Market Overview

Yandex Revenues Topped Estimates In Q4, But Earnings Are Lacking

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Yandex Revenues Topped Estimates In Q4, But Earnings Are Lacking

Yandex (NASDAQ: YNDX) is a company with a wide range of online services, such as internet search, ride-hailing, food delivery, and payments. 49% of Yandex's year-on-year growth belongs to the ride-hailing division, Yandex.Taxi, which covers activities like taxi, food delivery, and driverless cars. Development of technology for Driverless cars was started in 2016 and is currently ready to be tested outside Russia. Yandex has a license to test driverless vehicles in Israel and also it will start with tests in the United States later this year.

Besides Yandex, the race for development of driverless vehicles for mass consumption includes several other companies like Google parent Alphabet Inc (NASDAQ: GOOGL), with its self-driving car division Waymo. Yandex's driverless fleet now counts 110 vehicles.

Last Quarter Results And Earnings Report

The company's fourth-quarter results were rated as solid by BCS Global Markets analyst Maria Sukhanova, and it showed a 33% increase in revenue year-on-year.

On the other hand, Yandex's net income in the fourth quarter fell to 95% year-on-year, due to many one-time factors, like restructuring and exchange rate losses.

Revenue from the taxi business was increased by 71% year-on-year, accounting for 23% of the total revenue.

Zacks Consensus estimates of quarterly earnings of $0.39 per share were missed, and Yandex came out with $0.25 per share, which was more similar to previous year earnings of 0.30 per share (all of these figures are adjusted for non-recurring items). This is a negative shocker of -35.90%, especially after the previous quarter when earnings per share under delivered for -8.57%. Earnings per share were exceeded only once over the last four quarters.

This current negative stock decrease does not blur the stock price result during the last six months, having in mind that the lowest price in that period was below $30.0, and now it is trading at around $45.0.

While earning per share were lower than estimated, Yandex has beat consensus revenue estimates four times over the last four quarters. Specifically, the quarter ending in December 2019 achieved $835.10 million, topping the Zacks Consensus Estimate by 2.26%.

Competitors And New Ventures

In January this year, Yandex had its driverless car display at the Consumer Electronics Show in the United States. The company is considering whether to conduct an initial public offering (IPO) of its taxi joint venture with U.S. group Uber Technologies Inc (NYSE: UBER), Yandex.Taxi, potentially in Russia and the United States, but no details have been enclosed.

Despite recently announcing that it expects to become profitable for a whole year earlier, which the market overjoyed in, Uber is still facing difficulties.

In the last quarter of 2019, London's transport authority decided not to renew Uber's license, which came as quite a shock. Official concerns were about customer safety based on vulnerabilities discovered in the application that let drivers fake their identities. Similar happened two years ago when Uber appealed the decision, which allowed it to operate while the appeal was ongoing.

But as for U.S. alone, both Uber and Yandex also need to think about Lyft Inc (NASDAQ: LYFT) which followed Uber's quarter success by revealing a record fourth quarter recently as they surpassed $1bn in quarterly revenue, marking an increase of 52 percent year-over-year.

Outlook For Yandex

Yandex has surpassed the market so far, but investors are a bit surprised with lower earnings per share than consensus estimates. Although estimates are only expectations, investors need a way to rely on the company's earnings outlook. Changes in quarter earnings expectations also affect investors' decision to invest. This may be a reason why the current Zacks Rank of Yandex released earnings report corresponds to hold for the stock, meaning that the shares are expected to move in line with the rest of the market in the near future.

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