Yandex N.V. Announces First Quarter 2024 Financial Results

Yandex N.V. Announces First Quarter 2024 Financial Results

AMSTERDAM, the Netherlands, April 26, 2024 -- Yandex N.V. (NASDAQ: YNDX), a Dutch public limited company, today announced its unaudited financial results for the first quarter ended March 31, 2024.

Q1 2024 Financial and Operational Highlights1,2

On February 5, 2024, we announced our binding agreement with a purchaser consortium to sell all of the Group’s businesses in Russia and certain international markets. The transaction (the “Sale”) was approved by our Shareholders in early March and will be implemented in two closings, the first of which is expected to take place in the coming weeks. In light of this Sale, in this quarter's financial report, we have classified the scope of the Group's businesses to be sold as discontinued operations, in line with ASC 205-20, Discontinued Operations criteria, which assesses whether the disposal of a business component represents a strategic shift that has or will have a major effect on the Group, the status of the approval and probability of the Sale. As such, the assets, liabilities, and results of discontinued operations preceding the completion of the Sale are presented separately in the unaudited condensed consolidated balance sheets and statements of operations.

(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 92.366 to $1.00, the official exchange rate quoted as of March 31, 2024 by the Central Bank of the Russian Federation. Following the completion of the Sale, the group will consider changing the reporting currency from Russian ruble to US dollars.
(2) The following measures presented in this release are “non-GAAP financial measures”: adjusted EBITDA/(loss), adjusted EBITDA/(loss) 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.

Corporate and Subsequent Events

• On February 5, 2024, Yandex N.V. (“YNV”) announced that it had entered into a definitive agreement with a purchaser consortium to sell all of the Yandex group’s businesses in Russia and certain international markets (the “Target”) for total valuation of RUB 475 billion, subject to adjustments, and payable in a combination of cash and Class A shares of YNV. The businesses being sold represented more than 95% of the group’s consolidated revenues in 2023, and approximately 95% of the group’s consolidated assets and employees.
  
  To date we have received all necessary regulatory approvals in Russia, including the approval from the Government Commission for Control over Foreign Investments, and antitrust approval from the Federal Antimonopoly Service. On March 7, we received the requisite Shareholder approvals (including the separate approval of Class A shareholders) for the divestment and related amendments to YNV’s articles of association.
  
  We expect the first closing will occur in the coming weeks, with the second and final closing to take place within seven weeks after first closing.
  
  Following the completion of the transaction YNV will retain a portfolio of international businesses and other non-Russian assets, including four early-stage technology businesses: (i) Nebius AI, (ii) Toloka AI, (iii) Avride, and (iv) TripleTen. Upon completion of the proposed transaction, we intend to publish pro forma financial information for the Company and the retained businesses, giving effect to the divestment.
  
  An amendment of our articles of association that was approved by our Shareholders in March will become effective at the first closing. This amendment, in particular, will eliminate the “Priority Share” currently held by the Public Interest Foundation, as well as the related rights of that Foundation to appoint two members of our board. Further, four Russian members of our Board will resign with effect from that closing. The remaining members of our Board of Directors will be John Boynton (Chairman), Rogier Rijnja and Charles Ryan.
• We are continuing our preparations for the future of the retained group. We expect to provide updates regarding the new senior management team and their strategy for the retained business in the coming months, and to nominate additional members of the Board in due course. We also expect to introduce new branding for the retained group, and to ask our Shareholders to approve a change in the legal name of our company. The Yandex brand will continue to be used by the Target group being sold.
• Neither YNV 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. YNV continues to closely monitor developments in this regard.

Consolidated Results

The following table provides a summary of our key consolidated financial results for the three months ended March 31, 2023 and 2024:

Our segment disclosure is provided in the Segment financial results section below. The segment disclosure reflects the presentation of the Target as discontinued operations and the results of retained businesses are presented as continuing operations.
 

Cash and cash equivalents as of March 31, 2024:

• RUB 86.9 billion ($941.2 million) on a consolidated basis, including RUB 14.1 billion ($152.8 million) related to continuing operations.

Total debt as of March 31, 2024:

• RUB 133.9 billion ($1,449.5 million) on a consolidated basis, including RUB 0.6 billion ($6.5 million) related to continuing operations.

Continuing operations

Continuing operations include four international businesses: Nebius AI, an AI cloud platform that is one of the largest providers of GPU capacity in Europe; Toloka AI, a data solutions partner for generative AI and LLM development; Avride, one of the world’s leading developers of self-driving technologies; and TripleTen, an EdTech service that equips people with in-demand tech skills. Thus far, securing adequate capital for the advancement of these businesses has proven challenging due to substantial constraints on the group's ability to transfer funds from its historically profitable businesses in Russia. To support the development of the four businesses in the future, we expect to retain a portion of the cash consideration received pursuant to the Sale transaction, the amount of which is to be determined by the Board.

As of Q1 2024, Nebius AI accounts for almost two thirds of YNV’s continuing operations’ total revenue, mostly driven by GPU capacity sales in Europe and worldwide as Nebuis AI is one of only a few providers of excess GPU capacity, specifically in Europe. Throughout Q1 2024, Nebius AI was working on introducing a self-service option, launched at the beginning of Q2 2024, enabling customers to directly access GPU resources bypassing traditional sales channels. In addition to enhanced operational efficiency and convenience for clients, this will allow Nebius AI to diversify and expand its customer base going forward.

In Q1 2024 Toloka AI, a data-for-AI platform, launched Mindrift, a supply service of experts-in-the-loop to engage in data preparation and validation. This has become a revenue driver for Toloka services requiring expert supervision. This is attributed to growing demand for such services among customers, particularly niche GenAI startups who are in need of quick and high-quality data solutions.

TripleTen’s Q1 2024 revenue was driven by a threefold increase year-on-year in the number of students enrolled in the bootcamp across TripleTen’s key markets of operation (USA and Latin America), coupled with a threefold reduction year-on-year in acquisition costs per customer.

Avride's main focus for Q1 2024 was R&D and the development of its existing robodelivery projects.

Discontinued operations