FY17 Preliminary Results 9 October 2017 Published: Oct 9, 2017

• Group revenue increased by 21% (9% on a constant currency basis)

• Data Products and Services revenue up by 37% to £47m (24% on a constant currency basis); now represents 44% of Group total (2016: 38%)

  • BrandIndex revenue increased by 36% (20% at constant currency) to £20m

  • Profiles revenue increased by 165% (144% at constant currency) to £4m

  • Omnibus revenue increased by 33% (23% at constant currency) to £22m

• Data Products and Services operating profit increased by 32%

• Custom Research revenue up by 11% (static at constant currency) to £60m and operating profit increased by 30%

• Adjusted operating profit up by 33%, adjusted profit before tax up 24% and adjusted earnings per share up by 24%

• Cash generated from operations (before paying interest and tax) increased by 37% to £19m (2016: £14m)

• Excellent cash conversion1 of 130% of adjusted operating profit (2016: 130%)

• Net cash balances of £23.2m (2016: £15.6m)

• Recommended dividend increased by 43% to 2.0p per share

• US becomes largest profit generator with operating profit increasing 54%

• Current trading in line with the Board's expectations

1. Defined in the explanation of alternative performance measures on page 16.

Commenting on the results, Stephan Shakespeare, Chief Executive, said:

"This is the third consecutive year in which YouGov has delivered growth significantly above the market, both in revenue and profit. We have made further progress in our strategic shift to data products and services sold on subscription and this is bringing increased margin and greater visibility. Our systematic approach to market research which combines our syndicated data with new proprietary analytic methodologies to deliver greater granularity and accuracy, points to an exciting future. Trading in the current financial year has started in line with our expectations and we expect continued growth consistent with our ambition to become a leading player in the global data and analytics market."

We are pleased to report that in the financial year just ended, YouGov has once again achieved strong organic revenue growth and significantly increased its profitability. This performance is in line with the long-term plan we have been following since 2015. As shareholders will be aware, this plan set ambitious goals for the company based on rapid growth in the higher margin Data Products and Services parts of our business and on raising the profit margins in our Custom Research business.

Group revenue of £107m increased by 21% in reported terms, and 9% in constant currency terms, compared to the prior year. This organic growth rate is once again well above that of the global research market. Our adjusted operating profit increased by 33% to £14.5m and the operating margin increased by 2% points to 14%.This reflects the benefits of the continuing planned shift in our product mix from traditional market research to subscription-based Data Products and Services. The latter accounted for 44% of total Group revenue in the year, an increase of 6% points in its share from 2015/16.

YouGov is a pioneer of the market's shift towards rich, single-source, connected data. Our proprietary multi-dimensional database, the YouGov Cube, allows fast large-scale analysis of many thousands of variables. This has allowed us to create innovative syndicated data products and services that are helping to grow our market share among key users of data on public behaviour and attitudes. These users include brand owners, advertising and media agencies focussing on marketing, as well as public agencies wishing to understand the populations that they serve.

YouGov's ability to provide accurate, in-depth data was demonstrated during the 2017 UK General Election. We applied our ground-breaking MRP (Multi-level Regression and Post-stratification) model which produced highly accurate seat-by-seat projections and predicted a hung parliament. The model's combination of connected data and sophisticated analytics is directly applicable to the analysis and monitoring of audiences in many marketing contexts. The model is currently being developed for commercial uses and will allow us to gain advanced statistical insights into micro audiences with greater confidence than ever before.

We have continued to expand our global capability, which includes our panel comprising of 5 million people worldwide and a network of 30 offices in 20 countries, making YouGov one of the top ten international market research networks. This year the USA became our largest profit generator having already been our largest revenue source for several years. This reflects our success in winning many US based global leaders as clients and is a strength at a time when the UK and European political and economic outlook remains more uncertain.

YouGov's strong cash position has enabled us to continue to invest to support organic growth, including in our product development, technology and panel. It also provides us with the means to consider bolt- on acquisition opportunities that may arise to accelerate our development in line with our strategy.

In keeping with our progressive dividend policy, we are pleased to propose a 43% increase in the annual dividend to 2.0p per share, payable in December 2017.

As separately announced, Alan Newman, Chief Financial Officer, will be retiring from the Company at the end of December 2017 after nine years in this role. On behalf of the Board of Directors, I would like to take this opportunity to thank Alan for his service and his contribution to YouGov's successful growth and strong financial momentum.

9 October 2017

YouGov's revenue for the year ended 31 July 2017 increased by 21% to £107m and by 9% on a constant currency basis. In comparison, we estimate the global market growth to be approximately 4%. Our higher margin Data Products and Services accounted for some 68% of the total revenue growth, increasing revenue by 37% (24% in constant currency terms) from £35m to £47m. Custom Research revenue grew in reported terms by 11% from £54m to £60m, although it was static in constant currency terms.

The Group's adjusted operating profit increased by 33% from £10.9m to £14.5m and the adjusted operating margin increased by 2% points to 14%.

Within Data Products and Services, YouGov BrandIndex revenue grew by 36% to £20m (20% constant currency growth), the newer YouGov Profiles segmentation product increased revenue by 165% (144% in constant currency terms) to £4m, and YouGov Omnibus revenue grew by 33% (23% constant currency growth) to £22m. Data Products and Services operating profit increased by 32% to £13m, although the operating margin was 1% lower at 27% due to planned investment continuing in geographical expansion and in data analytics support.

Our strategy is to focus investment on Data Products and Services while aligning Custom Research with our panel-centric methodology and consequently, improving margins. Progress is encouraging - increasingly, we are selling the in-depth data derived from our digitally interactive panel as a subscription-based service and in custom research through higher margin annual tracker contracts. During this financial year, approximately 31% of the Group's revenue arose from contracts of 12 months duration or longer. This trend enhances visibility over the Group's future revenue and helps to increase cash generation.

This strategy resulted in revenue from Custom Research being static (in constant currency terms) while its adjusted operating profit increased by 30% from £6.9m to £8.9m and its operating margin rose by 2% points from 13% to 15%. This improvement comes from moving our focus away from projects which do not benefit from YouGov's core competitive strengths derived from our ability to generate connected and large-scale data for clients. During the year we also reduced, as planned, certain non-core, less profitable parts of the business (notably in Germany and Middle East).

Regionally, the USA became the highest profit generator in the Group, with a 54% increase in adjusted operating profit to £9.3m, as well as being the largest region in revenue terms accounting for 38% of the Group's total revenue. The UK increased revenue by 9% to £27.1m and raised its operating profit margin to 32%. The newer markets of Asia Pacific and France continued to grow strongly with their businesses centred on Data Products and Services although the costs of expansion in Asia Pacific led to a higher regional operating loss. In our Germany, Nordic and Middle East units, Data Products and Services revenue also grew well, but the scaling back of their less profitable, non-core Custom Research activities led to lower overall growth. As a result, Nordic revenue rose by only 3%, Middle East by 1% and Germany's fell by 7%, all in underlying terms.

Digital technology has created new challenges for marketers. They used to say, "I know half of my advertising works, I just don't know which half". Now they are more likely to say, "A quarter works, but which quarter?" YouGov now has better answers to that question than ever before. Our rich connected data and advanced analytics tools provide new opportunities for us to lead our industry. Our new Data Applications solutions and our performance in the 2017 UK General Election illustrate the application of our data and methodologies to vital challenges in the market. With great efficiency (speed and low cost), we are able to create continuous reliable measures of campaign effectiveness at granular levels which facilitate within-campaign adaptation.