of £3.2m compared to calculation in constant currency terms.

 

Alex McIntosh

Chief Financial Officer

21 March 2023

 

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

 

Explanation of Non-IFRS measures

 

Financial Measure	How we define it	Why we use it
Underlying growth	Growth in business excluding impact of current and prior period acquisitions and business closures, and movement in exchange rates (i.e. current year performance calculated with exchange rates held constant at prior year rates).	Provides a more comparable basis to assess the year-to-year operational business performance and is how our performance is reviewed internally
Separately reported items	Items that in the Directors' judgement are one-off or need to be disclosed separately by virtue of their size or incidence
Adjusted operating profit	Operating profit excluding separately reported items
Adjusted operating profit margin	Adjusted operating profit expressed as a percentage of revenue
Adjusted profit before tax	Profit before tax before share based payment charges, imputed interest and separately reported items
Adjusted taxation	Taxation due on the adjusted profit before tax, excluding the tax effect of separately reported items	Provides a more comparable basis to assess the underlying tax rate
Adjusted tax rate	Adjusted taxation expressed as a percentage of adjusted profit before tax
Adjusted profit after tax	Adjusted profit before tax less adjusted taxation	Facilitates performance evaluation, individually and relative to other companies
Adjusted profit after tax attributable to owners of the parent	Adjusted profit after tax less profit attributable to non-controlling interests
Adjusted earnings per share	Adjusted profit after tax attributable to owners of the parent divided by the weighted average number of shares.  Adjusted diluted earnings per share includes the impact of share options
Cash conversion	The ratio of cash generated from operations to adjusted EBITDA	Indicates the extent to which the business generates cash from adjusted EBITDA

 

 

 

Reconciliation of Non-IFRS measures

Adjusted Operating Profit1	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	% Change
Statutory operating profit	20.4	10.8	89%
Separately reported items	1.7	3.2	(47%)
Adjusted operating profit1	22.1	14.0	58%

 

Adjusted Profit Before Tax1	Six months to 31 Jan 2023 £m	Six months to 31 Jan 2022 £m	% Change
Statutory profit before tax	21.0	9.2	128%
Separately reported items	1.7	3.2	(47%)
Share based payments	3.8	3.0	27%
Adjusted profit before tax1	26.5	15.4	72%

 

1 Defined in the explanation of non-IFRS measures above.