Yougov (LON:YOU) is continuing to deliver on its growth strategy, with FY17 revenues up 21% y-o-y (9% in constant currency). Data products and services now represent 44% of group revenues. This concentration on its core strengths, using its own proprietary panel, is increasing group margins and giving better visibility to earnings through subscription income. Cash conversion remains strong, allowing continued investment in data analytics, geographic expansion and panel recruitment. The dividend has been stepped up 43%, reflecting the greater maturity of the business model and the cash-rich balance sheet. These strengths are reflected in the continuing valuation premium to peers.
Step up in margins
YouGov’s organic (constant currency) revenue growth of 9% is made up of 29% growth in data products and 19% growth in data services, well ahead of the market, offset by flat revenues from custom research. Within data products and services, BrandIndex grew 20% (constant currency) to £20m, while YouGov Profiles is proving its value to marketing professionals, more than doubling its revenues to £4m. Custom research revenues were flat as it focused on projects that utilised its own panel resource and pared back work in Germany and the Middle East that no longer fit with the model. The change in mix, and the focus on custom research projects that utilise own-panel resource, drove group gross margin up from 78% to 80%, while operating margins climbed from 12.4% to 13.6%. CFO Alan Newman retires at the end of December and the search for a successor is underway.
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