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Yandex Announces Third Quarter 2019 Financial Results

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MOSCOW and AMSTERDAM, the Netherlands, Oct. 25, 2019 (GLOBE NEWSWIRE) -- Yandex (NASDAQ and MOEX: YNDX), one of Europe's largest internet companies and the leading search provider in Russia, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Q3 2019 Financial Highlights(1)(2)(3)

Q3 2019 consolidated financial results

  •  Revenues of RUB 45 billion ($698.8 million), up 38% compared with Q3 2018

  •  Net income of RUB 4.4 billion ($68.0 million), down 1% compared with Q3 2018; net income margin of 9.7%

  •  Adjusted net income of RUB 6.9 billion ($106.7 million), up 12% compared with Q3 2018; adjusted net income margin of 15.3%

  •  Adjusted EBITDA of RUB 13.9 billion ($216.1 million), up 29% compared with Q3 2018; adjusted EBITDA margin of 30.9%

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

  • RUB 85.4 billion ($1,326.4 million) on a consolidated basis

  • Of which RUB 25.7 billion ($399.3 million) related to Taxi segment 

 Q3 2019 Operational and Corporate Highlights

  • Share of Russian search market, including mobile, averaged 56.6% in Q3 2019, up from 55.9% in Q3 2018 and down from 56.9% in Q2 2019, according to Yandex.Radar

  • Search share on Android in Russia was 52.8% in Q3 2019, up from 49.1% in Q3 2018 and 52.3% in Q2 2019, according to Yandex.Radar

  • Search queries in Russia grew 9% compared with Q3 2018

  • Paid clicks on Yandex's and its partners' websites, in aggregate, increased 22% compared with Q3 2018

  • Average cost per click decreased 2% compared with Q3 2018

  • Number of rides in the Taxi segment grew 59% year-on-year compared with Q3 2018

  • 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

"I am delighted with another excellent set of results," said Arkady Volozh, Chief Executive Officer of Yandex. "In Q3, our ride-sharing business delivered sequential acceleration in ride growth, while Zen continued to grow its user engagement, and Yandex.Drive became the second largest car-sharing service in the world. Our strong IT expertise allows us to develop new business models, and we aim to continue preserving and growing the IT talent pool both for Yandex and the country as a whole."

"We delivered 38% year-on-year revenue growth in Q3 with great contributions from Search and Portal, Taxi and Drive," said Greg Abovsky, Chief Operating Officer and Chief Financial Officer of Yandex. "Our core business continued delivering strong results and demonstrated solid margins, while our business units and experiments maintained triple digit revenue growth, and now represent 36% of consolidated revenues."

The following table provides a summary of our key consolidated financial results for the three and nine months ended September 30, 2018 and 2019, which includes Yandex.Market financial results through April 27, 2018, the date as of which that business was deconsolidated:

             
In RUB millions Three months ended September 30,  Nine months ended September 30, 
  2018 2019 Change 2018 2019 Change
Revenues  32,570  45,014 38 %  88,815  123,695 39 %
Ex-TAC revenues2  27,277  39,257 44 %  74,481  107,002 44 %
Income from operations  5,959  7,437 25 %  13,380  19,809 48 %
Adjusted EBITDA2  10,801  13,919 29 %  27,261  37,784 39 %
Net income  4,434  4,378 -1 %  38,860  10,918 -72 %
Adjusted net income2  6,162  6,876 12 %  15,183  18,141 19 %

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars at a rate of RUB 64.4156 to $1.00, the official exchange rate quoted as of September 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.

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

Consolidated revenues breakdown

             
In RUB millions Three months ended September 30,  Nine months ended September 30, 
  2018 2019 Change 2018 2019 Change
Online advertising revenues:            
  Yandex properties3  19,965  24,903 25 %  56,303  68,669 22 %
  Advertising network  5,952  6,329 6 %  16,936  18,744 11 %
Total online advertising revenues3  25,917  31,232 21 %  73,239  87,413 19 %
Revenues related to Taxi segment  5,109  9,636 89 %  12,289  26,058 112 %
Other  1,544  4,146 169 %  3,287  10,224 211 %
Total revenues3  32,570  45,014 38 %  88,815  123,695 39 %

(3) Excluding Yandex.Market from financial results for the nine months ended September 30, 2018:

  • Online advertising revenues related to Yandex properties grew 25% year-on-year
  • Total online advertising revenues grew 22% year-on-year
  • Total revenues grew 41% year-on-year

Online advertising revenues grew 21% in Q3 2019 compared with Q3 2018 and generated 69% of total revenues. Online advertising revenues include revenues derived from performance and brand advertising on Yandex properties and in our advertising network.

Online advertising revenues from Yandex properties increased 25% in Q3 2019 compared with Q3 2018 and accounted for 55% of total revenues.

Online advertising revenues from our advertising network increased 6% in Q3 2019 compared with Q3 2018 and accounted for 14% of total revenues.

Revenues related to Taxi segment grew 89% in Q3 2019 compared with Q3 2018 and accounted for 21% of total revenues. This increase mainly reflected the solid performance of our ride-sharing business driven by increase in the number of rides and incentives optimization, the strong growth of our corporate Taxi offering, which we recognize on a gross basis, as well as the growing contribution of our food delivery businesses.

Other revenues grew 169% in Q3 2019 compared with Q3 2018 and amounted to 9% of total revenues. The growth was primarily driven by our car-sharing service Yandex.Drive, subscription revenues of Media Services and our initiatives related to IoT (Internet of Things).

Consolidated Operating Costs and Expenses

Yandex's operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A) and depreciation and amortization expenses (D&A). Apart from D&A, each of the above expense categories include personnel-related costs and expenses, relevant office space rental, and related share-based compensation expense. Increases across all cost categories reflect investments in overall growth. In Q3 2019 Yandex's headcount increased by 583 full-time employees. The total number of full-time employees was 9,588 as of September 30, 2019, up by 6% compared with June 30, 2019, and up 8% from September 30, 2018.

Cost of revenues, including traffic acquisition costs (TAC)

             
In RUB millions Three months ended September 30,  Nine months ended September 30, 
  2018  2019  Change 2018  2019  Change
TAC:    
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