HeadHunter Group PLC Announces Second Quarter 2019 Financial Results

MOSCOW, Sept. 16, 2019 (GLOBE NEWSWIRE) -- HeadHunter Group PLC HHR announced today its financial results for the quarter ended June 30, 2019. As used below, references to "we," "our," "us" or the "Company" or similar terms shall mean HeadHunter Group PLC.

Second Quarter 2019 Financial and Operational Highlights

• Revenue up 25.7% primarily due to the increase in revenue in our Russia segment. Russia segment revenue up 24.7% mainly driven by the increase in the number of paying customers in Small and Medium Accounts by 37.7% to 140,147 paying customers and the increase in the average revenue per customer ("ARPC") in Key Accounts in Moscow and St. Petersburg by 17.3%.
  
  
• Net Income down to ₽275 million from ₽322 million as the positive impact from our operations was offset by the expenses we incurred in relation to our IPO.
  
  
• Adjusted EBITDA up 36.0% primarily due to the increase in revenue, and Adjusted EBITDA Margin up to 52.0% from 48.1% as our marketing and general and administrative expenses (excluding the IPO-related costs) declined as a percentage of revenue.
  
  
• Adjusted Net Income up 35.8% primarily due to the increase in revenue, and Adjusted Net Income Margin up to 31.1% from 28.8% as our marketing and general and administrative expenses (excluding the IPO-related costs) and interest expense declined as a percentage of revenue.

• Net Working Capital as of June 30, 2019 remained flat as compared to December 31, 2018, as the increase in trade and other payables over the six months ended June 30, 2019 due to the increase in the IPO-related expenses was offset by the increase in the advances paid.
  
  
• Net Debt decreased by ₽327 million, or 9.1%, primarily due to the cash generated from operating activities, partly offset by the acquisition of a 25.01% ownership interest in LLC "Skilaz", Russian HR technology company which automates routine recruiting processes, for ₽232 million, capital expenditures, dividends paid to minority holders, and the effect of exchange rate fluctuations on cash.
  
  
• Net Debt to Adjusted EBITDA Ratio declined from 1.3x to 0.9x mainly due to the increase in Adjusted EBITDA.

"We are pleased to announce another strong set of operational and financial results for the second quarter of 2019, despite the ongoing economic slowdown and the impact of several holidays in May," said Mikhail Zhukov, Chief Executive Officer of HeadHunter Group PLC.

"In slow economic environment, enterprises strive for efficiency and optimization, which online recruitment in general, and HeadHunter as the market leader in particular, help to secure. As a result, we had a strong quarter in terms of our customer base expansion – we managed to sustain high customer growth in the other regions of Russia and in Small and Medium Accounts, both of which we believe remain the most underpenetrated segments.

"We are also very happy with the recent brand recognition study results showing that, in terms of top-of-mind brand awareness, we are not only the leaders by a big margin in the white collar segment, which traditionally is our strongest area, but we are also now the leader in the blue collar area. This evidences our successful transformation towards a universal platform serving various user categories.  

"We continued to drive our mobile platform development and our significantly redesigned mobile application, featuring a fully re-worked first time user session and simple and intuitive interactions to optimize engagement and conversions, is now downloaded by more than 20 million users to date.

"Significant investment in brand and product quality enables us to reach out to all types of candidates with the result that we achieved recently an important milestone of 40 million CVs on the platform.

"We believe that our services have a growing importance for business and the economy in conditions of a challenging macro environment and worsening demography. We are very excited to deliver on expectations."

Operating Segments

For management purposes, we are organized into operating segments based on the geography of our operations. Our operating segments include "Russia," "Belarus," "Kazakhstan" and other countries. As each segment, other than Russia, individually comprises less than 10% of our revenue, for reporting purposes, we combine all segments other than Russia into the "Other segments" category.

Customers

We sell our services predominantly to businesses that are looking for job seekers to fill vacancies inside their organizations. We refer to such businesses as "customers." In Russia, we divide our customers into (i) Key Accounts and (ii) Small and Medium Accounts, based on their annual revenue and employee headcount. We define "Key Accounts" as customers who, according to the Spark-Interfax database, have an annual revenue of ₽2 billion or more or a headcount of 250 or more employees and have not marked themselves as recruiting agencies on their page on our website, and we define "Small and Medium Accounts" as customers who, according to the Spark-Interfax database, have both an annual revenue of less than ₽2 billion and a headcount of less than 250 employees and have not marked themselves as recruiting agencies on their page on our website. Our website allows several legal entities and/or natural persons to be registered, each with a unique identification number, under a single account page (e.g., a group of companies). Each legal entity registered under a single account is defined as a separate customer and is included in the number of paying customers metric. Natural persons registered under a single account are assumed to be employees of the legal entities of that account and thus, are not considered separate customers and are not included in the number of paying customers metric. However, in a specific reporting period, if only natural persons used our services under such account, they are collectively included in the number of paying customers as one customer.

Seasonality

Revenue

We generally do not experience substantial seasonal fluctuations in demand for our services and our revenue remains relatively stable throughout each quarter. However, as our customers are predominately businesses and use our services mostly on business days, our quarterly revenue is affected by the number of business days in a quarter, with the exception of our services that represent "stand-ready" performance obligations, such as subscriptions to access our curriculum vitae ("CV") database, which are satisfied over the period of subscription, including weekends and holidays.

Public holidays in Russia predominantly fall during the first quarter of each year, which results in lower business activity in that quarter. Accordingly, our first quarter revenue is typically slightly lower than in the other quarters. For example, our first quarter revenue in our Russia segment in 2017 and 2018 was 21.1% and 20.9%, respectively, and our first half of the year revenue in our Russia segment in 2017 and 2018 was 45.5% and 45.6%, respectively, of total Russia segment revenue for the year.

The number of business days in a quarter may also be affected by calendar layout in a specific year; also, the Government of Russia decides on an annual basis how public holidays that occur on weekends will be reallocated to business days throughout the year as a requirement of the Labor Code of Russia. As a result, the number of business days in a quarter may be different in each year, while the total number of business days in the year would remain the same. This affects our revenue in a particular quarter, and year-on-year revenue growth rate for that quarter, if the allocation of business days in the comparable period was different. In addition, when a calendar layout in a specific year provides for several consecutive holidays, or small number of business days between holidays, or holidays adjacent to weekends, HR managers of our customers may take short vacations, further contributing to the decrease in business activities in these periods.

The following table illustrates the number of business days by quarter for the years 2017 to 2019. In 2019, the total number of working days is the same as in 2018, but there is 1 business day more, 2 business days less, and 1 business day more in the first quarter, second quarter, and third quarter, respectively, and the same number of business days in the fourth quarter:

Therefore, in the second quarter of 2019, we saw a negative impact on our revenue and revenue growth rate from fewer business days as compared to the second quarter of 2018, which has offset the positive impact from additional business days we saw in the first quarter of 2019. Also, due to the particular calendar layout in this year, our revenue in the period from May 6, 2019 to May 8, 2019 was unusually low, as these days were adjacent to holidays and HR managers of our customers could take short vacations, which contributed to lower customer activity on our platform.

Operating costs and expenses (exclusive of depreciation and amortization)

Our operating costs and expenses (exclusive of depreciation and amortization) consist primarily of personnel and marketing expenses. Personnel and marketing expenses cumulatively accounted for 77.4% and 78.9% of our total operating costs and expenses (exclusive of depreciation and amortization) for the years ended December 31, 2018 and December 31, 2017, respectively. Most of our marketing and personnel expenses are fixed and not directly tied to our revenue.

Marketing expenses are more volatile in terms of allocation to quarters, which is affected by our decisions on how we realize our strategy in a particular year, which can differ from year to year. Therefore, total marketing expenses as a percentage of revenue for a particular quarter may not be fully representative of the whole year. Personnel expenses are relatively stable over the year; however, they are also affected by other dynamics, such as our hiring decisions. Costs and expenses, such as share-based compensation or foreign exchange gains or losses, can be significantly concentrated in a particular quarter.

Second quarter segment external expenses in our Russia segment in 2017 and 2018 were 22.7% and 24.0%, respectively, of total Russia segment external expenses for the year.

Net income and Adjusted EBITDA

Even though our revenue remains relatively stable throughout each quarter, seasonal revenue fluctuations described above affect our net income. As a result of revenue seasonality, our profitability in first quarter is usually lower than in other quarters and for the full year, because our expenses as a percentage of revenue are usually higher in first quarter due to lower revenue. For example, our Adjusted EBITDA Margin was 34.6% for the first quarter of 2018 and 41.9% for the six months ended June 30, 2018, compared to 46.7% for the full year 2018. Our profitability is also affected by our decisions on timing of expenses, as described above.

Contract liabilities

Our contract liabilities are affected by the annual subscriptions' renewal cycle in our Key Accounts customer segment. A substantial number of our Key Accounts renew their subscriptions in the first quarter and prepay us in the fourth quarter of a previous year, as per our normal payment terms. As a result, we receive substantial prepayments from our customers in the fourth quarter which causes consequential increase in our contract liabilities at the end of that quarter. For example, our contract liabilities as of March 31, June 30, September 30, and December 31, 2018 were ₽1,607 million, ₽1,548 million, ₽1,553 million, and ₽2,073 million, respectively.

Net cash generated from operating activities

Our net cash generated from operating activities is affected by seasonal fluctuations of business activity as explained in "Revenue" and by substantial prepayments from our customers (see "Contract liabilities"), as well as by our decisions in regard to timing of expenses (see "Operating expenses (exclusive of depreciation and amortization)"), and to a lesser extent by payment terms provided to us by our largest suppliers, such as TV advertising agencies and others.

Net working capital

Our net working capital is primarily affected by changes in our contract liabilities as discussed above. As our contract liabilities are usually highest in the fourth quarter, our net working capital is usually lowest in the fourth quarter. For example, our net working capital of March 31, June 30, September 30, and December 31, 2018 was ₽(2,044) million, ₽(2,048) million, ₽(2,036) million, and ₽(2,623) million, respectively.

Second Quarter 2019 Results

Our revenue was ₽1,902 million for the three months ended June 30, 2019 compared to ₽1,513 million for the three months ended June 30, 2018. Revenue for the three months ended June 30, 2019 increased by ₽388 million, or 25.7%, compared to the three months ended June 30, 2018, primarily due to the increase in revenue in our Russia segment. Revenue in our Russia segment was ₽1,758 million for the three months ended June 30, 2019 compared to ₽1,409 million for the three months ended June 30, 2018. Revenue in our Russia segment increased by ₽349 million, or 24.7%. This was primarily due to the growth in the number of paying Small and Medium Accounts by 65.1% in the other regions of Russia and by 14.5% in Moscow and St. Petersburg, and due to the increase in ARPC in Key Accounts in Moscow and St. Petersburg by 17.3%, driven by price increases and an increase in the usage of our services by this type of customer.

The following table breaks down revenue by product.

The following table sets forth the revenue broken down by type of customer and region.

The following table sets forth the number of paying customers and ARPC for the periods indicated:

• Our customer base has continued to expand, as penetration of online recruitment in Russian regions outside of Moscow and St. Petersburg and Small and Medium Accounts continue to grow.
  
  
• In our Key Accounts, ARPC has increased by 17.3% in Moscow and St. Petersburg and remained flat in Other regions of Russia. Increase in the ARPC in Moscow and St. Petersburg was approximately equally driven by the increase in prices effective January 1, 2019 (e.g. 10% on average for subscriptions and 18% for a single "Standard" type job posting) and a reduction of discounts, and the increase in the usage of service, which was driven by the increase in the average number of job postings per customer, whilst the average number of subscription days per customer (total for Bundled Subscriptions and CV Database access) remained flat. ARPC in Other regions of Russia was impacted by acquisition of new customers, who initially have a lower ARPC, while ARPC of the cohort of customers acquired before January 1, 2018 has increased by 9.3% in this customer segment.
  
  
• In our Small and Medium Accounts, ARPC has increased by 2.5% in Moscow and St. Petersburg and decreased by 3.5% in Other regions of Russia. ARPC dynamics in this customer segment was impacted by acquisition of new customers, who initially have a lower ARPC, while ARPC of the cohort of customers acquired before January 1, 2018 has increased by 12.1% in Moscow and St. Petersburg and 15.8% in Other regions of Russia in this customer segment, in both cases primarily driven by the increase in the average number of job postings per customer.

Operating Costs and Expenses (exclusive of depreciation and amortization)

Operating costs and expenses (exclusive of depreciation and amortization) were 1,132 million for the three months ended June 30, 2019 compared to ₽817 million for the three months ended June 30, 2018, representing an increase of ₽315 million, or 38.6%.

Our personnel expenses and professional services have increased as a percentage of revenue for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, primarily driven by the increase in share-based compensation (see ‘Personnel expenses' below) and IPO-related expenses (see ‘Other general and administrative expenses'), while other operating expenses were flat or decreased as a percentage of revenue (see table below). Excluding share-based compensation and IPO-related expenses, our personnel expenses remained flat as a percentage of revenue, and our general and administrative expenses decreased as a percentage of revenue.

Personnel expenses

Personnel expenses increased by ₽164 million, or 38.2%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. The main factors that contributed to the increase in personnel expenses are: (i) an increase in share-based compensation, primarily due to beneficial modification of the 2016 Unit Option Plan and the grant of new options under the 2016 Unit Option Plan and 2018 Unit Option Plan in the second quarter of 2019; (ii) 92 new employee hires from June 30, 2018 to June 30, 2019, primarily in the development and production teams in our Russia segment, thus increasing headcount in the Russia segment to 671 people as of June 30, 2019; and (iii) the indexation of wages effective from the first quarter of 2019.

Marketing expenses

Marketing expenses increased by ₽25.5 million, or 13.0%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, primarily due to an increase of TV marketing expense.

Other general and administrative expenses

Our professional services have increased by ₽189 million, or 200.0%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, as the decrease in the other professional services was offset by the increase in the professional services related to the IPO.

Our office rent and maintenance expenses decreased by ₽55 million, or 9.9%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. At January 1, 2019, we initially adopted IFRS 16, the new accounting standard that introduced a single, on-balance sheet accounting model for lessees. As a result, we, as a lessee, have recognized right-of-use assets representing our rights to use the underlying assets and lease liabilities representing our obligation to make lease payments. We have applied IFRS 16 using the modified retrospective approach. Accordingly, the comparative information presented for 2018 has not been restated and is presented, as previously reported, under IAS 17 and related interpretations. We have recognized ₽18,621 thousand of depreciation charges and ₽8,430 thousand of interest costs from the leases in the second quarter of 2019.

Net foreign exchange loss

Net foreign exchange loss was ₽13 million for the three months ended June 30, 2019, an increase of ₽7 million, compared to a ₽6 million loss for the three months ended June 30, 2018. The net foreign exchange loss for the three months ended June 30, 2019 reflects mostly the foreign exchange loss on USD-denominated cash balances, offset by the foreign exchange gain on USD-denominated payables, including dividend payable and IPO-related expenses payable.

Depreciation and amortization

Depreciation and amortization were ₽169 million for the three months ended June 30, 2019, compared to ₽147 million for the three months ended June 30, 2018. Depreciation and amortization increased by ₽22 million, or 14.6%, primarily due to a depreciation charge of ₽18.6 million related to right-of-use assets recognized as of January 1, 2019 under the new standard IFRS 16 "Leases." (See "Other general and administrative expenses").

Finance income and costs

Finance income was ₽19.5 million for the three months ended June 30, 2019 compared to ₽20 million for the three months ended June 30, 2018. Finance costs were ₽157 million for the three months ended June 30, 2019 compared to ₽159 million for the three months ended June 30, 2018.

Income tax expense

Income tax expense was ₽174.7 million for the three months ended June 30, 2019 compared to ₽88.7 million for the three months ended June 30, 2018, driven by the reversal of the deferred tax liability in the second quarter of 2018 not occurring in the second quarter of 2019, and the increase of tax base primarily due to the increase in revenue. The effective tax rate was 38.8% for the three months ended June 30, 2019 and 21.6% for the three months ended June 30, 2018.

The effective tax rate for the three months ended June 30, 2018 was affected by the reversal of the deferred tax liability. Without the effect from the reversal, the effective tax rate for the three months ended June 30, 2018 would have been 37.2%.

The effective tax rate for the three months ended June 30, 2019 was affected by the one-off IPO-related expenses, which are mostly non-deductible for tax purposes. Without the effect from the IPO-related expenses, the effective tax rate for the three months ended June 30, 2019 would have been 29.5%.

Net income

Net income was ₽275 million for the three months ended June 30, 2019 compared to ₽322 million for the three months ended June 30, 2018. Net income decreased by ₽46 million compared with the three months ended June 30, 2018, primarily due to the reasons described above.

Adjusted EBITDA

Adjusted EBITDA was ₽989 million for the three months ended June 30, 2019 compared to ₽727 million for the three months ended June 30, 2018, and it increased by ₽262 million primarily due to the increase in revenue.

Adjusted Net Income

Adjusted Net Income was ₽591 million for the three months ended June 30, 2019 compared to ₽436 million for the three months ended June 30, 2018. Adjusted Net Income increased by ₽156 million compared with the three months ended June 30, 2018, primarily due to the reasons described above.

Cash Flows

The following table sets forth the summary cash flow statements for the periods indicated:

Net cash generated from operating activities

For the six months ended June 30, 2019, net cash generated from operating activities was ₽1,012 million compared to ₽618 million for the six months ended June 30, 2018. The change between the periods of ₽395 million was primarily driven by an increase in sales, which resulted in an increase in net income (adjusted for non-cash items and items not affecting cash flow from operating activities), and a decrease in interest paid due to timing of cash flows, partially offset by an increase in income tax paid due to an increased tax base.

Net cash used in investing activities

For the six months ended June 30, 2019, net cash used in investing activities was ₽361 million compared to ₽132 million for the six months ended June 30, 2018. The change between the periods of ₽228 million was primarily due to the acquisition of a 25.01% ownership interest in LLC "Skilaz" for ₽232 million.

Net cash used in financing activities

For the six months ended June 30, 2019, net cash used in financing activities was ₽666 million compared to ₽341 million for the six months ended June 30, 2018. The change between the periods was primarily due to repayment of a ₽270 million loan to the associate of a non-controlling shareholder, and an increase in the dividends paid to non-controlling shareholders by ₽36 million.

Capital Expenditures

Our additions to property and equipment and intangible assets in the six months ended June 30, 2019 were ₽192 million, an increase of ₽32 million compared to ₽160 million for the six months ended June 30, 2018, primarily due to ₽71 million in office renovation costs during the six months ended June 30, 2019, as we have redesigned our office in Yaroslavl in the six months ended June 30, 2019 and are in process of redesigning our office in Moscow, and have allocated a budget of ₽220 to ₽250 million for this purpose in 2019, partially offset by ₽41 million of costs relating to the acquisition of Job.ru CV database from Pronto Media Holding LLC incurred in the six months ended June 30, 2018 that did not occur in the same period in 2019.

Financial Outlook

The following forward-looking statement reflects our expectations as of September 16, 2019:

Based on our recent performance, we currently expect our revenue to grow in the range of 27% to 30% year-over-year and our Adjusted EBITDA Margin to be between 48% and 50% for the year 2019.

This outlook reflects our current view, based on the trends that we see at this time, and may change in light of market and economic developments in the business sectors and jurisdictions in which we operate.

Conference Call Information

We will host a conference call and webcast to discuss our results at 08:00 a.m. U.S. Eastern Time (3:00 p.m. Moscow time, 1:00 p.m. London time) the same day.

Second Quarter 2019 Financial Results Conference Call

Monday, September 16th, 2019

08:00 a.m. U.S. Eastern Time (3:00 p.m. Moscow time, 1:00 p.m. London time)

To participate in the conference call, please use the following details:

Webcast:
https://edge.media-server.com/m6/p/hdiq5op3

About HeadHunter Group PLC

HeadHunter is the leading online recruitment platform in Russia and the Commonwealth of Independent States focused on providing comprehensive talent acquisition services, such as access to extensive CV database, job postings (jobs classifieds platform) and a portfolio of value-added services.

USE OF NON-IFRS FINANCIAL MEASURES

To supplement our condensed consolidated interim financial information, which is prepared and presented in accordance with IAS 34 Interim Financial Reporting, we present the following non-IFRS¹ financial measures: Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. For more information on these non-IFRS financial measures, please see the tables captioned "Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures", included following the accompanying financial tables. We define the various non-IFRS financial measures we use as follows:

• "Adjusted EBITDA" as net income (loss) plus: (1) income tax expense; (2) net interest income or expense; (3) depreciation and amortization; (4) transaction costs related to business combinations; (5) gain on the disposal of subsidiary; (6) expenses related to equity-settled awards (including related social taxes); (7) IPO-related costs and income, and (8) share of profit or loss of equity-accounted investees.
• "Adjusted Net Income" as net income (loss) plus: (1) transaction costs related to the acquisition of the outstanding equity interests of Headhunter FSU Limited by HeadHunter Group PLC from Mail.Ru Group Limited (the "Acquisition"); (2) gain on the disposal of subsidiary; (3) transaction costs related to the disposal of subsidiary; (4) amortization of intangible assets recognized upon the Acquisition; (5) the tax effect of the adjustment described in (4); (6) (gain)/loss related to the remeasurement and expiration of a tax indemnification asset; (7) IPO-related costs and income, and (8) share of profit or loss of equity-accounted investees.
• "Adjusted EBITDA Margin" as Adjusted EBITDA divided by revenue.
• "Adjusted Net Income Margin" as Adjusted Net Income divided by revenue.

Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and its operations. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.

Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

• Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,
• Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect changes in, or cash requirements for, our working capital needs, and
• the fact that other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin differently than we do, which limits their usefulness as comparative measures.

The tables at the end of this release provide detailed reconciliations of each non-IFRS financial measure we use to the most directly comparable IFRS financial measure.

We provide earnings guidance on a non-IFRS basis and do not provide earnings guidance on an IFRS basis. A reconciliation of our Adjusted EBITDA Margin guidance to the most directly comparable IFRS financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including depreciation and amortization, expenses related to equity-settled awards and the other adjustments reflected in our reconciliation of historical non-IFRS financial measures, the amounts of which, could be material.

Net Working Capital

Net Working Capital is a financial measure not defined under IFRS. We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Working Capital.

Net Debt and Net Debt to Adjusted EBITDA Ratio

Net Debt and Net Debt to Adjusted EBITDA Ratio are financial measure not defined under IFRS. We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt. These measures should not be considered in isolation or as a substitute for any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Debt and discussion of Net Debt to Adjusted EBITDA Ratio.

¹ _{Denotes International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB").}

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the year ending December 31, 2019, as well as statements that include the words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statements of a future or forward-looking nature. These forward-looking statements are based on management's current expectations. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, significant competition in our markets, our ability to maintain and enhance our brand, our ability to improve our user experience and product offerings, our ability to respond to industry developments, our reliance on Russian Internet infrastructure, macroeconomic and global geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment, privacy and data protection concerns  and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the caption "Risk Factors" in our prospectus pursuant to Rule 424(b) filed with the SEC on May 9, 2019 as such factors may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission ("SEC"), which is on file with the SEC and is available on the SEC website at www.sec.gov. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Contact:

Roman Safiyulin
+ 7 966 005-17-82

Unaudited Condensed Consolidated Interim Statement of Income and Comprehensive Income

For the three and six months ended

(in thousands of RUB and USD, except per share amounts)

Unaudited Condensed Consolidated Interim Statement of Financial Position

As at

Unaudited Condensed Consolidated Interim Statement of Cash Flows

For the six months ended

Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures

Reconciliation of EBITDA and Adjusted EBITDA from net income, the most directly comparable IFRS financial measure:

Reconciliation of Adjusted Net Income from net income, the most directly comparable IFRS financial measure:

We calculate our Net Debt to Adjusted EBITDA Ratio by dividing Net Debt by Adjusted EBITDA.

Calculation of Adjusted EBITDA on the last twelve months basis as of June 30, 2019: