Market Overview

Yandex Announces Second Quarter 2019 Financial Results

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MOSCOW and AMSTERDAM, the Netherlands, July 26, 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 second quarter ended June 30, 2019.

Q2 2019 Financial Highlights(1)(2)(3)

Q2 2019 consolidated financial results

  • Revenues of RUB 41.4 billion ($656.3 million), up 40% compared with Q2 2018
  • Net income of RUB 3.4 billion ($54.2 million), down 90% compared with Q2 2018; net income margin of 8.3%
  • Adjusted net income of RUB 5.8 billion ($92.3 million), up 16% compared with Q2 2018; adjusted net income margin of 14.1%
  • Adjusted EBITDA of RUB 13.1 billion ($207.6 million), up 50% compared with Q2 2018; adjusted EBITDA margin of 31.6%

Q2 2019 financial results excluding Yandex.Market in 2018 and 2019

  • Revenues excluding Yandex.Market of RUB 41.4 billion ($656.3 million), up 41% compared with Q2 2018
  • Net income excluding Yandex.Market of RUB 4.5 billion ($70.6 million), down 3% compared with Q2 2018
  • Adjusted net income excluding Yandex.Market of RUB 6.9 billion ($108.8 million), up 31% compared with Q2 2018; adjusted net income margin excluding Yandex.Market of 16.6%
  • Adjusted EBITDA excluding Yandex.Market of RUB 13.1 billion ($207.6 million), up 48% compared with Q2 2018; adjusted EBITDA margin excluding Yandex.Market of 31.6%

Cash, cash equivalents and term deposits as of June 30, 2019:

  • RUB 75.0 billion ($1,189.2 million) on a consolidated basis
  • Of which RUB 24.9 billion ($395.5 million) related to Taxi segment 

Q2 2019 Operational and Corporate Highlights

  • Share of Russian search market, including mobile, averaged 56.9% in Q2 2019, up from 56.2% in Q2 2018 and down slightly from 57.0% in Q1 2019, according to Yandex.Radar
  • Search share on Android in Russia was 52.3% in Q2 2019, up from 47.8% in Q2 2018 and 51.2% in Q1 2019, according to Yandex.Radar
  • Search queries in Russia grew 9% compared with Q2 2018
  • Paid clicks on Yandex's and its partners' websites, in aggregate, increased 17% compared with Q2 2018. Excluding Yandex.Market, paid clicks grew 20% compared to Q2 2018
  • Average cost per click grew 2% compared with Q2 2018. Excluding Yandex.Market, average cost per click increased 1% compared to Q2 2018
  • Number of rides in the Taxi segment grew 49% year-on-year compared with Q2 2018
  • Yandex introduced the smart home concept, powered by its AI-assistant Alice
  • Yandex.Auto became the official supplier of infotainment systems for Renault, Nissan, and LADA in Russia

Q2 2019 Subsequent Events

  • MLU B.V., Yandex's ride-sharing and food delivery joint venture with Uber, announced an agreement to acquire the IP and call-centers of the Vezet group of companies in Russia

"We have delivered consolidated revenue growth of more than 40% year-on-year for the fifth straight quarter," said Arkady Volozh, Chief Executive Officer of Yandex. "Thanks to our focus on sustainable, long-term investments, we have built a strong ecosystem that is continuing to play a key role in the rapid growth of both our existing and new businesses. As a result, non-core businesses contributed one-third of consolidated revenues in Q2. Our advanced capabilities in machine learning are helping to deliver exciting results in self-driving. We also continue integrating Alice, our voice assistant, into a growing number of different platforms to help users get things done more easily, including at home and in their cars."

"We had a great quarter, with revenues up 41% year-on-year, excluding Yandex.Market," said Greg Abovsky, Chief Operating Officer and Chief Financial Officer of Yandex. "In Q2 our Taxi segment had strong momentum and became profitable, and we also continued to improve profitability in ride-sharing as well as the unit economics of our food delivery business. We are extremely excited about this business. Our recently announced agreement to acquire the IP and call centers of Vezet Group is in line with our plans to further invest in the regions and to boost safety and security technologies in the taxi market."

The following table provides a summary of our key consolidated financial results for the three and six months ended June 30, 2018 and 2019, which includes Yandex.Market financial results through April 27, 2018:

             
In RUB millions Three months ended June 30, Six months ended June 30,
  2018 2019 Change 2018 2019 Change
Revenues 29,672 41,397 40 % 56,245 78,681 40 %
Ex-TAC revenues2 24,948 35,803 44 % 47,204 67,745 44 %
Income from operations 4,262 6,987 64 % 7,421 12,372 67 %
Adjusted EBITDA2 8,756 13,097 50 % 16,460 23,865 45 %
Net income 32,575 3,416 -90 % 34,426 6,540 -81 %
Adjusted net income2 5,012 5,825 16 % 9,021 11,265 25 %

The table below provides a summary of our key financial results excluding Yandex.Market for the three and six months ended June 30, 2018 and 2019:

             
In RUB millions, excluding Yandex.Market Three months ended June 30,  Six months ended June 30, 
  2018 2019 Change 2018 2019 Change
Revenues ex. Yandex.Market  29,350  41,397 41 %  55,018  78,681 43 %
Ex-TAC revenues2 ex. Yandex.Market  24,633  35,803 45 %  46,011  67,745 47 %
Income from operations ex. Yandex.Market  4,377  6,987 60 %  7,740  12,372 60 %
Adjusted EBITDA2 ex. Yandex.Market  8,857  13,097 48 %  16,723  23,865 43 %
Net income ex. Yandex.Market  4,571  4,453 -3 %  6,573  8,298 26 %
Adjusted net income2 ex. Yandex.Market  5,241  6,862 31 %  9,365  13,023 39 %

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars at a rate of RUB 63.0756 to $1.00, the official exchange rate quoted as of June 30, 2019 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 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 (income)/loss from equity method investments line in the consolidated statements of income. Financial results excluding Yandex.Market exclude the results of Yandex.Market and Yandex's share of Yandex.Market's net loss after the deconsolidation from the three and six months periods ended June 30, 2018 and 2019.

Our segment disclosure is available in the Segment financial results table below Income from operations.

Consolidated revenues breakdown

             
In RUB millions Three months ended June 30, Six months ended June 30,
  2018 2019 Change 2018 2019 Change
Online advertising revenues:            
Yandex properties 18,863 22,854 21 % 36,338 43,766 20 %
Advertising network 5,619 6,287 12 % 10,984 12,415 13 %
Total online advertising revenues 24,482 29,141 19 % 47,322 56,181 19 %
Revenues related to Taxi segment 4,064 8,798 116 % 7,180 16,422 129 %
Other 1,126 3,458 207 % 1,743 6,078 249 %
Total revenues 29,672 41,397 40 % 56,245 78,681 40 %


             
In RUB millions, excluding Yandex.Market Three months ended June 30,  Six months ended June 30, 
  2018 2019 Change 2018 2019 Change
Online advertising revenues            
Yandex properties  18,454  22,854 24 %  34,743
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