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par Yandex N.V. (NASDAQ:YNDX)

Yandex Announces First Quarter 2023 Financial Results

Yandex N.V.
Yandex Announces First Quarter 2023 Financial Results

27-Apr-2023 / 13:00 MSK
The issuer is solely responsible for the content of this announcement.


Yandex Announces First Quarter 2023 Financial Results

 

AMSTERDAM, the Netherlands, April 27, 2023 -- Yandex (NASDAQ and MOEX: YNDX), a Dutch public limited company and one of Europe's largest internet businesses, today announced its unaudited financial results for the first quarter ended March 31, 2023.

 

Q1 2023 Financial and Operational Highlights1,2

 

 

 

 

 

 

In RUB millions

 

Three months ended March 31

 

 

2022

2023

Change

 

  Total Revenues

 106,010

 163,275

54%

 

  Total Adjusted EBITDA3

 1,271

 12,794

n/m

Total Group

Total Adjusted EBITDA margin, %

1.2%

7.8%

6.6 pp

 

  Net income/(loss)

 (13,037)

 5,785

n/m

 

  Adjusted Net Income/(loss)

 (8,124)

 2,571

n/m

 

  Share of Russian search market, %

61.0%

63.3%

2.3 pp

 

  Search share on Android, %

59.9%

62.6%

2.7 pp

 

  Search share on iOS, %

46.1%

49.1%

3.0 pp

Search and

  Revenues

 43,803

 67,545

54%

Portal

  Ex-TAC revenues

 36,763

 55,257

50%

 

  Adjusted EBITDA

 19,561

 34,713

77%

 

Adjusted EBITDA margin, %

44.7%

51.4%

6.7 pp

 

  Revenues

 55,194

 88,475

60%

E-Commerce, Mobility

  GMV of Mobility4

 167,418

 224,734

34%

 and Delivery

  GMV of E-commerce5

 64,580

 107,836

67%

 

  GMV of other O2O services6

 40,105

 68,515

71%

 

  Total Adjusted EBITDA loss

 (8,445)

 (10,799)

n/m

Plus and Entertainment Services

  Yandex Plus subscribers7, MM

 12.5

 22.1

77%

 

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars in this release at a rate of RUB 77.0863 to $1.00, the official exchange rate quoted as of March 31, 2023 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 and adjusted net income/(loss). Please see the section “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) In March 2022, Yandex incurred one-off personnel expenses due to an additional (13th) month’s salary paid to employees in the aggregate amount of RUB 5,890 million in order to support them in the face of macroeconomic instability, including accelerated inflation and currency volatility. Excluding this one-off payment, total adjusted EBITDA was RUB 7.2 billion in Q1 2022.
(4) GMV (or gross merchandise value) of Mobility is defined as the total amount paid by customers for ride-hailing, car-sharing and scooters rent services booked through our platform, including VAT.
(5) GMV of E-commerce is defined as the value of all merchandise sold through our Yandex Market marketplace and Yandex Lavka as well as the value of products sold through Yandex Eats and Delivery Club grocery service (delivered and paid for), including VAT.
(6) GMV of other O2O (online-to-offline) services includes the total amount paid by customers and partner businesses for Yandex Delivery and Yandex Fuel services, the value of orders delivered through the Yandex Eats and Delivery Club Food Delivery services, Lavka Israel, and several other smaller O2O experiments, including VAT.
(7) Starting from June 2022, we made several adjustments to our methodology for calculating the number of subscribers, in particular: including mobile operators’ subscribers who do not have Yandex account, and improving the quality of counting unique users who have multiple Plus subscriptions. As a result, the previously disclosed numbers for Q1 2022 were restated

 

 

Financial outlook

 

Given that uncertainty concerning future geopolitical developments and the macro environment remains high, our visibility over the short- and medium-term is limited and we remain unable to provide any forward-looking expectations at this stage. We aim to remain transparent about the current performance and key trends across our businesses.

 

Corporate and Subsequent Events

 

  • On April 21, 2023, Yandex entered into an agreement with Uber NL Holdings 1 B.V., a subsidiary of Uber Technologies Inc., and on the same day Yandex acquired Uber’s entire remaining 28.98% interest in the MLU B.V. mobility joint venture, for total consideration in cash of $702.5 million. The boards of directors of both Uber and Yandex approved this transaction and it was not subject to the approval of the shareholders of either party. The parties received all required regulatory approvals.
  • On March 15, 2023, as a result of the continued geopolitical circumstances affecting Russia and their potential impact on the company, we received a notice from the Listing Qualifications Staff of Nasdaq which determined to delist the company’s securities from the Nasdaq Global Select Market as of March 24, 2023, exercising its broad discretionary authority under Nasdaq Listing Rule 5101 to delist securities. On March 21, 2023, we submitted a request for a hearing to appeal such determination. A hearing will be held in late April 2023, and the delisting of our Class A shares will be stayed pending the issuance of a written decision of the hearings panel. Until then, the trading halt that was implemented on February 28, 2022, remains in effect. As of the date of this press release, the trading of our shares on the Moscow Exchange remains intact, however the liquidity of our shares on that exchange remains limited to the number of shares held in the Russian National Stock Depository (NSD) system.
  • The Board is progressing the proposed restructuring of the Yandex group’s overall ownership and governance with a view to ensuring the group’s sustainable development and success of all of our businesses over the longer term (as previously announced in November 2022). The Board is working in particular on the potential divestment by our Dutch parent company of ownership and control of a number of our core businesses, including all Russia-based businesses. The Board also aims to enable the international divisions of certain services (self-driving, cloud computing, data labeling / AI training and EdTech) to develop independently from the Russia-based businesses. Our goal is to come to our shareholders for approval of a restructuring proposal later this year.
  • Neither Yandex N.V. nor any of its group companies is a target of sanctions in the United States, European Union, Switzerland or United Kingdom, and the Yandex group is not owned or controlled by any persons who have been designated under such sanctions. Yandex continues to closely monitor developments in this regard.

 

Impact of the current geopolitical crisis

 

Current geopolitical tensions and their impact on the Russian and global economy have created an exceptionally challenging environment for our business, team and shareholders.

These developments have adversely impacted (and may in the future materially adversely impact) the macroeconomic climate in Russia, resulting in volatility of the ruble, currency controls, materially increased interest rates and inflation and a potential contraction in consumer spending, as well as the withdrawal of foreign businesses and suppliers from the Russian market. In addition, laws or regulations may be adopted that may adversely affect our non-Russian shareholders and the value of the shares they hold in our company. We provided detailed information on our risk exposure and possible adverse impacts on our businesses in our Annual Report on Form 20-F for the year ended December 31, 2022, which was filed on April 20, 2023.

We continue to provide services to our users and partners with no interruptions. We are taking appropriate measures to conserve cash and to consider our capital allocation and budget appropriately during this period of uncertainty, while remaining committed to continue investing in the development of our key businesses and services. We are closely monitoring sanctions and export control developments as well as the macroeconomic climate and consumer sentiment in Russia and we are assessing contingency plans to address potential developments. Our Board and management are focused on the wellbeing of our approximately 23,000 employees in Russia and abroad, while doing everything we can to safeguard the interests of our shareholders and other stakeholders.

 

Consolidated Results

 

The following table provides a summary of our key consolidated financial results for the three months ended March 31, 2022 and 2023:

 

 

 

 

 

In RUB millions

Three months ended March 31, 

 

2022

2023

Change

Revenues

 106,010

 163,275

54%

Ex-TAC revenues

 99,864

 152,172

52%

Income/(loss) from operations

 (12,434)

 1,970

n/m

Adjusted EBITDA

 1,271

 12,794

n/m

Net income/(loss)

 (13,037)

 5,785

n/m

Adjusted net income/(loss)

 (8,124)

 2,571

n/m

 

Our segment disclosure is provided in the Segment financial results section below.

Cash, cash equivalents and term deposits as of March 31, 2023:

  • RUB 119.4 billion ($1,548.9 million) on a consolidated basis.

 

Segment financial results

 

Starting in Q1 2023, we introduced the following changes to our segments under which we reported our quarterly financial results previously, in order to better reflect the operational structure of our businesses:

  • we renamed the Devices business within our Other Business Units and Initiatives category to Devices and Alice, which better reflects the nature of that business;
  • we transferred the following businesses from the Search and Portal segment to the businesses included in the Other Business Units and Initiatives category: Yandex 360 to Yandex Cloud, Alice voice assistance to Devices and Alice, and Yandex Pay and Yandex ID to FinTech; and
  • we transferred RouteQ from the Other Business Units and Initiatives category to the Delivery business within the E-Commerce, Mobility and Delivery segment.

These changes have been applied retroactively to all periods presented.

 

Search & Portal

 

Our Search and Portal segment includes Search, Geo, Weather and a number of other services offered in Russia, Belarus and Kazakhstan.

 

Key operational trends:

  • Share of Russian search market, including mobile, averaged 63.3% in Q1 2023, up 2.3 pp from 61.0% in Q1 2022 and an improvement from 62.6% in Q4 2022, according to Yandex Radar
  • Search share on Android in Russia was 62.6% in Q1 2023, up 2.7 pp from 59.9% in Q1 2022 and an improvement from 62.0% in Q4 2022, according to Yandex Radar
  • Search share on iOS in Russia was 49.1% in Q1 2023, up 3.0 pp from 46.1% in Q1 2022 and an improvement from 48.0% in Q4 2022, according to Yandex Radar
  • Mobile search traffic was 67.9% of our total search traffic in Q1 2023. Mobile revenues represented 60.7% of our search revenues in Q1 2023

 

 

 

 

 

 

In RUB millions

Three months ended March 31,

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