Hi, all. Thank you for joining us this morning. We're just waiting for a few more folks to join us in the waiting room. Okay. Great. Well, let's settle down the numbers. I mean, that's kind of 9:32, so we'll start.
Yes, good morning, everyone, and thank you for joining us this morning for our FY '24 Trading Update for YouGov. I'm Steve Hatch, the CEO, and I'm joined today by Alex, our CFO; and Hannah, our Director of Investor Relations.
Happy to give you updates on how we're ending the year and how we're thinking about going into FY '25. And that's at a time when, in many ways, the company is in very robust health. Our most important asset, our panel, is the strongest that it's ever been, and I'll share a little bit more detail on that a little bit later on.
Our brand is in the same shape as well. That's been incredibly strengthened over the last couple of months, kind of particularly in the U.K. And it's not often I get to kind of directly publicly thank our teams out there, but certainly, to the teams that worked in the U.K. election, I don't know how many people who are on the call are kind of U.K.-based, but it was incredible performance, dominated in terms of the coverage and, indeed, the accuracy. So our final MRP, being more accurate than the exit poll, it was a great demonstration of the power and the potential and capabilities in the company.
Now I also know it's quite unusual for us to do a webinar at the time of the trading update at the end of the year before we get together again in October for our kind of final numbers. However, we thought it was the right thing to do, particularly having had to issue our revised guidance a couple of months ago. So this morning, we're going to take you through a few short slides, and then we'll go into Q&A.
I'm going to talk about how we're ending the year, and then Alex is going to talk about unpacking kind of Q4, the kind of quarter, the very deeply frustrating quarter, that's to be very candid, that led to our requirement to release the revised guidance on our profitability and our revenue.
Alexander's going to talk about how we're getting in the right shape for kind of innovation and for growth in FY '25, and then I'll just share some of the summary in a bit more detail on those points. So yes, and thank you, everyone, for finding the time this morning.
Okay. Let's get started. Disclaimer, I'm sure you're going to speed read that. So I guess we are jumping out straight into it. You -- those that have seen our kind of initial kind of RNS would have seen that, actually, our results are slightly ahead of our revised guidance issued in June. That was particularly driven by a kind of strong performance by the kind of YouGov team across kind of all elements, actually including Data Products in the back part of Q4.
So we slightly revised up that number for our total revenue at GBP 327 million to the GBP 330 million range. That's dropping through at an operating profit. So again, slightly kind of increased range of GBP 43 million to GBP 46 million.
And we've heard kind of quite clearly that there were just some questions on what our leverage ratio was looking like. So just to be very clear about that, our leverage ratio is 1.8x to 2x. I should say that includes kind of 12 months of CPS, which is kind of in line with the terms in our loan agreement.
And just to unpack this somewhat. What we saw is our business performing in different ways. On our Research division, and that is a combination of 2 parts of the company. Our Custom Research, which is the work we do for large-scale clients at an enterprise level, which is bespoke to them. So they're often clients that come in through our Data Products. They see the value and the capabilities in the company and the unique data sets that we have. And then they ask us to take on new and unique tasks that they are about -- that aren't syndicated but designed specifically for them.
It also includes our Omnibus, so our kind of fast turnaround survey work. And we definitely saw a spectrum of performance indeed. We saw a strong demand for that Customer Research, particularly amongst existing clients. That's Research projects from trackers. So they have a longevity to them, even if they're selling different to the subscriptions that we see within our Data Products.
So it's very highly valuable for us and definitely kind of indication of the strength -- the underlying strength that sits within the business. And we saw good growth within that. That was part offset by the expected decline in our Omnibus and Short Survey work, which is a fast-turnaround work. Historically, that's often been commissioned by PR agencies and other types of companies who want to get kind of a very quick read, sometimes in order to create a press coverage.
Now with the decline, in a way, of that as an effective marketing technique, that's subsequently also seen a decline in that. And once we saw a slowing in that rate of decline, it still is a part of the business that we believe is best served by us maintaining and improving our kind of margin in that area through more automation and digital -- digitally led sales over the long term and also using our centers of excellence around the world.
When we look at CPS, the kind of landmark acquisition of FY '24, very pleased to see that the integration process is progressing very well. It continues to -- the team there continues to impress. They really are the kind of high-quality assets and the kind of high-quality data set that we thought. And it's also really encouraging to see a high number now of cross-sells, particularly within our German market and our Italian markets, where we have both CPS and YouGov kind of operating in strength.
You would have seen also in our announcement that we -- and Alex will unpack the specifics on that in the next slide, that we did see a potential shortfall. But that was purely down to revenue recognition, depending on when the work is actually realized and delivered to clients. But again, I'll leave that to Alex to unpack in the next slide as well.
And then finally, in our Data Products, in many ways, a kind of core growth engine, historically, for the company, we've seen revenues in line with what we've seen over the prior year. And again, just to unpack that a little bit, our subscription rates have remained consistently high at 80%, where customers truly value the data that we're providing.
And the team has also been successful in acquiring new subscriptions across that period. Meaning that a number of subscriptions and our average pricing across those subscriptions has remained consistent with this year across [ the business ]. Obviously, something we're very focused in on FY '25 and having a reacceleration in those Data Products. And whilst very early days, we did see good Data Products growth in July as we go into FY '25.
And so whilst those results are ahead of the expectations or ahead of the guidance, they're certainly below our [ expectations ] and certainly below the potential that we see and continue to see within YouGov for our long-term growth story and delivery of SP3. So Hannah and Alex is going to unpack the quarter of Q4 to give kind of clarity about what happened there, but also the kind of 2 steps that we're making to make sure that we're in the right shape and kind of fit for growth and innovation in FY '25.
Thank you, Steve. I just want to remind everybody that for FY '24, we had assumed that we would have a back-end-weighted year. And if you saw this at our half year, we were pointing to confidence in the second half coming through from good sales pipeline that our sales teams are working on. But we knew that we would have to have a revenue profile that was really dependent on winning projects from white space clients.
I really want to make the point this is an unusual situation for to be in -- for us to be in. Because as Steve points out, Data Products has historically been the growth driver. And growth -- and Data Products have a really predictable profile for us going into outlying months in terms of revenue recognition and what we should expect, and more importantly, is a very strong profit generator.
What we found, and just to pick up specifically on Q4, we've given you a waterfall here just to see -- just to show you what the moving parts are, is we were -- yes, we were expecting more sales of projects that would have short-term revenue generation to really fill in that gap for us, filling the momentum for Q4, which didn't come through. We just had a delay in closing deals. The mix of what we were selling was a bit unpredictable.
It's not to say we don't see those deals panning out and closing in the short term, but we had a particular low sales month in April, and May wasn't strong. And that gave us a cause of concern in terms of being able to reach the target for the end of the year. A consequence of that, we've got a bit of indigestion of being able to then cover our costs rapidly. So do you want to -- we'll come back to this point in the Q&A.
We were anticipating lower-than-expected Data Product growth after that of the half year, the first half performance. And it was -- we had a strong pipeline. However, we just didn't convert as many of those products as we would've liked. We have had some excellent growth in some of our clients. There's some asymmetry internally in our performance. We're running higher cost of sales than we have historically run because we're doing some work using third-party panels just around some specific audiences, particularly B2B.
We have a lot of people profiled in our panel to do this, but it's a little bit specialist. And so we've been going to third-party panel providers for that. This is work that we would always do. It's for important clients, where we're doing an increasing amount of their research program. And so it's one of a testament to -- big clients really value our service, really value the products and data that we give them. And they want us to be able to handle all of their research. The more that we do that, that's where we feel we have a right to win.
And we're also flagging the potential for CPS revenue. There's a timing shift on when they recognize revenue. We recognize revenue on delivery, and we've been going through the -- to close with them and preparing for closing for the full year. There's a few areas where they recognize revenue earlier than we would ordinarily do. And so we're flagging, as we do that review, there may be a bit of a shift in that revenue.
As a catalyst to -- the morning we put out, I think -- I just want to go through sort of 2 areas we're focused on for -- in the short term and moving into FY '25. The first is this is a moment for us to bring forward efficiency programs that we're looking for, already looking at. You will have heard us in the past talk about we want to be growing revenue, and we want to be growing profit margin. And so it's always important that we really focus on activities that can scale.
As part of this, in the last couple of weeks, we've been reviewing team structures. We've been reviewing products and services that we offer countries and taking some decisions that we probably would have taken a little bit further down the path. We are accelerating that now and taking action. So we've identified GBP 20 million worth of annualized cost savings. We expect 70% of that to be realized in FY '25. And the majority of that saving is coming from rightsizing teams, and 7% of the YouGov roles are impacted by this program.
But we're also looking at how we spend our money with third-party suppliers, and that includes reducing the amount of projects that we're running with suppliers. It means we're rationalizing some of the spend that we have in a few areas. It means we're negotiating much harder than we would've ordinarily done with suppliers, really just getting to grips with what has been a bit of a proliferation of suppliers because we've been growing so fast over the last few years.
And it's also a moment for us is to rationalize some of our real estate footprint. We're in a number of countries where the -- how people approach working in the office has shifted. And so a few of our offices, we have less usage than the more it's keeping those, and so we've made a decision to close a few of our offices.
What's important about these cuts, so they really help us become more efficient so that we can continue scaling and growing faster. And so a lot of that work will help us land some of the focused investments we're working in FY '24. We're going to keep our capital expenditure in FY '25 -- we're keeping our capital expenditure in line with FY '24 and really focused on Data Products.
And that's a clear -- we have a clear plan coming out of the work we were doing over the last few months. We have to bring the Data Products' growth back to the fore in the business. And obviously to mitigate having to go through this type of scenario again, there's a few key areas that we are investing in. And Steve's referenced Yabble. Yes, we've got some great opportunities to deploy AI and machine learning across our products and teams, really enhancing visibility of those products, but also giving us the potential to launch new things.
We have already mentioned we're working on improving the user experience of our products, and we've been investing in the user interface, user experience of the front end, and that work is underway. And we will be investing in sales leadership in some priority markets coming back to that point, really focusing on deepening our relationship with some of the largest companies in the world and really driving that Data Products growth potential.
So just looking ahead and just summarizing what we spent the last backpack of 16, 17 minutes covering before we jump into questions. I mean just to remind everybody, I mean, the competitive advantage that YouGov has and the right to win is it's stronger. In fact, stronger than it's ever been in, in fact, arguably stronger. The panel and the data quality that we have is exceptional. And I just want to say congratulations to the team that's doing a lot of hard work there. We just passed 50,000 Trustpilot reviews, with an overall score of 4.6%, which is way ahead of what we see in the rest of the markets.
That creates data accuracy because people -- we need to care about what they provide YouGov with and the attention that they pay in completing the surveys and also the breadth of data that they're comfortable sharing with us. That continues to grow, and we see kind of growth in our behavioral products as a testament to the different types of data that people across YouGov panel are willing to share.
And of course, the strength of the YouGov brand. We, as I mentioned right at the top of this, we saw a great exposure on coverage across the U.K. election. We're now subsequently seeing the same thing come through into the U.K. Two of our most important markets and areas where we know, particularly when it comes to the U.S., the higher our spontaneous brand awareness is within our target customer base, the more likely we are to become an automatic entry point for RFIs and new work as it comes through.
And we're a company that's built on innovation. We pioneered a lot of the work that we see now as industry standard, even though we're still the best in those standards now. We're deepening kind of our AI and ML capability. It is that ML capability that meant we were the most accurate MRP across all of the U.K. in the election. We're also empowering our teams to be using AI tools in their day-to-day works. Now everybody across YouGov has access to those systems.
And as Alex mentioned, we're very excited to be announcing today the acquisition of Yabble, a truly brilliant company. Yabble have been pioneering the work of AI and, in particular, within the research sector. Since 2017, they developed a whole suite of bespoke algorithms that enable us to extract much, much, much more value from the existing work.
So we're very, very delighted to have Kathryn and her team become part of YouGov. And we're very keen to make sure that we're taking those technologies and very quickly integrating them into our core Data Products as well as seeing the kind of continued business for YouGov -- sorry, for Yabble, I should say, thrive.
In addition to that, we're investing in the right talent. Very pleased that we have Marc Ryan joining us at the beginning of September as our Chief Product Officer, has an incredible track record, with decades of work in the market research industry, most recently as Chief Product Officer at SCUBA. And then prior to that, he was the Chief Data Officer at Kantar and the Chief Product and Technology Officer for Kantar Profiles and kind of many other places between that. So having somebody with kind of Marc's expertise and innovation, a true builder in the company, is really going to help us accelerate the changes that we want to make.
And then we will continue to build out the panel and to do that in the right way in the areas where we're seeing the greatest demand. And that's our expansion. It could well be as well that we start collecting different types of data that enable us to recognize some of the unique and different opportunities and requests that we're getting from clients for over the next 12 months.
And so for FY '25, this is all about returning to growth. We truly believe that there is a significant market opportunity that lies in front of YouGov. We are simplifying our sales strategy to make sure the emphasis is in the right places, and that's all underway.
Our cost optimization plan has already commenced the GBP 20 million annualized that Alex has already mentioned. And in fact, as of today, when that comes from the most significant contributor to that, which is kind of head count costs, close to 30 -- sorry, close to 40% of that has already been completed. And we're very confident in our ability at this point to meet the current market expectations into FY '25.
So I'll just finish by saying, yes, thank you to all of you for joining and for your continued interest in YouGov. And also to say thank you to the YouGov team. I mean it really is a kind of exceptional group of people with some incredible capabilities, and I really appreciate all the hard work that's been done this year, and yes, looking forward to taking the market on an FY '25 further. Thanks.
Hannah, I think it's now ripe to open to some questions. I see a few have come through.
Yes. Your first question comes from James at Fidelity. How are your Data Products contracts structured? And how much of the revenue is based on seats versus usage of data? And have you been impacted by customers cutting head count?
With the way that we currently position from a pricing perspective, Data Products is, effectively, it's open on all access. So we don't charge by seat model or by log-in model. We have historically had the belief is that the more people that are using the products within the company, the greater value that will be seen within those products. And in many ways, that's been true. I mean it's the exposure to -- and we don't want to limit that, and it's part of our kind of -- has been part of our historic value proposition.
So we don't see any kind of loss in pricing or kind of value for each individual sale, if people are reducing the number of heads. Interestingly, while considering what are the kind of pricing or tiering structures may look like versus, say, historically, it's enabled us to have a kind of deeper relationship with organizations by enabling as many people as possible to have the products. And therefore, it's not -- it doesn't impact us from a financial perspective if there is kind of a reduction in our client size. Yes, I'm going to say, I mean, the other side of that, nor does it benefit us when a client might expand and grow and kind of use more of that Data Product access. But that's often also where our Custom Research work then comes through.
Great. Thanks. Two questions from Dan at HSBC. First one, you've mentioned pricing pressure in Data Products. While existing clients continue to value your products, what do you think you need to do to attract new clients and improve competitiveness?
Yes, there's 3 parts to this. There is -- I mean, one, I just do want to stress, our products are viewed continuously as the best in the market. But of course, yes, we want to make sure that, one, we're staying innovative, and one, we're staying deeply competitive. I also do want to say as well, there will always be a part of the market that is not right for us. And we should be really okay with that, if there is kind of a few thousand pounds or kind of area that's not where we want to play out.
So -- but to get to continue to kind of make sure we have the broadest addressable market, one, there is the continued value-add in our core products. We've mentioned the UI/UX that's coming onstream in Q2 and Q3. And that's even before we think about how the components of Yabble can help add additional value and additional interest into those products.
Secondly, we mentioned a couple of times, I think, which is on a sales strategy and ensuring that the teams are really focused on the right types of offering for us to help create value for the clients, but of course, create a long-term value for the company. But we also think that there is a right to win for us, not only in the mid-market area as well, but we do see success and that requires product innovation.
So over the last 2 months, we have had live in market with some of our agency clients, our product called category view. And category view is a product created from our syndicated data, so it doesn't require additional research -- data points from us or indeed additional costs associated with that. It's utilizing the Data Product -- sorry, the data that we have that we collect from our syndicated data. But rather than the full set of our syndicated data, it's specifically targeted to a category and the drivers within that category.
And that came from the kind of insight that of all the brands that we collect data for, we actually only have a monetized relationship with 6% of those total brands. So there's 94% of the data that we're already collecting, it's not a cost to us, that we want that we think we can create more value for at a more competitive price point relative to the full suite. So that you should expect us to be rolling that out with a focus at the mid-market level from Q2 onwards.
So just to summarize, it's back, maintaining and creating great added value -- sorry, I've got a reaction saying bubbles up, there's a thumb -- value on our clients. So second is our sales focus, to ensure we're focusing on the right areas. And then three, which is bringing our product innovation that enables us to target the mid-market sector at a lower entry point, but with a more focused and targeted category product.
Thanks. The second question from Dan is, do you think you have sufficient management capacity to execute on the cost savings as well as integrating Yabble and [ project impasse ] for CPS?
Yes. Alex, maybe you want to take on that one, and then I'll add afterwards.
Yes, we do. So it has definitely been a year of consolidation at YouGov, bringing in some new people. We have a new Chief Revenue Officer. And I think it's really important to stress that a new Chief Product Officer also helps us create more structure in the way that we are supporting the sales teams and the broader commercial teams with really showing clients the real value of our data, making that much more systematic in the way that we present that.
A number of steps also, over the last few weeks, in order to streamline what we're doing, and that's quite important, really focusing on areas for -- that can scale is meaning we're pushing the teams to stop doing things that just aren't -- are tying up too much time. And that is -- it's quite important messages for the broader YouGov team, which is, this isn't just about taking cost, it's about a different way of thinking that we can be much more efficient.
And reducing and focusing on -- reducing how many things we're doing and focusing on things at scale, we have the bandwidth for that, and we've taken steps, obviously, to remediate that. I echo Steve's sentiment. We want to thank everybody at YouGov for what has been -- it's a challenging few months of trying to hit the largest number we could do for the year-end, at the same time as having to go through planning for starting the -- starting the cost reduction plan before we got to the year-end.
And we kicked off a number of things in the last couple of weeks, at the same time as trying to deliver a lot of revenue. So the team has done a fantastic job of dealing with high levels of complexity, keeping teams motivated at the same time, knowing that we're going to go through a bit of a challenging time, and losing some very valued colleagues as part of this.
Yes. I mean, just one, I completely agree with that. One thing I'd just add that whilst Yabble is very powerful and a kind of big acquisition from a technology perspective, it's also a relatively small team. So I think it's a very valid question. It was one of the things that we're mindful of, of how well can we utilize this opportunity. But we feel very, very confident, not least of all because we've been working with the Yabble team for over 9 months now. So we see that as a relatively smooth integration and kind of a great opportunity for us and for our clients, for us to create more value for our clients as well.
Thanks. Three questions from Anders at SEB. First one, it would be great if you could touch on what's driven the better-than-expected result? And has the U.S. election had a positive impact?
I'll start that. We've built in a little bit of risk in the guidance just because we were having to -- we knew that we would have to be sort of going through cost reduction at the same time as finishing the year-end. And there's a very strong push from the teams to try to over deliver as best we can do in July.
We've ended July in a very decent place. So the beginning of our Q4 was weaker than we were expecting. But the team has been able to, I was going to say, pull forward. We have pulled forward just to deliver much more than we would have expected whilst, at the same time, we're trying to go through this restructuring and reorganizing work.
And that's an important point. We wanted to make sure that we're very focused on getting our cost base for FY '25 in the right place, and so we wanted to give a little bit of room to be able to do that. And so I think we're pleased, and it is a testament to the resilience of the teams to be able to continue delivering whilst also going through the reorganization work.
Was there a second half to that...
Yes, there is.
About the U.S. election.
The U.S. elections.
Oh, the U.S. election. So it's probably just taking a step back on elections and the benefit to YouGov Germany. It's -- I think people are aware as a sector. It's roughly 5% of the total revenues. I mean across this, we might see some increase, but not substantive. And the reason being is often when election and campaigning work begins, it does coincide with government work reducing. So there's a bit of a trade-off there.
We do see some upside through the U.S. election. In fact, our kind of U.S. team had completed their FY '24 budget by, I think, around kind of January, February last year. So we kind of do see kind of potential there how -- and whilst the real kind of true value for us is in what it does for our brand and what it does for panel.
Being at the forefront of the conversation, being able to show our visibility, demonstrating our power and our accuracy and the quality of our data is what brings a new client, and it's also what brings in new panelists as well. So yes, we expect to see some upside, not to the degree that it were to create any kind of change in our guidance for the year as it stands now.
Thanks. Looking into FY '25, how do you expect profitability to develop in H1 versus H2? And related to that, on the cost savings, can you detail where the GBP 20 million impact will come from?
Yes, I'll start with that. The -- Yes, we will be a little bit back-end loaded in terms of just building up the momentum, and this is an important thing for us to really focus immediately on which has started. We need sales of Data Products to happen in H1 so that we have the revenue building from those new sales, helping to contribute to margin improvements in the second half.
So I think it will be a little bit back-end weighted for a couple of reasons. Some of that is it's going to take us some time to realize some of the cost savings that we've put in place. We have to go through as it's right to do consultation processes in a few countries. And so there's a bit of a timing lag on those reviews being completed.
Some of the things that we're also doing in place with removing suppliers, we've got a little bit of a runoff in those. So we'll annualize, yes, we have a bit of that really taking into effect in our second quarter. And obviously, then coming into the second half of the year, we have realized the majority of that.
But we are expecting to have Data Products really being a key focus, and that is because of the way that we recognize the revenue on a one-stop basis. When we see an annual subscription, that does mean that we will have a back-end-weighted year.
I want to stress, we're approaching budgeting in a different way this year. That was the challenge in FY '24 of positioning ourselves for growth. And increasing our costs in the first half meant we were really overreliant on the performance really needing to come through in the second half to deliver our numbers. Where -- I'd make this point that we were making some focused investments, but we will be looking at our cost base in a different way going into FY '25, focusing on fewer things so that we really focus on -- and we are delivering and executing on the margin improvement plans we have.
Thanks. And final question from Anders. You're confident of meeting FY '25 consensus. Is that on revenue and EBIT?
Yes, it is.
Okay. Thanks. Next question from Imogen. Why aren't custom projects priced to reflect the higher cost of the third-party data collection? Can you do this moving forward to limit the gross margin impact?
Yes. We do it in part and, certainly, it's our desire to always make it come from our panel. But equally, as Alex said, this is not work that we'd want to turn down. It just does come in a different form. Across this year, we're going to be exploring how we either kind of reduce kind of the per unit cost of that -- of panel -- of the health panel work, or indeed, how we can incorporate the data insights into our own and the existing panel.
I think I just want to be clear as well. There may well always be a desire and a need for us to go off panel. There may be a specific market within a specific area that we don't necessarily have a panel for, or it doesn't make sense for us because it's only related to one client. I have to say, I think our teams do a great job commercially, and that kind of margin is strong within our custom work. It's just not to the same degree that we see within our Data Products.
And we know that's where we see the cumulative growth come from within our enterprise clients. Entry among Data Products, so we have that, and then growth through additional Custom Research. But for sure, we want to do what we can to be more efficient in that off-panel spend. It won't ever disappear, but also build out -- potentially build out different data points in our own panel that would enable us to serve directly elements like B2B.
Thanks. Next question from Jess at Peel Hunt, three-part question. First one, can you talk about changes in your sales approach other than investing in senior leadership?
Yes, for sure. So as we mentioned that kind of couple of times, like a lot of this is about efficiency and focus. We have a high number of products. I think of it, over time, that's meant that the team hasn't always been able to be as focused as they could be. So that's quite consistent. And I want to separate that from some of the specific geographical factors that we saw as well.
So having Tom in as our Chief Commercial Officer, with kind of oversight across all of our commercial, gives a single point of contact, who can orchestrate and guide and direct across all of our teams. We're also sectioning our new business teams to be focused very, very strongly against our Data Products, with our account managers and our client service teams being focused on kind of some renewals on that, but also into kind of deep focus into custom work.
We're reducing some of the books of business that our account managers have to enable them to be more focused and also for them to be more sector-specific. Now it hasn't been uncommon, perhaps have an account manager that might be working across a high number of sectors and with a high number of clients, making it that much harder for them to have the impact in when we see the biggest opportunities.
And just to be very clear, you don't need very many of those large opportunities to really get great growth, particularly when we spend the time with them. We understand the organization well. We move from one partner organization to another, and they consistently then see that benefit are crazy great. Kind of virtuous circle inside our clients as well, where they see the work they were able to do, and we end up with a kind of good in a way internal referral engine that, that creates.
And yes, just -- we have mentioned -- I know in our update that, in addition to that, to have leadership appointments in DACH, Germany and the U.K. are our particular focus. And we're right in the process of making sure those -- getting those appointments in place so they can make a difference in the first half of this year.
Thanks. A second question from Jess. You're scaling back in noncore regions, which regions are these?
Yes, we probably wouldn't share that kind of broadly many from a competitive perspective, but there were regions where we might have seen -- just a moment. Just to be clear about what we mean by scaling back is we're not overinvesting in acquisition -- in panel acquisition. So it's not as if we are disappearing from those markets or not being able to provide in those markets, we're just reducing our acquisition investment in those markets so we're able to sustain them for when the needs come through.
In order for us to be more focused on both the markets and the demographics that we see the greatest and highest demand on, so partly is related to the, I think, 2 questions back now on our panel kind of costs. We know we don't have to have that if we've got the right -- the fullest amount of demographic opportunity in our biggest market, where our biggest market demand is. And to be clear, that typically still is the U.S. as the market where we continue to see the more we invest in panel, the more we see revenue -- direct revenue growth that comes from that investment impact.
Thanks. A question on Yabble. Can you give more color on Yabble's AI capabilities and what their focus will be in the near term? And then we have a similar question from Eric is, why did you have to buy the engineers rather than develop it in-house?
Yes. No, great questions. I mean on the first one, maybe I'd love to kind of do a separate session where we can talk about Yabble with the teams here. But there's a number of capabilities that Yabble have developed. They have developed different types of algorithms across their established kind of LLMs. So they have the best insight into which LLMs work for specific research tasks.
They've also done something that's incredibly important as well, which is they developed capabilities that derisk the outcomes of that LLM work. So I think we're all kind of quite familiar now that sometimes LLMs can create outputs that are either kind of uncertain or, in some cases, just undesirable that you want to see. And what Yabble have created is filters and algorithms that stop that from happening. So you don't have -- you dramatically reduce the kind of risk of either bad quality outcomes, but also kind of undesirable outcomes.
Not many companies in the world have cracked that yet. And that is because they've been at this since the beginning, and it's kind of like a good kind of foresight into that. And that partly relates -- and they've also developed a really interesting personas project -- sorry, product, I should say, as well, with the idea that you're going to be able to effectively have your customer on every single one of your -- I was about to say desktops, but it may well be kind of phone as well, on the basis that every single client in the world is a really powerful concept.
What stops that is questions around kind of the quality of the data and the accuracy of the data, that's what YouGov has. To be able to power those technologies with accurate and refreshing data, those are the 2 things you need. You got to be accurate, and it's got to say current. We have all of those kind of capabilities within YouGov.
And then answering the question of why did we -- it's kind of build-or-buy question, I guess, isn't it? It was very simple. You've got a really great established team that are working really well. We've been able to work with a [indiscernible] over the last 9 months. We could do that. We could have built up that team.
But it would have maybe taken another kind of 12 to 18 months to do that. And in addition, our established teams are really busy creating the kind of other work that's in the company as well. So yes, overall, not a difficult decision, particularly when we know we can apply those technologies to our existing Data Products, that's a really, really powerful proposition.
Thanks. A couple of questions from Steve at Deutsche Numis. Can you give more detail on the sales and commercial teams. Where is it right -- where is there work to do? Also, have you invested in e-sales systems? And what are you doing to make sure that the internal management information processes are accurate going forward?
Yes. No, great questions. I think I may have covered some of the kind of sales front on the previous. But maybe do you want to speak to systems, Alex, and how we're looking at this and approaching this so we don't have the bloody frustrating outcome that we had in kind of Q4 this year?
Yes. And there's 2 parts of what we're doing there. One is systems, but the other part is then the sales process and consistency in the way that we're doing things so you can ride on the data that's in those systems. We've had a number of things for people to better understand their pipeline. And what we need to be investing in and landing is the way that the sales teams are managing and qualifying their pipeline that's been too variable in the period. And that has been hampered by, in a couple of areas, we haven't had the sales leadership in place and to help drive that way of working.
And that is -- that's a task that we've been working on for a while coming into FY '25. And particularly, I make this point again, bringing in a CPO and really thinking about how do we have constant evolution in our products, which are going into the market. We need to establish our YouGov of way of doing this, which has just been a little bit fragmented because we've got teams that haven't been really connected in the way that they approach clients and how they structure their sales plans.
Improving and increasing our commercial rigor. There is -- that has happened in parts. But clearly, there's a strong focus for us now in terms of getting that consistent around the group. We do want to make the point. Yes, we want to spend more time in the higher -- in the markets where we have the highest potential. And we also want to spend time with clients where we have the highest potential.
So it's not just investing in the systems, but it's also investing in the training and the leadership of our sales teams so that we're setting them up for success as they sort of meet new clients, but also expand our relationships with existing clients.
Thanks. On Data Products, a few questions. Can you give a bit more color on new business wins? When is the new go-to-market category view offering launching and as well as the AI tools? And is there a risk of cannibalization of category view?
Sorry, I came off mute. I didn't mean to do that. The -- sorry, [indiscernible] myself out. Hannah, can you just give me that one again, please?
The Data Products.
Yes, Data Products.
Any color on the new business wins?
New biz, yes.
Category view cannibalization.
Category view cannibalization. Okay, great.
And AI tools as well.
Yes. Well, maybe I'll take the last one. Okay, kind of sort of 4 there, isn't there? Yes. AI tools, there's every reason to think that we can create some -- actually, quite quickly and quite strongly, we've already been working with Yabble. In fact, we do co-developed a product with them already, an AI Qual Explorer.
So I'd say this is kind of day 1 with them. I'm with the teams for a night, and I'm with the team on Thursday morning. So we're not -- we don't think we're talking halves over the years here. At least we get to a position where we've got something that's minimum viable and really interesting. And I would hope to think that we could begin the trading season kind of in earnest with that in place.
Cannibalization on category view, it's different types of the market. Like, of course, there is always that potential that's there, but they're often at different sectors. So our agency clients, for example, they like to have the full suite of data because -- and they're some of our kind of strongest clients when it comes to profiles because they want to be able to operate across multiple number of verticals.
It wouldn't be a reason not to do it. It's a straight answer. And we've seen, I'd say, strong renewal rates across our existing syndicated data. And there are some clients that they want to see the kind of full picture and they want to understand all categories because they are -- in a way, they don't just benchmark themselves against their competitors, they might benchmark themselves against other what might seem like out-of-category competitors.
So for example, if you're looking at the entertainment area, if you are a video streaming provider, you're as interested in what's happening in the world of gaming as you are as what's happening directly within your own streaming environment. So there's always a degree there, but that's a great thing about innovating and being able to be in a position to offer kind of new products. That is less than we see the overall potential of increased value that we can create from the , as I said, 94% of brands that we cover, but don't currently have a commercial relationship with. That was cannibalization. That was category view. [indiscernible] Hannah, sorry.
The other one was on color on new business wins.
Yes. No, I mean, we've seen actually kind of quite a nice rap coming through across -- actually, particularly in the U.S., where we're seeing real success, where people are being more sector focused. We're also seeing expansion of territories as well within some of our larger data -- with some of our larger data product clients.
So there's a bit of expansion of geographies, and there are some new sectors. I'd say, the kind of third part of that is, it's really great to see the encouraging work in FMCG begin to come through, where we're seeing the CPS and the YouGov relationships in markets where that bond has happened kind of quite organically and quite strongly already.
Question from [indiscernible] at [indiscernible]. Can you give an update on your SP3 targets and whether you still plan to hit the 25% OP March?
Yes. I mean it's no doubt that FY '24 has been a slower year than we were expecting. But as I make the point, a bit of a year of consolidation as we go from one growth plan to the next and really focusing on the components that you're going to get us to the inflection point for meeting those targets. We're still confirming our commitment to those targets.
We want to echo some of the things we talked about in the past around targets. We have set a medium term because there's a number of things we want to be putting in place that we have to build to. There was always going to be a component of finding a new product, whether it's behavioral data or a different way of interacting with our Data Products. And obviously, Yabble is part of that. That gives us new things to be able to take to our existing clients, which continue to show them the value of our data.
A couple of key things that give us confidence. We continue to have fantastic relationships with large clients that we know that we can develop further. And this is a particularly important point when we've been talking about pricing competition and being able to convert sales. We've been taking the same approach to working -- to try to win new clients that are small and medium sized, as we do with large -- some of the very largest companies in the world. We need to adapt that approach.
We have relationships with some of the biggest companies in the world, but we'd like them to be much deeper relationships. And we have, in Tom Fisher, our Chief Revenue -- Chief Commercial Officer, who has done that in the past for us, and that will be a clear part of our account management going into FY '25 and beyond.
Steve has already referenced, reducing the number of clients that our account management teams have so they can really make a big impact -- a bigger impact with those clients. That's a particular growth opportunity for us. We want to give the team some time to do that, but we think the potential is certainly there.
And I think I can demonstrate in the continued confidence and value that our existing clients put on the Data Products, this really is the best data that's in the market. And so really focusing on how we continue commercializing and advancing the product awareness within our particular territories, improving our sales approach to be able to convert products quicker, really understanding which clients do we go for and which clients do we not go for. I think we can definitely see some improvements in how we approach ourselves. We do expect our momentum to start building up within FY '25, which will set us up for FY '26 and beyond.
Thanks. Next question from Paul at [indiscernible]. You talked about previously about well-funded start-up competitors in certain segments, reducing prices pretty dramatically and clients getting better at comparing prices. How is this playing out?
Yes, I'll take that one as well. I think this is a very important point around what clients will be going after. And where we've seen the most significant pricing pressure is with small and medium-sized companies. And that is where the clients and potential clients have -- don't have a very deep data requirement. They have very -- usually very small teams as well. And we try to sell our products on fundamentally an enterprise basis, where you get access to everything.
So in part, the way that we have been packaging those deals has made it difficult for clients to assess the 2 products together. Because you've got a smaller data set of the customers that our competitors are offering because they're really only offering 1 or 2 sectors. We still insist we're changing that. We have been insisting we take all the sectors.
And that's meant we're just over servicing those types of clients with that kind of offer. And that's difficult for them to understand the value proposition. It's easier for them to look at more simple product and be able to say, actually, "This is good enough for what I need it for."
We need to address that part of the market in a different way, and category view is the way that we think we should do that. We're not adding a lot more incremental costs. We're repackaging the data that's much more relevant to the way that those types of clients would like to see.
And that gives us something from a packaging perspective, we can then work on pricing to be much more competitive for those smaller -- the competitive set. I want to make this point with the larger clients that work with this type of data in lots of different countries, we still continue to win, but we just haven't put the same amount of sales focus in those larger enterprises as we have done. We just diluted ourselves' focus across the entire potential market, treating small and medium-sized companies in the same way that we treat large clients.
Thanks. Next question from Joe Brooks. Is the 80% subscription retention rate what you are targeting going forward? Or are your targets above this? And what have customers been citing as the key reasons for churn in the recent period?
Yes, I'll take that one. I mean it's a pretty decent level. We'd want to see if we can improve on that. But I do believe that's one of the kind of best in the markets from a renewal level, always think we can do a bit better. But 80%, we're not suggesting that, that will be any different into the coming year, whether that's kind of low or higher. And in terms of the ones that churn, there's a couple of reasons. One, where they may have taken an additional product from us and then found that they don't kind of use it quite as much.
And actually, I mean, I really like kind of looking at macros. I think our ability to grow given the scale around the ambition we have, it shouldn't be determined by that. But we definitely did see a kind of new clients that were just pulling back and they just didn't necessarily go to a competitor, they just didn't go to anyone.
So the main reason that we see tends to be kind of internal decisions, either they reduce down to kind of one product rather than two. Or they find that their own internal kind of cost -- or they came into a product and didn't actually find as much value from it as they expected. That relates a little bit to what Alex is saying, which is, of course, we like sales, and we went to have that, but having a more disciplined approach as to what is a really good high-quality sale look like that has a longevity that's associated with the -- with our cost of sale. And just kind of get a bit more kind of data-led or more intentional than that, than having a [indiscernible] that you can kind of fill through a bucket and a [ hopper ] kind of each time.
Thanks. Next question from William at Allianz, can you add more details to what exactly makes your data the best data versus the competition? Is it collection methodology and analysis tools?
Yes. It's a combination of kind of all of those things. I mean, first off, is panel experience, the care that we take both on -- in a number of levels really as a competitive advantage to it. Again, and if you're interested, I'd encourage you to perhaps look at some of the other reviews of other kind of research companies that are out there in this area. And you'll see just how strong ours is, and that comes from a number of factors.
One, just doing the basics really well. If you're offering a member of the platform where people have rewards for that, just make sure they have access to those rewards simply and easily in a very clear and transparent-powered way. Secondly, the differential that comes from that is our brand plays such a key part in this.
In fact, being part of being able to express their opinion and have their voice heard is one of the largest reasons why people come and join YouGov. But in many ways, that social contract that exists between the company is one of the reasons why we see the kind of accuracy in the data. We spend a lot of time evaluating 2 things on the survey side as well.
One, how is the questions written? Are they useful? Are they engaging? We have great algorithms that ensure that the right kind of surveys are going to the right kind of people, that they're answering things that they're broadly kind of interested in. Again, we see kind of improved accuracy through that. And one of the metrics we use of that is what's the time spent on this? Are people really giving the survey the attention that it should have?
And attention metric actually is also very happy when we -- sorry, very happy. It's also very useful as a way of assessing whether somebody is either a good panelist or kind of accurate panelist, or we definitely saw some integrity issues in the marketplace that it's still going through. Again, having that deep understanding of the panel, we're able to measure -- people just sitting through this thing? Or are they actually spending the right tough right amount of time for it really helps us.
Now of course, the question is like how do we improve these things? And that's part of having -- that's partly where our public brand plays such a key role to be tested, to have the most accurate MRP in the most recent U.K. election, to be the most accurate pollster in the last 7 national referendums around the world. To find ourselves in positions where clients are blind testing against different providers. And our accuracy is, see, that's much stronger than others is the reason within those big clients that really care about data quality and are some of the most data sophisticated clients themselves.
It's why they have continued to grow kind of into this year. And of course, it's our job to translate that more effectively into value and into sales and into kind of growth in the company. And just finally, to some of the academic level, we're very, very highly rated. I can certainly kind of share at a later date some of the assessments, we're the top-rated research company in the most recent U.S. by [indiscernible] I believe it's called, which is a very well-regarded academic assessment. I think the only -- there are a couple of organizations that were above us in that top 5, and they were active institutions, universities, 2 of whom we provided data for. So that gives a real sense of the credibility and the quality that we have. Our job, as I said, to determine and then turn that into powerful drivers of the business as well.
Thanks. And probably the final one as we're running out of time. Can you give more detail on the UI/UX launches and how that will improve product delivery and application?
Yes, sure. We'll be -- well, I just don't want you to think this is one single big bang moment. This is a continual refreshment and kind of updating and upgrading of the products over the next year. I'll give one example on profiles. We've already introduced kind of vector search, which improves the search functionality. So people are able to extract data out kind of more readily and more quickly.
And then we are expecting kind of Q2 to be the -- where we have then, when it comes, the design refresh. So there's back-end work that's been going on. Those features are already coming on board. And then the kind of front-end work because you have to do sort of partly, concurrently, but also back end and influencing what the front end looks like and vice versa. But we'd expect to see in Q2 and beginning of Q3 for most of those significant upgrades we rolled out.
Thanks. Do you want to add some?
Yes, for sure. Why not? I mean, thank you. I'd say thank you all for joining. I know we've had a lot of people attend the call, which is, obviously, certainly encouraging for us to go into and make them very, very most of the kind of great potential in the kind of year ahead. So again, thank you, Alex. Thank you to Hannah. I thank everyone for joining and their kind of interest in the company. We look forward to being really stuck in. We're a few days in already into FY '25. And just finally, I just want to say thank you again to kind of all of the YouGov teams across the world for their help and their work this year.
I just want to say a big thank you to those -- some of those folks we are saying goodbye to as well. They're kind of good people. I really appreciate the work and the contributions they've made to the company in the past as well, and I wish them kind of good success in the future.
Okay, everyone. Well, thanks, Hannah. Thanks, Alex. Thanks, everybody, for joining. We look forward to seeing you all again in October. Thank you.
