YouGov plc

Well, good morning, everyone, and welcome to YouGov's H1FY24 presentation. I'm Steve Hatch, the CEO here at YouGov, and I'm going to be joined in a second by Alex McIntosh. And just for that, I've got a big thank you to our panelists. As ever, you saw a few examples of them, the people that enable us to really build brilliant products and help us fulfill our mission. If we could go to the agenda slide, please. So across the next hour, in addition to Q&A, I'll be covering financial and operational highlights, giving an update on the priority progress that I set out at the end of the FY23 presentation back in October. I'm then going to give an update on the transformative acquisition that we have in having the great colleagues and the business of CPS, the Consumer Panel Survey Business, joining YouGov at the beginning of January. Alex McIntosh, our CFO, is going to be taking us through a financial review and then I'll summarize and then we'll go straight open into questions. Thanks again for joining us this morning. So our kind of highlights kind of looking across this half year, which has been a pretty busy one for the organization on many levels. So from a financial perspective, these numbers obviously inclusive of the CPS acquisition, we saw 143 million just over in revenue, kind of 9% reported, 2% on an underlying basis. And I'll talk a little bit more to that in a second. Operating profit of just under 30 million at 27.9 at a 19% margin. 23% reported, 4% underlying with the significant kind of investments we've made in this first half of the year to set us up well, and an adjusted EPS of 20.4, so 4% reported there. I'm going to go into more detail into these things throughout the course of this morning, but to see the investments that we've made in our products, and particularly our optimization of our behavioral products and some innovation in our core flagship data products and services, making sure that we're investing appropriately into our panel to meet client demand. And that demand is increasing ever more kind of day after day and using our platform basis to increase our member engagement, the vitality of our community of panelists, the interests that we have in our public platform. And I'll put out a couple of highlights we've had already so far in this half on that and then where we're seeing kind of growth of new advertisers in our self uh tool um from a people perspective one of the big highlights has been the appointment of a new chief commercial officer uh i'll be candid i expected this when i came into it to be an external uh um appointment um however i'm delighted that uh tom fisher has been appointed as our Chief Commercial Officer. Tom is somebody with over 30 years of experience in market research, and latterly, within his time at YouGov, has been the driving force behind our technology sector and our technology sector growth. So very highly skilled individual in our sector, very, very commercially sharp, and has also been one of the key drivers through behind some of our product innovations. So delighted to have Tom enrolled, and we're really seeing the impact that he is making. And then the most transformative moment in you guys history in recent memory, which is the completion of the acquisition of CPS and I'll touch into more detail. And whilst a smaller acquisition, the significant technology advantage that KnowledgeHound has brought to us, both of those occurring at the beginning of the year. So that's our overall summary. Looking at how the year has been flighted and a thought into the second half as well, here are kind of numbers that we saw in 22, 23, and now as we are into, we're into 24, and we had a pretty significant comp year on year, against kind of particularly the increase that we saw in the technology sector, making, as we've always said, our year will be back-weighted and that's, proven to be the case against a 30% increase that we saw on the previous years. Good news around that particular is we've increasingly seen not only resilience, but also increased growth in our technology sector. So that momentum story is continuing quite consistently. We're also in a position now that we have 75% of our booked revenue for the entirety of the year, which, again, gives us that ability to maintain a momentum. And I kind of thought it's fast into the second half. That's somewhat ahead of what we'd normally expect to see at this point in the year. Well, kind of previous years, that would have been somewhere around kind of the high, the high 60s. Last year, that was 68%. And you'd have heard me talk as well at different points, either this presentation kind of back in October about the need that I saw for increased commercial rigour, not just in Tom's appointment, but overall in the organisation. And what we saw when I came into the business was we were seeing a reduction, a slowdown in our revenue in the second half of FY23. Obviously, that's something that I wanted to correct. And we've seen that occur within the first half of the year with increased sales momentum. So our sales number within Q1 of this year was minus 1%. And we've seen that move significantly, a 13 point spread. from Q1 into Q2 with 12% kind of sales growth into Q2. So again, seeing the momentum, some of this is related to some of the economic backdrop, but I think we also gotta be very open and realistic that some of this was directly within our control. So it's great to see that kind of improvements that we're seeing both sales and forward-looking revenue security with the appointments of new people in place, new people in positions and new processes brought into play. And I'll touch on those in a second as well. And just to remind everyone, what are the moats in this business? What are the things that make the overall proposition of YouGov so compelling? Well, there are many, but if we had to boil them down to three, they would be these. The fact that we have a zero party palace relationship. the the long-standing kind of data um capabilities that we have are built on our panelists and how their willingness to openly share in a very transparent way um their information uh with us now of course that's always been valuable data that's becoming increasingly important in the era of zero cookies which we are about to enter but also in the era of kind of ai and ml there's great kind of data capabilities again i'll touch on those as well our brand, our brand recognition, and our brand reputation. How being one of the few public-facing organizations in our sector, we have a very strong B2C as well as a B2B brand, and how that creates a great flywheel for our organization in enabling us to recruit panelists at a substantially lower level and pricing than we see kind of more widely in the market, but also customers as well. And then thirdly, the kind of capabilities on product and technology innovation. Again, back in October, I talked about how I had a good understanding of the products and the data quality kind of coming into the company. What I didn't have as good an understanding is the very strong technology capability in the organization, and particularly the kind of strength in machine learning and data science. And all of these things make the kind of YouGov proposition so incredibly strong and robust. And it's combining these things together that in our third strategic plan, we look to build this virtuous circle of what we call the YouGov platform. So our public platform where anybody with an internet connection anywhere in the world is able to access millions and millions of data points for free to be able to make more informed decisions. So just enjoy engaging into the conversation and the point of debate. That enables us to expand our public data, our member platform, so the community, as they call themselves, of our members that feel that sense of participation in the wider debate in the world. And of course, having great rewards that they get from being members of the YouGov panel. and a higher platform. So increasingly, we're seeing our clients access our services through a kind of digital first environment and new clients coming to us as we scale up on our data services piece, our self-serve tools. And when we were looking at the beginning of the year, kind of back in October, I highlighted five areas of focus for us over FY24, five priorities and five opportunities. Panel quality and then maintaining and increasing that, the bedrock of what the YouGov proposition is. Product innovation that's fueled kind of YouGov success in the past and continuation of that. A new one, a commercial rigor, a doubling down on our US expansion and the opportunity that represents that. and the continuing build of that flywheel that I just described of the YouGov platform. And to update you on the progress that we've made in the past six months, it's been a pretty busy one for the team. So I just say again, huge thanks to them for all of the effort and work that they've shown since I joined. on panel quality um for those aren't following the industry as uh that closely there's certainly been an absolute wake-up call across the sector around panel quality and panelists quality uh and whether there is a and how legitimate kind of palettes and therefore how accurate and real the results of those panelists have been um this is unquestionably a tailwind for us as an organization. And we've taken a definitive market leading position on panel quality and panel integrity. For those of you interested, I encourage you to take a look at the white paper that we issued back in November, which outlines ugub's approach to maintaining panel quality and data integrity and we believe this is this is market leading combined with multiple techniques to ensure that the data that we're sharing and the panelists that we have are represent are real and representative and again we believe that the industry will benefit from adopting many of those approaches as industry standards and we've also looked to increase our key markets and our key demographics And there are some demographics that we genuinely cannot keep up with the client demand that we see. So increasing our areas, particularly in young men or underrepresented groups in the US. Back earlier in the year, we discussed and we predicted that whilst at this point we hadn't seen panel quality and panel integrity become a big focus of client requests, We predicted that it will be, and that's proven to be the case. It is very unusual now for clients wanting to really understand at a deep level, panel integrity and the techniques and the processes that you have in place to provide that. So again, seeing that widely feature in RFP just shows the benefit as well as being able to access and continue to invest in these areas. And of course, that all helps us build great products. On product innovation, we have launched our first innovation on our core brand index product called Sector View. In essence, giving customers much deeper insight into their specific category. We're starting in the US with autos. We'll roll more categories out initially in the US and then other markets as we go throughout the year as well. We launched our first AI-focused client product, AIQOL Explorer, a way of combining together all of the qualitative comments that the businesses get at the end of their surveys, processed through live language models, to enable them to access what are the key insights and the kind of key interests, taking something that was a curious but not particularly kind of that useful aspect because the large number of volume of inputs for information, but what's actually the kind of insight within them. AI Cloud Explorer answers that problem. We're already seeing kind of great traction from clients already. Expansion of our YouGov behavioral, including YouGov Safe going out into nine more markets. And we have an app store approval awaiting on our mobile app development there. Again, kind of taken those into more user friendly, more frictionless ways of people sharing their data. And in addition, the acquisition of KnowledgeHound has enabled us to do two things at speed. One is introduce the AI technique of vector search into our crunch database. And Vector Search is a particular AI technique that's suitable for large-scale databases to build and create very accessible rapid associations and insights. And in addition, we're using the kind of great capabilities and talent and the knowledge of our team to refresh the overall user interface and user experience for our core data products. Something that I think was a little overdue for us and something that I'm really glad we're now focusing on now. On commercial rigor, I've already mentioned Tom's appointment. It's kind of great to see that. We've also realigned ourselves into more joined up teams that are regionally focused. That's one of the reasons why we've been able to see that step change in momentum of the minus one to the plus 12 quarter on quarter in our sales. We've introduced new technologies to sharpen our focus and help us understand our win-loss rates in much more granular detail and follow-up. We've signed our largest ever deal as YouGov with a multinational media agency. Using YouGov's data is underpinning for their operating model and enabling them to develop new products alongside ours. And we're beginning to see the first kind of green shoots of the cross-sell with our CPS colleagues. And it perhaps wasn't the largest kind of sale that we ever had, but to have a kind of first omnibus survey from a previous kind of CPS client, it was a milestone for the company. And we're continuing to see large scale interest on YouGov's Insight products coming from CPS clients. And on the US, I'm very pleased to see that technology continues to be a kind of growth sector for us. I think that has countered somewhat to what we're seeing in the rest of the rest of the industry. The elections are beginning to build momentum for us. perhaps unsurprisingly, but it is true, we're now at a position where our YouGov politics team in the US have had, to date, about the totality of their revenues that they would have seen in the previous year. So we're really beginning to see that ramp as we run up into November. And to do that, we're making sure that we're increasing our panel capability uh to be ready for this kind of us uh us expansion in fact our kind of active um panel uh capability in the us is up 15 year on year so really really strengthening up um into this core area where we know our kind of growth where we want our growth momentum to continue and in fact even though it's our largest geography already uh we expect a single country i should say we expect that The U.S., we predict that the U.S. will also be our largest growth area when we get to the end of FY20. And then finally, on platform, we see significant upticks on the engagement in our in our public platforms just last couple of weeks in the UK. Whenever we see kind of you got mentioned in the wider kind of news media, which saw one hundred and forty five percent spike in visits to our public platform. which also included 40,000 people reading the very technically deep article on MRP, which is the machine learning technique. So the appetite clearly out there for really understanding well is very, very high. And of course, it has the advantage of us fulfilling our public mission enabling us to acquire panelists through an organic source, and it raises our public profile. They bring more clients to become aware of YouGov, something particularly in the US we know is a great advantage to us. We've seen increases in our member engagement on our member platform, and their satisfaction levels is just shy of the 87% goal that we've set ourselves for the year already. So good to see that be maintained. And on our self-serve tool, we've 150 new advertisers coming to the tool. Still early days here, still kind of relatively kind of small spell compared to the rest of the movement, but we are seeing a double digit kind of increase in our revenues there. But some more work to do as we continue on self-serve journey. But within that, and I've touched it only just once in this slide already, the most significant kind of moment for us in quite some time, which is the successful completion and the joining of our near 1,000 colleagues in CPS into the YouGov family. an update on where we are on that position. You've clearly seen kind of, you know, the kind of financial outputs of that successful acquisition already, but there are much, much more of this to come. For those that kind of snapshot of what CPS is, and just to pull back for a second, you know, the strategic rationale, if we were to, there are many, many reasons why this acquisition fitted so well with YouGov strategy, but if we're boiling it down into one thing, It's the power of combining YouGov's attitudinal data, how people think and feel with the incredible deep capabilities that CPS has in people's behavioral capability, what people are buying and bringing these together into a single unit. This is what the market is demanding and increasingly expecting. People understand the power of data. but they want that data to be more joined up than ever before in order to be actionable. So understanding not only what people are thinking and feeling, but what they're buying and why it's an incredible, incredible, powerful position. And in of itself, the CPS business is quite an extraordinary kind of organization with a level of scale I've found increasingly as well, professionalism that isn't matched by anyone. So very glad to kind of have that team at the beginning of that journey. Also very pleased to say that the integration is progressing very well. The things that we thought were true turned out to be very, very much the case. The quality of the panel, the kind of strength of the team, and perhaps kind of one of the pieces that is often kind of understated in either integrations, whether that's through carve outs or through acquisitions is the importance of understanding the culture of the organizations and making sure that we have a kind of mutual respect as we develop this kind of joint process together. And there's no doubt that that's been a very kind of reassuring and great process, as well as bringing some new insights. For example, on the product client spectrum, YouGov is a very product-centric organization. CPS historically has been a very client-centric organization, how they drive their innovation. So bringing both those compatible skills together, I think is no doubt going to make improvements for both parts of the organization. So lots of work done up until up until February. More work to do. But by the end of the year, we expect to be in a very, very strong place. Also working directly with Alex Partners. the consultants to help us develop jointly our new target operating model and bring those kind of synergies across the organizations as well as the opportunities for us to build brand new innovative products to help disrupt the market in a way that we know YouGov does very, very well. And to get some sense of timeline, YouGov CPS joined. great moment in kind of Nuremberg earlier in the year. We've concluded that kind of getting to know each other phase, collaborating on kind of quick wins and developing our kind of early commercial strategy. We'll be launching in the middle of this calendar year and across kind of into kind of Q1 and Q2 of our year. the future business in its entirety, and then we really get to build new great things together. So overall, I'm just very, very pleased to report that every single expectation we had has been met and seated on this, and that is progressing very well to date. Now, what this does mean is it gives us that moment to revise our strategic growth plan. Our organic, original strategic target, our SP3, again, that's our third strategic plan, was a target in the midterm of 500 million in revenue and to increase our operating profit margin to 25%. Now we have full ownership and understanding of the CPS business, pleased to revise, to raise that target to maintaining that 25% kind of ambitious and kind of strong 25% operating profit margin goal, but increasing our midterm three to five year revenue goal by an additional 150 million from 500 million to 650. So thank you. It's been a very busy year, and the first half of the company, we set ourselves up very strongly for the remaining half of the year. Now over to Alex for the full detail on the financial review. Thanks, Alex.

Thank you, Steve. Good morning, everybody. We have flagged this for a few reporting cycles now, but this financial year, we are changing our divisional reporting structure to reflect how we now organize the group internally. Clearly, we also now have a significant addition to the group in CPS, which Steve has just updated on. So we'll now be looking at the group within three segments. We've got data products, research, and CPS. Just a point on CPS. Yeah, we are very much cognizant. This is a high quality assets. This is a carve out that's coming out from a much larger group. And so the first year will be really careful and careful work around making sure we've we've adequately separated the group. We will be under TSA transfer service agreements with JFK for the provision of some services. for up to 12 months. So we will be running it as a standalone division, certainly for the next 12 months, but as Steve highlighted, you'll start to see some of the synergy benefits coming through fairly quickly because of the work that Alex Partners is doing. Just as a reminder, data products, this includes the majority of the products we had previously in the definition of this, it's brand index, it's our behavioral products in SAFe, it's profiles. In research, this is what was the old data services and custom segments brought together. There's a few things that have moved between what were incubators before. It's not 1 plus 1, but it's nearly there. Really, this is to bring together those two teams, which had been run as very separate entities, separate divisions previously, now coming together to really help service our clients in a more comprehensive way. As Steve mentioned, there's been some tough macro, but also some of the things within our control in terms of improving our performance going into the second half. It has been a challenging macro environment. We're very pleased to be reporting growth on an underlying basis. A lot of that is driven by some good work that the custom teams are doing, particularly in the UK. That's the positives. One of the things that has been difficult, and Steve has already gone through that explanation, quite a difficult comparative period in the prior year to do with technology clients, spending quite a lot in our November and December 2022, which is our half one 2023. We have seen a slowdown in growth in data products in part driven by just a lack of focus and commercial rigor that we've been mentioning. We used to have dedicated sales teams who would be driving data product sales. It's now in the portfolio of sales teams. So there has been a little bit of not as core focus as we've had in the past. We've made some remedial actions around that. But I think it is fair to say this is one area, particularly new clients coming on, we are seeing clients take longer to make decisions. We are seeing some non-renewals in December where clients are saying, this wasn't nice to have. That has been a little bit of a shift. We haven't seen that kind of behaviour before in the past. I think where we're very pleased is our core clients that have been long-term subscribers continue to have this data very embedded into their workflow. And we have seen strong renewals from tenured clients. Pleased to see renewals are picking up into the new year. We are seeing budgets improving slightly with our clients. It's still early for the majority of our clients to have a 1st of January year-end. A huge focus for us will be increasing our sales into the second half, driven by the launch of SectorView, which is a version of Brand Index that allows clients to buy a package of Brand Index, and we seek to use that as a way of also getting into larger subscriptions. The research division, and just to remind you, this is in part data services where it's fast, tactical work, and custom research, which is long-term strategic projects. Really what we're seeing is the mix has continued to shift in the types of projects clients are doing. We're seeing an increasing amount of opportunity to pitch for large custom trackers. where clients are looking for high quality data, understanding where that provenance comes from. Very important for them, particularly as the industry is having quality issues around panel. But what we aren't seeing is a return to that fast turnaround work. That is an area where clients seem to be not spending money on discretionary projects. So the growth here is primarily driven by what is traditionally our custom business. I'm very pleased to see the UK is driving a lot of that growth. Testament to fantastic performance from the team here in the UK. The US is stable, but that is beginning to pick up as we come into the tail end of Q2. And that is in part because of the different comparisons with the technology clients. and cps is now in our numbers yeah we closed the deal on the 9th of january so this is 20 odd days of revenue that we have in a group so obviously no trends to draw from yet um but we're very pleased to have closed closed the deal early in the year and really been able to kick kick off the calendar year with great momentum and a lot of um fantastic collaboration that's already happening now that we own the asset You'll see in our sector splits, we've seen an increase in technology spend. We had pointed this out in October when we came out with our four-year results. We have seen an increased opportunity across all of our big tech clients, and we're pleased to see that spend is continuing. We've also seen some progress in our media agencies, our agency group. Just as a reminder, the revenue that we generate from agencies is not directly linked to marketing activities. This is a lot of subscriptions, which are long-term contracts. And whether their clients are slowing spend or increasing spend doesn't affect their decision to keep using our products. But we have seen some of our agencies actually expand, going into new countries. And as Steve mentioned, we have a very large holding company that has signed a substantial contract with us, which includes a combination of data products and custom trackers. We've had a couple of lowlights in our sectors. Esports and gaming are two sectors where we've seen our clients go through reorganization, a little bit like what we had seen in the year before with technology clients, but through COVID, they just extended themselves a little bit too much. So there's a bit of softness in those two sectors, but we continue to be very well diversified across a number of sectors. Just to preempt some questions, given the majority of our polling work will probably happen at the second half of the calendar year, we're not seeing an uptick in our polling revenue yet. In these numbers, and it's unlikely it will be a significant contributor in the second half, but it's definitely gonna be useful in building our brand and building momentum going into FY25. We're pleased to report an increase in profit margin due to bringing in the CPS business. Important to note, the CPS division is a very high quality asset, very cash generative and operates at a very high margin. That is masking some underlying margin decrease in our core business. in part due to a little bit of gross margin pressure. We've had some pricing pressure around data products. We've also had to use a little bit more external sample in a couple of countries where we're running big trackers for clients. Ordinarily, that would have been absorbed easily within the revenue growth, but this sort of the slowing down of our data products businesses meant we're not able to absorb as much of that as we would have liked. We're also capitalizing less. We have increased the amount of development spend we are incurring. We are capitalizing less as a proportion of the overall technology spend. Obviously, that has an impact on OpEx. That's just a shift from that, from balance sheet to the P&L. And we have increased headcount in the period, in part to reflect increasing investment in products. and making sure that we're building for sustainable growth into the next financial years. And so with a sort of slowdown in revenue growth in the first half, that's obviously impacted the overall margins for the first half. But obviously we expect to see that improving in the second half of the new building. Good cash generation for the period. And we end the period with 53.4 million pounds of cash in the bank compared to 41.4 million last year. We have spent a considerable amount of money on deal fees to get the CPS acquisition completed. And so when we're looking at our cash conversion, we're adding that back into normalizing it. There's been a small decrease in overall cash conversion from 87% to 81%. In part, that's to do with lower revenue mix coming from data products growth. As a reminder, if you're not familiar, data products, we typically invoice upfront and so it has a very good cash generation profile. We'll obviously seek to increase that cash conversion ratio as we focus more on data products in the second half. For the half, we have kept CapEx broadly flat, but you've seen there's a shift in the amount of money we're spending on panel augmentation. That's decreased down to 3.4M compared to 4.8M last year, but we are spending more on technology. Now, in part, some of that technology spent is helping reduce our panel acquisition costs, in part making the platform much easier for people to join organically, really driving more around retention, We're seeing some of the benefits of technology investment reducing our requirement to spend as much money on external panel building. As part of the CPS acquisition, we took out a loan with an RCF and the details of this, the group has a 280 million euro facility that is signed. We have currently drawn down 216 million pounds. So our net debt amount is 162.7. We are going to try to deliver our operating during that's our arguing ratio by half a turn every year we're currently at 1.6 times even dot and we've given you a profile of what our um repayments are underneath um but clearly we are we are fairly comfortable in in servicing this debt that is new for you guys we haven't had this level before and we are comfortably under our um our covenants for interest uh cover and um gearing And just to recap, it has been a very busy year. We've had a slow start, as Steve points out, but the order book is looking very robust. I want to make this point again. Our growth rate in Q2 in sales was 12%, having been flat or slight decline in Q1. That's coming from a number of areas, but it is continuing to be. Our large tech clients that are meeting the floor on that, and it is, I make the point, we're getting invited to pitch for ever increasingly larger custom research projects, which have a tracking component, which for us have a great margin profile. So I feel really confident going into the second half of the year, still a lot to do. We were very busy with the CPS acquisition. but really pleased to report that's also trading in line with expectation. Huge thank you to the CPS team. Very difficult to be going through, uncertainty of a carve out, running a sales process, but still delivering on the business and a huge testament to their skills and be able to handle quite a lot of ambiguity throughout that sale process. But most importantly, continue to support clients and support the teams. and so as we expected we will see a back-end weighted uh full year where we see um growth in our revenue coming through in the second half as we um as we consolidate on a lot of momentum that has been building over the last three months in terms of the balance sheet and we will continue to be prudent in where we invest and we are seeking to um um improve margins and we would like to keep strong cash balances that's very important and we want to make sure that we still have optionality and looking for opportunities that are in the market particularly with acquisitions that could continue to drive our strategic objectives and also we would be looking to pay down debt in a very rapid fashion as well. and at this moment in time we will be keeping our capex broadly in line with in fy24 compared to fy23 but make that point we've had a little bit of a shift spending more on technology and we've made this point in the past the more that we invest in technology the more that that helps drive our future revenue growth and so we will continue to be highly cash generative and i make this point again i'm looking to deliver our hearing ratio by half a turn each year

So thank you for sticking with us so far, looking forward to answering your questions in a second, but just to summarize where we are, there's been significant kind of progress on our five pillar operational priorities in the first half of the year. And we've had, all the success we could have expected to have from the CPS integration. And that's trading, as Alex said, very well, truly resilient, brilliant team there. And it's great to have them as part of Vue.gov. Of course, we also have the knowledge acquisition, which has brought technology capability and talent capability into the organization, enabling us to advance our AI capabilities and improve our overall UX. Alex just mentioned, but we've got a very strong forward-looking revenue commitments ahead of where we were this year by, at this point last year, by some five to six points. And that good to see that step change that's occurring, but we're being laser focused. continuing to really kind of push that commercial rigour and very pleased to announce our revised target now as a combined entity increasing our mid-range revenue objective from half a billion to the 650 million over the next three to five years lots of work to do but lots of work done and to Just to conclude, a reminder of what really makes this company so impressive and so special. It is a great product that we build based on the brilliance of the panelists that we have, an aspect of our organization that's becoming increasingly valued to clients. and enabling us to really drive our platform, our public platform within the election cycle that's rapidly taking hold across the world, our member platform enabling them to have greater engagement and understanding of the work that they're providing, and our client platform enabling them to access our services more digitally. And of course, from the heart of this, the brilliant YouGovers that are here. I'd just like to end by saying an enormous thank you to them for all of their hard work in this first half of the year, my first half in the company. And yeah, we've got a lot of work to do over the next six months as well. But yeah, couldn't want to be doing it with a better team than we have now. So thank you. And I think, well, we'll go over to Hannah and your questions. Thanks, Hannah.

Thanks. Your first question comes from Steve at Numis. On 2Q lifelike revenue, is 12% a realistic run rate going into the second half? Or is there any reason for this to change in the third and fourth quarter?

You know, there's no reason for it to change. Just the quirks of when companies have their year ends. We do typically have a strong revenue Q4 as we sort of push through and try to get as much projects through. So I think there's no reason to see a substantial change in client behavior. Obviously, we may have an event that causes clients to pause. But I think the most important part is this is a new budget year for the majority of our clients. And so the trends that we're seeing early in the year Certainly comfortable seeing them extending for the next four or five months.

And linked to that, the margin in core you got for the first half, what are the moving parts between the first and the second half?

Well, some of that is just recognizing we increased headcount in the first half. And obviously, as we generate more revenue in the second half, we've got people who are now becoming more effective as they're getting embedded into the business. We're also looking to increase the amount of revenue we're generating from data products. I want to make the point it is harder the further you go into the financial year to generate significant revenues from that because of the revenue recognition profile. But there are a number of things that we have that are very high margin, particularly the more that we can drive in our behavioral data sales, which is a very high margin product. Sector view will have very high margins attached to it as well because it's a versioning of existing data that we have. part of the margin increase will be driven by just a change in mix. And I will also make the point, the increasing amount of tracking work that we're going for as it replaces a lot of the data services as a percentage of revenue generating and research also helps with that margin. We do generate significant amounts of margin compared to ad hoc project work when we're doing tracking studies for clients.

And linked to that, Steve asks, what is the customized tracker as a percentage of revenue and research for the first half?

For the first half, it is about 50%.

And then on data products margin, you talk about gross margin pressure. Why is that happening? And is that temporary or a new one?

I think it is temporary. We have seen a bit of pricing pressure and that is in part, we have one competitor in our profiles product and one competitor to Brandindex who both raised significant amounts of money in 2021, 2022 and what we're seeing is they're reducing their prices pretty dramatically as they're trying to trade through those valuations and that of course is impacting us. We are seeing clients looking at getting better at comparing prices between the two. What we do see if we lose out to those other competitors is actually clients do come back later on when they understand the difference in quality. It's often a very difficult thing for clients to understand when you're assessing a new product is what is the actual underlying quality when you start using it in earnest? Are you getting the insights that you would be expecting? And we do have strong confidence that our products continue to be the highest quality in the market.

Thanks. Moving on to, there's a question from Paul Richards. Will you be able to link potentially on an anonymous basis data from YouGov panelists and data from CPS panelists?

Yeah, thank you. Thanks for the question, Paul. Yeah, I mean, ultimately, our goal is to have one YouGov panel and for us to be able to do exactly that. And we also, one of the kind of key aspects I found kind of coming into the company, and that's true with this process as well, is the transparency that we have with our panelists in and around their data. You know, YouGov sits at this a cultural intersection of people wanting more and more control over their data but at the same time wanting more value from their data as well so we sit right at the intersection of those two points so this is how how do we sorry it's about migrating on to a kind of single you go panel in its totality uh for us to do exactly that so to be able to combine together those different um those different data sources so we very much see the potential of having the kind of single perspective that enables us to take existing set of CPS data, match that against the historic kind of data that we've got against YouGov to be able to combine both the quantitative data, sorry, quantitative attitudinal data sets that we have together with the sales data sets going forward. So our goal is to always do that with our panelists. as well. So you hit exactly the heart of the benefit that we see of the acquisition and bringing single datasets together to make sure clients have even better information than they've ever had.

Thanks, Steve. Your next question comes from Andrew Ripper-Libram. Can you explain how the Q1 of minus one and Q2 of plus 12% relates to the organic growth in the first half?

In one hand, we're talking about sales. And so the increase in sales that we've had in Q2, we won't have seen the benefit of the revenue coming through from that yet. That's why we're making the point growth will be back in weighted. It's the nature of the products that we're selling, products and services that are selling. So if we've got an increased commitment from our tech clients, for example, on running more trackers and those sales being recognized in January and February, some revenue will be generated from those sales in month as we get those products up and running. But the majority will come in the months coming after. It depends if we're doing a quarterly tracker or an annual tracker in terms of what that profile of revenue recognition looks like. And so there is a bit of a lagging effect of increasing sales means we will be generating the revenue in the coming months rather than being able to drive a lot in months. And I make that point because that's where we're seeing this distinction between the mix in our research department is going more to strategic projects which are longer in nature. We aren't seeing that very fast turnaround work where we would generate sales and then be able to generate the revenue associated with those sales rapidly. That business, what was the old data services business, there's just not as much of that work coming in as we've had in previous years. So this is, and coming back to Steve's point about the flywheel, it's by building this momentum that's very important for us. It's giving us this better visibility on our forward revenues and shifting into a model where we can be much more predictable in terms of what projects are coming in and how we win them.

Thanks. Another question from Andrew on CPS. How should we interpret the CPS's 20 day contribution of 14 million of sales in the first half? And what does that imply for an annualized run rate and what's driven the better than expected sales?

Yeah, so I'll go with better than expected trading performance, because that's a step back. CPS is still on a 1st of January, 31st of December year end. And so we're in the process of shifting that. Where they've seen better trading performance is once we were announced as the preferred bidder, that gave their clients some comfort in what was happening with the asset. They had seen clients having a little bit of a, let's wait and see what happens as part of the sales of the divestiture process. So just having clarity on where the asset was going meant clients were then committing to CPS. And in fact, there was a little bit of pent up demand because they've been holding back a bit. They've seen clients come and be more interested in other things that might be coming down the pipe at CPS now that they're owned by a strategic, which will be giving more investment and more to how they improve services. obviously different to private equity ownership. And CPS has a different revenue recognition profile than we do. So the majority of its businesses is providing reporting to clients. It provides those reports on a monthly, quarterly or annual basis. So the cost basis, they're collecting data continuously, obviously employ all the staff continuously, but they have seasonality in the revenue profile. They have a peak in January and they have a peak in July, and that's because you're getting a month reporting, you get the quarterly reporting, and you're getting half your reporting to clients happening within that month. uh we recognize that and um race to close the deal as early as we could do in january to capture as much of that margin as as possible um but what that means is the the revenue expectations for february march are definitely going to be much lower than that so um it's not something you can then just straight line out in the way that we could do with our data products business and say this is what the run rate looks like for the rest of the year When we get to the half here, that growth rate, it will be in the mid to high single digits in terms of expected growth rate. And for the most part, that's because we're still running CPS as it was, making sure that we're continuing to support the teams, making sure that we're handling the integration as responsibly as possible. It's a very high quality asset and do not want to disrupt it. And so as we point out, it's worked with target operating models in order to look at what does this new combined group look like. But for the most part, in the short term, the revenue profile will be the same as it has been historically.

Thanks, Alex. Next question comes from Jess at Pure Hunt. How meaningful can political revenue be in FY25 and any insight from previous elections?

Yeah, thanks for the question, Jess. Just a bit of context here, like typically we see our public revenues that includes both government work and political work, roughly kind of 5% of our overall business. Alex shared earlier that's increased by a point or two. We should expect to probably see it kind of maintain around those levels in FY24. We do believe there's room for a bit more optimism into FY25 in this. Not least of all, because we've seen some of the applications, technology applications that we've been developing and have been developing our expertise on, such as MRP, gain more and more traction into that world. So we're not putting a number on this one into FY25. yet but clearly the kind of august through to november um opportunity that the us represents is a pretty big one for us i do just want to stress so when we talk about revenue uh with specifically how it relates to politics rather than government um we're principally talking about the us um there is some opportunity there in the uk but it's it's which uh um and from a politics perspective, but predominantly this is this is U.S. based strong capabilities in the team. We're also gearing up for if we've already started our election coverage. So you will see many noted new givers, not least for our chief scientist being involved in multiple kind of press interviews and all these things going to help the flywheel of not only helping us increase our political revenue, but grow our brand. And as I mentioned earlier, that's a great source of organic growth on our panelists, but it's also a great source of our commercial revenue. The reason being is that spontaneous brand recall is one of the key decision-making factors for organizations and marketeers when selecting who to send out an RFP to. In the UK, we're top three in spontaneous recall. In the US, we're top three in prompted recall, but not spontaneous. Now, the reason that's valuable is that you effectively become default for RFP requests with the higher level of kind of visibility and awareness that you have. So there's a combination both of the politics, politics, revenue, Jess, and also the additional uplift we get from increased brand awareness and reputational awareness for us. But I know this one, we do think there's more to have in the academic sector here for us as well over time. We are the highest ranked polling company and a very prestigious, five out of eight rankings just recently. In fact, I think we're the only one in the top five outside of the university. So very, very kind of clear positioning for us as being the definitive and from certainly from the academic perspective, the most accurate pollster that's there.

Thanks. Your next question comes from Kiran at Berenberg. In terms of operating margin in research, is any of the uplift a function of clients going to digital sales journey or is it too early to see that benefit?

Yeah, I'd say it's too early on that one. We're still building this as a way. I think the industry is learning how to do this. We're learning how to do this at an accelerated rate. But for sure, kind of longer term, we see the potential of a digitally driven sales journey as being one that, of course, will be margin enhancing to us. Of course, what we do also see is the great role of our scaled operations that we see in our CENIC centers around the world. Again, that helps us maintain or protect our kind of margin in our omnibus data services provision. Yeah. Thanks, Kieran. That's the journey. Not quite there yet, but certainly that's the destination we're headed for.

Next question from Bridie Barrett at CFO. You have signaled pricing pressure in data products. What share of data products are renegotiated each year and do you expect to continue to see pricing pressure?

That's a good question, Brad. He never looked at that from that perspective. I guess one way to look at it is what is the renewal rate? Typically, we have about 15% to 20% of our clients churn out updated products. Quite often, it's clients that have used it only for one year and haven't quite been able to embed it into their workflow. And so that's where I make the distinction when you have tenured customers, they do stick around for a very long time. So it's probably in the 15 to 20 where you're having a real sort of conversation around, do they want to take it? And within that, you're going to get people who go somewhere else. You're going to have people who just don't do anything in that space. So it's going to be... I would estimate probably 10 to 15% where you're having a conversation at the renewal stage where external pricing is coming to bear as part of that conversation. I would say it impacts us more on new clients, new subscriptions. That's where we're seeing some very aggressive pricing coming through from competitors. And that's where they're using that pricing to try to differentiate themselves. And I do make that distinction. Once you're already using the product and you're getting a lot of value out of it, the price is not something that's going to necessarily move you away. Being already a favorite with what the data looks like, how that works for you is just as important to clients.

Thanks. A follow-up question from Jess on Q3 trading. How has sales been in Q3 so far? Has it been similar to Q2 or has it underrated?

We haven't finished the quarter, so as much as I can say, I think we saw definitely a continuation of that into February, a very unusual Q1. So 1st of August to end of October is our Q1. So the 1st of February was the beginning of our Q3. We did have a really strong push in January. January was a record sales month for us. And we saw, compared to February last year, we saw similar levels of double-digit growth in the month. Now, clearly, we've still got the rest of the quarter to finish. But we have seen a continuation of that.

Thanks. We've got a couple of questions on CPS and the rollout into new geographies from different people. So it's a combination of UGO. And the combination of UGO and CPS is hugely powerful. How would you go to replicate this offering in geographies where CPS doesn't operate? and how far you've got with the planned rollout of CPS into the US?

Yeah, I'll take the US question last, but in terms of our planned rollout into non-existing geographies for us, definitely see a kind of role for Bill, definitely see a role for JVs, and definitely see a role for acquisition. In fact, we're looking at kind of all of these areas. And again, just to go back to the original strategic rationale, by far the biggest challenge in investing into new territories is panel. Now that's one thing we of course already have. The second thing clients want to see is historic data. So you actually kind of have to prove yourself in a way for a year to then grow. So we're looking at initially, how do we bulk out in the areas that we're already double operating in? So YouGov plus kind of CPS, within EMEA specifically, then the areas that exist within EMEA, and then it's the US. Now we do believe that the US offers a big opportunity for us. However, we also believe that in order to really make the most of that, we need a differentiated product. So this is about not just saying we've got a Me Too version relative to others, but a product that is the combination of the attitudinal data and the purchase data for us to take to the US. Our strategy, the way we've collaborated previously where that's in growing kind of panel or indeed specific products is to have effectively kind of anchor client, a sponsor client that understands the value of the proposition, gets quite excited about it, wants to replicate that into other markets. So our plan is, yeah, we'll look to kind of partner to, we'll strengthen our existing geographies, we'll expand out into other EMEA geographies or a combination of potential acquisitions in kind of smaller markets, but continuing some of the JVs that are there as well. And then for US developing a whole new side proposition and with our goal of finding the right client that's gonna build up with us.

Thanks. Question from Dan at HSBC. Can you update on the rollout of the SERP tool, any incremental revenue, user growth, anything?

Yeah, sure. So as I mentioned that we saw 150 net new advertisers, that's net new to YouGov, by the way, not net new to the self-serve part of YouGov. So it's definitely working to attract in, because we are seeing growth rates that are kind of, you know, kind of understandably kind of ahead of, in double digits and kind of ahead of what we're seeing elsewhere. But again, I would stress it's still relatively small in the business. We haven't had that kind of hockey stick moment just there.

uh but working through that and see we've seen kind of like good momentum in january and into february as well thank you uh we're slightly over so last question uh from kieran uh bernberg in terms of the updated targets can you clarify that the increase in revenue targets purely from the contribution of cps um and can you talk us to the drivers of increasing the margin to 25

Yeah, well, I'll take the first part of that. Maybe Alex, you want to finish on the second? So the first part of that is yes. So we're not planning any additional kind of acquisition kind of interest. If we do have a significant acquisition, it's not our current plan. But again, if an extraordinary value unicorn like CPS arrives, we wouldn't rule it out. You know, our ambitions are pretty big. However, I can confirm that that additional is existing YouGov organic goal, 500 million, plus the CPS goal, 150, gives us our new revised target of 650 revenue.

And just a couple points on the margin, we are anticipating the lift the cps margin so that's the driver that will be. Increasing the depth of data, they can go to in countries where they currently are operating we do that, using the existing you go panel assets. And so that broadens out the potential universe of clients they can sell to, but also being able to support geographic rollout as well. So there's a piece there of using existing YouGov assets much more effectively as part of the CPS rollout. Now, in terms of the YouGov core business, it's going to be a combination of increasingly driving sales through those digital sales channels, but also driving sales through to data products, whether they be data slices, behavioral data where we have really large drops in terms of operating leverage. Going for increasing amount of custom projects where we're doing that in multi countries, there's a multiplier effect that we get in those types of projects, which we can benefit from using our panel and using our technology. And then the third part of that, which links to technology, is looking at ways of being more efficient. So increased amounts of automation, being able to use technology to do different types of things in the data. So Steve talked about vector search. That's going to be a very powerful analytics tool for our clients to use our products and our large custom trackers much more intensively and we'll be able to drive incremental revenues off of that. There will be some opportunity for AI. We aren't sort of baking that in too heavily. We're definitely at the early stages of assessing what do we use AI for and where does that sit within our technology stack. But there's some clear opportunities for us to increase some efficiencies there using AI enabled products and services to make it easier for panelists to interact with us, to make it easier for clients to get to their data, to make it easier for ourselves to process increasingly large amounts of information as well.

Great. Well, thank you, Hannah, for that. And thank you all of us for joining us this morning and your continued interest in YouGov. As I say, it's been, in many ways, kind of transformative, half and a very busy half, but it's only out of half. So we know we've got lots of work to do. And again, thank you to all of the YouGovers out there. And again, thanks for interesting the time this morning. Look forward to continuing updating in six months' time. Thank you all. Bye-bye.