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Yandex Announces Fourth Quarter and Full-Year 2018 Financial Results

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MOSCOW and AMSTERDAM, the Netherlands, Feb. 15, 2019 (GLOBE NEWSWIRE) -- Yandex (NASDAQ:YNDX), one of Europe's largest internet companies and the leading search provider in Russia, today announced its unaudited financial results for the fourth quarter and the full year ended December 31, 2018.

Q4 2018 Financial Highlights(1)(2)(3)

Q4 2018 consolidated financial results

  • Revenues of RUB 38.8 billion ($559.1 million), up 39% compared with Q4 2017
  • Net income of RUB 5.9 billion ($85.1 million), up 69% compared with Q4 2017; net income margin of 15.2%
  • Adjusted net income of RUB 6.9 billion ($100.0 million), up 32% compared with Q4 2017; adjusted net income margin of 17.9%
  • Adjusted EBITDA of RUB 12.3 billion ($177.4 million), up 33% compared with Q4 2017; adjusted EBITDA margin of 31.7%

Q4 2018 financial results excluding Yandex.Market in 2017 and 2018

  • Revenues excluding Yandex.Market of RUB 38.8 billion ($559.1 million), up 46% compared with Q4 2017
  • Net income excluding Yandex.Market of RUB 6.5 billion ($93.2 million), up 102% compared with Q4 2017
  • Adjusted net income excluding Yandex.Market of RUB 7.5 billion ($108.2 million), up 53% compared with Q4 2017; adjusted net income margin excluding Yandex.Market of 19.4%
  • Adjusted EBITDA excluding Yandex.Market of RUB 12.3 billion ($177.4 million), up 38% compared with Q4 2017; adjusted EBITDA margin excluding Yandex.Market of 31.7%

  • Cash and cash equivalents as of December 31, 2018:
    -- RUB 68.8 billion ($990.3 million) on a consolidated basis
    -- Of which RUB 27.3 billion ($393.3 million) related to Taxi segment
    -- RUB 29.1 billion ($418.6 million) related to Yandex.Market and is not included in Yandex N.V. consolidated balance sheet

FY 2018 Financial Highlights(1)(2)(3)

FY 2018 consolidated financial results

  • Revenues of RUB 127.7 billion ($1,837.6 million), up 36% compared with FY 2017
  • Net income of RUB 45.9 billion ($660.1 million), up 430% compared with FY 2017; net income margin of 35.9%
  • Adjusted net income of RUB 22.1 billion ($318.7 million), up 44% compared with FY 2017; adjusted net income margin of 17.3%
  • Adjusted EBITDA of RUB 39.6 billion ($569.9 million), up 36% compared with FY 2017; adjusted EBITDA margin of 31.0%

FY 2018 financial results excluding Yandex.Market in 2017 and 2018

  • Revenues excluding Yandex.Market of RUB 126.4 billion ($1,819.9 million), up 41% compared with FY 2017
  • Net income excluding Yandex.Market of RUB 18.4 billion ($265.3 million), up 146% compared with FY 2017
  • Adjusted net income excluding Yandex.Market of RUB 22.9 billion ($329.7 million), up 62% compared with FY 2017; adjusted net income margin excluding Yandex.Market of 18.1%
  • Adjusted EBITDA excluding Yandex.Market of RUB 39.9 billion ($573.7 million), up 45% compared with FY 2017; adjusted EBITDA margin excluding Yandex.Market of 31.5%

Q4 2018 Operational and Corporate Highlights

  • Share of Russian search market, including mobile, averaged 56.5% in Q4 2018, flat compared to Q4 2017 and up from 55.9% in Q3 2018, according to Yandex.Radar
  • Search share on Android in Russia was 49.5% in Q4 2018, up from 49.1% in Q3 2018 and 45.0% in Q4 2017, according to Yandex.Radar
  • Search queries in Russia grew 10% compared with Q4 2017
  • Paid clicks on Yandex's and its partners' websites, in aggregate, increased 10% compared with Q4 2017. Excluding Yandex.Market, paid clicks grew 20% compared to Q4 2017
  • Average cost per click grew 7% compared with Q4 2017. Excluding Yandex.Market, average cost per click increased 4% compared to Q4 2017
  • Number of rides in the Taxi segment (including Uber rides) grew 112% year-on-year compared with Q4 2017; this includes a full quarter of Uber rides in Q4 2018
  • Yandex obtained official approval and started to operate its self-driving car in an autonomous mode in Tel Aviv, Israel
  • Yandex completed the transaction for the purchase of a property site for its new Moscow headquarters

"Our performance in 2018 was exceptional," said Arkady Volozh, Chief Executive Officer of Yandex. "We strengthened our positions in search, launched new online-to-offline businesses - Yandex.Drive and Yandex.Eats, and started sharing our technology and expertise in Yandex.Cloud. I am particularly proud of our accomplishments in self-driving, as, in just two years, we have already managed to create a real robo-taxi service."

"In Q4 we delivered another solid set of results with revenue growth of 39% year-on-year, or 46% excluding Yandex.Market," said Greg Abovsky, Chief Operating Officer and Chief Financial Officer of Yandex. "We remain committed to investing further in new initiatives, encouraged by the success of our ride-sharing segment of Taxi, which has now reached profitability thanks to our investments and continued focus."

The following table provides a summary of our key consolidated financial results for the three and twelve months ended December 31, 2017 and 2018, which includes Yandex.Market financial results through April 27, 2018:

             
In RUB millions Three months ended December 31, Twelve months ended December 31,
  2017 2018 Change 2017 2018 Change
Revenues 27,860 38,842 39%   94,054 127,657 36%  
Ex-TAC revenues2 23,071 32,678 42%   76,709 107,159 40%  
Income from operations 4,817 7,471 55%   13,036 20,861 60%  
Adjusted EBITDA2 9,293 12,323 33%   29,075 39,594 36%  
Net income 3,500 5,911 69%   8,656 45,861 430%  
Adjusted net income2 5,249 6,949 32%   15,359 22,138 44%  

The table below provides a summary of our key financial results excluding Yandex.Market for the three and twelve months ended December 31, 2017 and 2018:

             
In RUB millions, excluding Yandex.Market Three months ended December 31,  Twelve months ended December 31, 
  2017 2018 Change 2017 2018 Change
Revenues ex. Yandex.Market  26,674  38,842 46%    89,950  126,430 41%  
Ex-TAC revenues2 ex. Yandex.Market  21,943  32,678 49%    72,842  105,966 45%  
Income from operations ex. Yandex.Market  4,490  7,471 66%    11,566  21,180 83%  
Adjusted EBITDA2 ex. Yandex.Market  8,923  12,323 38%    27,477  39,857 45%  
Net income ex. Yandex.Market  3,203  6,478 102%    7,484  18,432 146%  
Adjusted net income2 ex. Yandex.Market  4,920  7,516 53%    14,114  22,906 62%  

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars at a rate of RUB 69.4706 to $1.00, the official exchange rate quoted as of December 31, 2018 by the Central Bank of the Russian Federation.
       
(2) The following measures presented in this release are "non-GAAP financial measures": ex-TAC revenues; adjusted EBITDA; adjusted EBITDA margin; adjusted ex-TAC EBITDA margin; adjusted net income; adjusted net income margin and adjusted ex-TAC net income margin. Please see the section headed "Use of Non-GAAP Financial Measures" below for a discussion of how we define these measures, as well as reconciliations at the end of this release of each of these measures to the most directly comparable U.S. GAAP measures.

(3) On April 27, 2018, Yandex and Sberbank formed a joint venture based on the Yandex.Market platform. Since that date, each of Yandex and Sberbank hold an equal number of the outstanding shares in Yandex.Market, with up to 10% of outstanding shares allocated to management and an equity incentive pool. Accordingly, starting April 27, 2018, we deconsolidated Yandex.Market from Yandex's consolidated financial results and, under the equity method of accounting, we record our share of Yandex.Market's financial results within the Other income, net line in the consolidated statements of income. Financial results excluding Yandex.Market exclude the results of Yandex.Market, gain from deconsolidation and Yandex's share of Yandex.Market's net income after the deconsolidation from the three and twelve months periods ended December 31, 2017 and 2018

Consolidated revenues breakdown

             
In RUB millions Three months ended December 31, Twelve months ended December 31,
  2017 2018 Change 2017 2018 Change
Online advertising revenues:            
Yandex properties 18,932 22,393 18%   65,149 78,696 21%  
Advertising network 6,138 7,105 16%   22,251 24,041 8%  
Total online advertising revenues 25,070 29,498 18%   87,400
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