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 fourth quarter and the full
year ended December 31, 2018.
Q4 2018 Financial Highlights(1)(2)(3)
Q4 2018 consolidated financial results
- Revenues of RUB 38.8 billion ($559.1 million),
up 39% compared with Q4 2017
- Net income of RUB 5.9 billion ($85.1
million), up 69% compared with Q4 2017; net income
margin of 15.2%
- Adjusted net income of RUB 6.9 billion
($100.0 million), up 32% compared with Q4 2017; adjusted
net income margin of 17.9%
- Adjusted EBITDA of RUB 12.3 billion ($177.4
million), up 33% compared with Q4 2017; adjusted EBITDA
margin of 31.7%
Q4 2018 financial results excluding Yandex.Market in
2017 and 2018
- Revenues excluding Yandex.Market of RUB 38.8
billion ($559.1 million), up 46% compared with Q4 2017
- Net income excluding Yandex.Market of RUB 6.5
billion ($93.2 million), up 102% compared with Q4 2017
- Adjusted net income excluding Yandex.Market of
RUB 7.5 billion ($108.2 million), up 53% compared with Q4 2017;
adjusted net income margin excluding Yandex.Market
of 19.4%
- Adjusted EBITDA excluding Yandex.Market of RUB
12.3 billion ($177.4 million), up 38% compared with Q4 2017;
adjusted EBITDA margin excluding Yandex.Market of
31.7%
- Cash and cash equivalents as of December 31,
2018:-- RUB 68.8 billion ($990.3 million) on a
consolidated basis-- Of which RUB 27.3 billion ($393.3
million) related to Taxi segment -- RUB 29.1 billion ($418.6
million) related to Yandex.Market and is not included in Yandex
N.V. consolidated balance sheet
FY 2018 Financial Highlights(1)(2)(3)
FY 2018 consolidated financial results
- Revenues of RUB 127.7 billion ($1,837.6
million), up 36% compared with FY 2017
- Net income of RUB 45.9 billion ($660.1
million), up 430% compared with FY 2017; net income
margin of 35.9%
- Adjusted net income of RUB 22.1 billion
($318.7 million), up 44% compared with FY 2017; adjusted
net income margin of 17.3%
- Adjusted EBITDA of RUB 39.6 billion ($569.9
million), up 36% compared with FY 2017; adjusted EBITDA
margin of 31.0%
FY 2018 financial results excluding Yandex.Market in
2017 and 2018
- Revenues excluding Yandex.Market of RUB 126.4
billion ($1,819.9 million), up 41% compared with FY 2017
- Net income excluding Yandex.Market of RUB 18.4
billion ($265.3 million), up 146% compared with FY 2017
- Adjusted net income excluding Yandex.Market of
RUB 22.9 billion ($329.7 million), up 62% compared with FY 2017;
adjusted net income margin excluding Yandex.Market
of 18.1%
- Adjusted EBITDA excluding Yandex.Market of RUB
39.9 billion ($573.7 million), up 45% compared with FY 2017;
adjusted EBITDA margin excluding Yandex.Market of
31.5%
Q4 2018 Operational and Corporate
Highlights
- Share of Russian search market, including
mobile, averaged 56.5% in Q4 2018, flat compared to Q4 2017 and up
from 55.9% in Q3 2018, according to Yandex.Radar
- Search share on Android in Russia was 49.5% in
Q4 2018, up from 49.1% in Q3 2018 and 45.0% in Q4 2017, according
to Yandex.Radar
- Search queries in Russia grew 10% compared
with Q4 2017
- Paid clicks on Yandex’s and its partners’
websites, in aggregate, increased 10% compared with Q4 2017.
Excluding Yandex.Market, paid clicks grew 20%
compared to Q4 2017
- Average cost per click grew 7% compared with
Q4 2017. Excluding Yandex.Market, average cost per
click increased 4% compared to Q4 2017
- Number of rides in the Taxi segment (including
Uber rides) grew 112% year-on-year compared with Q4 2017; this
includes a full quarter of Uber rides in Q4 2018
- Yandex obtained official approval and started to operate its
self-driving car in an autonomous mode in Tel
Aviv, Israel
- Yandex completed the transaction for the purchase of a property
site for its new Moscow headquarters
“Our performance in 2018 was exceptional,” said Arkady Volozh,
Chief Executive Officer of Yandex. “We strengthened our positions
in search, launched new online-to-offline businesses - Yandex.Drive
and Yandex.Eats, and started sharing our technology and expertise
in Yandex.Cloud. I am particularly proud of our accomplishments in
self-driving, as, in just two years, we have already managed to
create a real robo-taxi service.”
“In Q4 we delivered another solid set of results with revenue
growth of 39% year-on-year, or 46% excluding Yandex.Market,” said
Greg Abovsky, Chief Operating Officer and Chief Financial Officer
of Yandex. “We remain committed to investing further in new
initiatives, encouraged by the success of our ride-sharing segment
of Taxi, which has now reached profitability thanks to our
investments and continued focus.”
The following table provides a summary of our key
consolidated financial results for the three and
twelve months ended December 31, 2017 and 2018, which includes
Yandex.Market financial results through April 27, 2018:
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
| Revenues |
27,860 |
38,842 |
39% |
|
94,054 |
127,657 |
36% |
|
|
Ex-TAC revenues2 |
23,071 |
32,678 |
42% |
|
76,709 |
107,159 |
40% |
|
|
Income from operations |
4,817 |
7,471 |
55% |
|
13,036 |
20,861 |
60% |
|
|
Adjusted EBITDA2 |
9,293 |
12,323 |
33% |
|
29,075 |
39,594 |
36% |
|
|
Net income |
3,500 |
5,911 |
69% |
|
8,656 |
45,861 |
430% |
|
|
Adjusted net income2 |
5,249 |
6,949 |
32% |
|
15,359 |
22,138 |
44% |
|
The table below provides a summary of our key financial
results excluding Yandex.Market for the three and twelve
months ended December 31, 2017 and 2018:
|
|
|
|
|
|
|
|
|
In RUB millions, excluding Yandex.Market |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
| Revenues ex.
Yandex.Market |
26,674 |
38,842 |
46% |
|
89,950 |
126,430 |
41% |
|
|
Ex-TAC revenues2 ex. Yandex.Market |
21,943 |
32,678 |
49% |
|
72,842 |
105,966 |
45% |
|
|
Income from operations ex. Yandex.Market |
4,490 |
7,471 |
66% |
|
11,566 |
21,180 |
83% |
|
|
Adjusted EBITDA2 ex. Yandex.Market |
8,923 |
12,323 |
38% |
|
27,477 |
39,857 |
45% |
|
|
Net income ex. Yandex.Market |
3,203 |
6,478 |
102% |
|
7,484 |
18,432 |
146% |
|
|
Adjusted net income2 ex. Yandex.Market |
4,920 |
7,516 |
53% |
|
14,114 |
22,906 |
62% |
|
(1) Pursuant to SEC rules regarding convenience translations,
Russian ruble (RUB) amounts have been translated into U.S. dollars
at a rate of RUB 69.4706 to $1.00, the official exchange rate
quoted as of December 31, 2018 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 up to 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 Other income, net line in the
consolidated statements of income. Financial results excluding
Yandex.Market exclude the results of Yandex.Market, gain from
deconsolidation and Yandex's share of Yandex.Market’s net income
after the deconsolidation from the three and twelve months periods
ended December 31, 2017 and 2018
Consolidated revenues breakdown
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
|
Online advertising revenues: |
|
|
|
|
|
|
| Yandex
properties |
18,932 |
22,393 |
18% |
|
65,149 |
78,696 |
21% |
|
|
Advertising network |
6,138 |
7,105 |
16% |
|
22,251 |
24,041 |
8% |
|
|
Total online advertising revenues |
25,070 |
29,498 |
18% |
|
87,400 |
102,737 |
18% |
|
|
Other |
2,790 |
9,344 |
235% |
|
6,654 |
24,920 |
275% |
|
|
Total revenues |
27,860 |
38,842 |
39% |
|
94,054 |
127,657 |
36% |
|
| |
|
|
|
|
|
|
|
In RUB millions, excluding Yandex.Market |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
|
Online Advertising Revenues ex. Yandex.Market: |
|
|
|
|
|
|
| Yandex properties
ex. Yandex.Market |
17,576 |
22,393 |
27% |
|
60,663 |
77,170 |
27% |
|
|
Advertising network ex. Yandex.Market |
6,087 |
7,105 |
17% |
|
21,953 |
23,962 |
9% |
|
|
Total online advertising revenues ex. Yandex.Market |
23,663 |
29,498 |
25% |
|
82,616 |
101,132 |
22% |
|
|
Other ex. Yandex.Market |
3,011 |
9,344 |
210% |
|
7,334 |
25,298 |
245% |
|
|
Total revenues ex. Yandex.Market |
26,674 |
38,842 |
46% |
|
89,950 |
126,430 |
41% |
|
Online advertising revenues grew 18% in Q4 2018
compared with Q4 2017 and generated 76% of total revenues. Online
advertising revenues include revenues derived from performance and
brand advertising on Yandex properties and in our advertising
network. Excluding revenues of Yandex.Market
from Q4 of 2017, online advertising revenues grew 25% in Q4 2018
compared with Q4 2017.
Online advertising revenues from Yandex
properties increased 18% in Q4 2018 compared with Q4 2017
and accounted for 58% of total revenues. Excluding revenues
of Yandex.Market from Q4 of 2017, online advertising
revenues from Yandex properties increased 27% in Q4 2018 compared
with Q4 2017.
Online advertising revenues from our advertising
network increased 16% in Q4 2018 compared with Q4 2017 and
accounted for 18% of total revenues. The acceleration of growth
rates was primarily due to the increased contribution from small
partners.
Other revenues grew 235% in Q4 2018 compared
with Q4 2017 and amounted to 24% of total revenues. The growth
mainly reflected an increase in Yandex.Taxi revenues, and to a
lesser extent revenues of the newly launched Yandex.Drive and
hardware devices.
Segment revenues
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
|
Revenues: |
|
|
|
|
|
|
| Search and
Portal |
24,172 |
|
30,722 |
|
27% |
|
84,168 |
|
104,364 |
|
24% |
|
|
E-commerce* |
1,445 |
|
- |
|
n/m |
|
4,968 |
|
1,697 |
|
-66% |
|
|
Taxi |
2,191 |
|
6,924 |
|
216% |
|
4,891 |
|
19,213 |
|
293% |
|
|
Classifieds |
688 |
|
1,108 |
|
61% |
|
2,059 |
|
3,717 |
|
81% |
|
|
Media Services |
402 |
|
679 |
|
69% |
|
1,187 |
|
1,909 |
|
61% |
|
|
Experiments |
146 |
|
1,214 |
|
n/m |
|
369 |
|
2,516 |
|
n/m |
|
|
Eliminations |
(1,184 |
) |
(1,805 |
) |
52% |
|
(3,588 |
) |
(5,759 |
) |
61% |
|
|
Total revenues |
27,860 |
|
38,842 |
|
39% |
|
94,054 |
|
127,657 |
|
36% |
|
|
Total revenues, excluding Yandex.Market* |
26,674 |
|
38,842 |
|
46% |
|
89,950 |
|
126,430 |
|
41% |
|
*Our E-commerce segment revenues include revenues of
Yandex.Market through April 27, 2018. Standalone revenues of
Yandex.Market JV, on a like-for-like basis, are provided in the
table below.
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
|
Revenues: |
|
|
|
|
|
|
| Yandex.Market,
like-for-like |
1,445 |
3,407 |
136% |
|
4,968 |
7,886 |
59% |
|
In Q1 2018 we introduced the following changes to our segments
structure:
- Search and Portal segment (including Geolocation Services)
offers a broad range of services in Russia, Belarus and Kazakhstan
(and, for periods prior to the imposition of sanctions on Yandex by
the government of Ukraine in May 2017, all our services offered in
Ukraine), other than those described below. Since Q1 2018 our
Search and Portal segment also includes Search and Portal in Turkey
and Yandex Launcher, previously reported in Experiments and
Yandex.Travel, previously reported in Classifieds.
- E-commerce segment includes Yandex.Market for the period prior
to April 27, 2018, the date of the completion of the Yandex.Market
joint venture between Yandex and Sberbank;
- Taxi segment includes our Taxi business (including Yandex.Taxi
and Uber in Russia and neighboring countries) and Food Delivery
business (including Yandex.EATs, UberEATs and Food Party, meal kit
subscription service);
- Classifieds segment includes Auto.ru, Yandex.Realty and
Yandex.Jobs;
- Media Services segment includes KinoPoisk, Yandex.Music,
Yandex.Afisha and Yandex.TV program; Media Services were broken out
from Experiments and now constitute a separate business unit;
- Experiments segment includes Zen, Yandex.Cloud, Yandex.Health,
Yandex.Drive and Yandex Data Factory. Yandex.Cloud and
Yandex.Health initiatives previously were a part of our Search and
Portal segment. Yandex.Drive is our car-sharing service, launched
in February 2018.
- Eliminations represent the elimination of transactions between
the reportable segments, primarily related to advertising.
- Prior periods were restated to conform to the current year
presentation.
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 Q4 2018 Yandex's headcount
decreased by 87 full-time employees, mainly due to headcount
reclassification, which we implemented to ensure consistency in
internal reporting for positions that we treat as outsource labor.
The total number of full-time employees was 8,767 as of December
31, 2018, down by 1% compared with September 30, 2018, and up 18%
from December 31, 2017.
Cost of revenues, including traffic acquisition costs
(TAC)
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
|
TAC: |
|
|
|
|
|
|
| Related to the
Yandex advertising network |
3,567 |
|
4,406 |
|
24% |
|
12,907 |
|
14,785 |
|
15% |
|
|
Related to distribution partners |
1,222 |
|
1,758 |
|
44% |
|
4,438 |
|
5,713 |
|
29% |
|
|
Total TAC |
4,789 |
|
6,164 |
|
29% |
|
17,345 |
|
20,498 |
|
18% |
|
|
Total TAC as a % of total revenues |
17.2% |
|
15.9% |
|
|
18.4% |
|
16.1% |
|
|
|
Other cost of revenues |
2,008 |
|
5,692 |
|
183% |
|
6,592 |
|
15,392 |
|
133% |
|
|
Other cost of revenues as a % of revenues |
7.2% |
|
14.7% |
|
|
7.0% |
|
12.1% |
|
|
|
Total cost of revenues |
6,797 |
|
11,856 |
|
74% |
|
23,937 |
|
35,890 |
|
50% |
|
|
Total cost of revenues as a % of revenues |
24.4% |
|
30.5% |
|
|
25.5% |
|
28.1% |
|
|
TAC grew 29% in Q4 2018 compared with Q4 2017 and represented
15.9% of total revenues, 130 basis points lower than in Q4 2017 and
40 basis points lower compared with Q3 2018 as a result of revenue
mix effect.
Other cost of revenues in Q4 2018 increased
183% compared with Q4 2017, mainly due to the growth of costs
related to Taxi, primarily driven by our B2B services, food
delivery and meal kit services, as well as costs related to our
car-sharing service Yandex.Drive.
Product development
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Product
development |
5,201 |
|
5,854 |
|
13% |
|
18,761 |
|
22,569 |
|
20% |
|
|
As a % of revenues |
18.6% |
|
15.2% |
|
|
19.9% |
|
17.7% |
|
|
Product development expenses grew slower than revenues, and
mainly reflected the growth of share-based compensation, new hires
as well as salary increases in Q4 2018, but offset by tax
benefits received in respect of our development team. Excluding
Yandex.Market from Q4 2017, product development expenses grew 21%
in Q4 2018 compared with Q4 2017.
Sales, general and administrative
(SG&A)
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Sales, general and
administrative |
8,022 |
|
10,458 |
|
30% |
|
27,081 |
|
36,200 |
|
34% |
|
|
As a % of revenues |
28.8% |
|
26.9% |
|
|
28.8% |
|
28.4% |
|
|
SG&A expenses grew 30% in Q4 2018 compared to Q4 2017. The
growth was mainly driven by our investments in advertising and
marketing to support our business units, primarily Classifieds and
Media Services, and our core business, as well as by the growth of
personnel costs as a result of new hires and salary increases.
Share-based compensation (SBC) expense
SBC expense is included in each of the cost of revenues, product
development, and SG&A categories discussed above.
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| SBC expense
included in cost of revenues |
36 |
|
54 |
|
50% |
|
178 |
|
180 |
|
1% |
|
|
SBC expense included in product development |
811 |
|
1,107 |
|
36% |
|
2,477 |
|
4,450 |
|
80% |
|
|
SBC expense included in SG&A |
547 |
|
481 |
|
-12% |
|
1,538 |
|
1,922 |
|
25% |
|
|
Total SBC expense |
1,394 |
|
1,642 |
|
18% |
|
4,193 |
|
6,552 |
|
56% |
|
|
As a % of revenues |
5.0% |
|
4.2% |
|
|
4.5% |
|
5.1% |
|
|
Total SBC expense increased 18% in Q4 2018 compared with Q4
2017. The growth was primarily related to new equity-based grants
made in 2017-2018, but was offset by the high base effect as a
result of the accelerated vesting of a portion of RSUs in Q4 2017.
SBC expense growth rate in Q4 2018 was also mitigated by
recalculation of SBC expense in our Taxi segment related to
previous quarters of 2018.
Depreciation and amortization (D&A)
expense
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Depreciation and
amortization |
3,023 |
|
3,203 |
|
6% |
|
11,239 |
|
12,137 |
|
8% |
|
|
As a % of revenues |
10.9% |
|
8.2% |
|
|
11.9% |
|
9.5% |
|
|
D&A expense increased 6% in Q4 2018 compared with Q4 2017.
D&A expense primarily reflects our investments in servers and
data center equipment connected with the launch of our new data
center in Vladimir, Russia, in 2017, which was partly offset by
expiration of useful lives of part of our equipment and intangible
assets.
Income from operations
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
Change |
2017 |
2018 |
Change |
| Income from
operations |
4,817 |
7,471 |
55% |
|
13,036 |
20,861 |
60% |
|
Income from operations increased 55% in Q4 2018 compared with Q4
2017.
Adjusted EBITDA – consolidated and by
segments
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
|
Adjusted EBITDA: |
|
|
|
|
|
|
| Search and
Portal |
10,736 |
|
13,350 |
|
24% |
|
36,630 |
|
47,418 |
|
29% |
|
|
E-commerce* |
370 |
|
- |
|
n/m |
|
1,598 |
|
(263 |
) |
n/m |
|
|
Taxi |
(1,584 |
) |
(129 |
) |
-92% |
|
(7,963 |
) |
(4,434 |
) |
-44% |
|
|
Classifieds |
70 |
|
(18 |
) |
n/m |
|
97 |
|
(183 |
) |
n/m |
|
|
Media Services |
(84 |
) |
(215 |
) |
156% |
|
(444 |
) |
(810 |
) |
82% |
|
|
Experiments |
(215 |
) |
(665 |
) |
209% |
|
(843 |
) |
(2,134 |
) |
153% |
|
|
Total adjusted EBITDA |
9,293 |
|
12,323 |
|
33% |
|
29,075 |
|
39,594 |
|
36% |
|
|
Total adjusted EBITDA, excluding Yandex.Market |
8,923 |
|
12,323 |
|
38% |
|
27,477 |
|
39,857 |
|
45% |
|
*Our E-commerce segment adjusted EBITDA includes adjusted EBITDA
of Yandex.Market through April 27, 2018. Standalone adjusted EBITDA
of Yandex.Market JV, on a like-for-like basis, is provided in the
table below.
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
2018 |
|
Change |
2017 |
2018 |
|
Change |
|
Adjusted EBITDA: |
|
|
|
|
|
|
| Yandex.Market,
like-for-like |
370 |
(1,313 |
) |
-455% |
|
1,598 |
(1,973 |
) |
-223% |
|
Total adjusted EBITDA increased 33% in Q4 2018
compared with Q4 2017.
Adjusted EBITDA excluding Yandex.Market
increased 38% in Q4 2018 compared with Q4 2017. This growth rate
was slightly lower than our revenue growth rate due to the mix
effect of business units, which grew faster than our core business
and, thus, have a dilutive effect on total margins, and to a lesser
extent due to hardware devices.
Adjusted EBITDA of Taxi was negative RUB 129 million in Q4 2018.
The positive adjusted EBITDA of our ride-sharing business was
partly offset by our investments in food delivery and autonomous
vehicles. Adjusted EBITDA loss of Yandex.Taxi in Q4 2018 also
includes the full quarter of Uber financial results.
Interest income in Q4 2018 was RUB 929 million,
compared with RUB 780 million in Q4 2017.
Interest expense in Q4 2018 was RUB 221
million, down from RUB 226 million in Q4 2017.
Foreign exchange gain in Q4 2018 was RUB 904
million, compared with a foreign exchange loss of RUB 243 million
in Q4 2017. This gain reflects the depreciation of the Russian
ruble during Q4 2018 from RUB 65.5906 to $1.00 on September 30,
2018, to RUB 69.4706 to $1.00 on December 31, 2018. Yandex's
Russian operating subsidiaries' functional currency is the Russian
ruble, and therefore changes due to exchange rate fluctuations in
the ruble value of these subsidiaries' monetary assets and
liabilities that are denominated in other currencies are recognized
as foreign exchange gains or losses within the Other income, net
line in the condensed consolidated statements of income. Although
the U.S. dollar value of Yandex's U.S. dollar-denominated assets
and liabilities was not impacted by these currency fluctuations,
they resulted in an upward revaluation of the ruble equivalent of
these U.S. dollar-denominated monetary assets and liabilities in Q4
2018.
Income tax expense for Q4 2018 was RUB 2,539
million, up from RUB 1,897 million in Q4 2017. Our effective tax
rate of 30.0% in Q4 2018 was lower than in Q4 2017, primarily due
to the effects of certain tax provisions related to prior years'
tax audits reversed in Q4 2018. Adjusted for these tax effects, SBC
expense and also for deferred tax asset valuation allowances
provided on operations of our newly acquired Uber and Food Delivery
businesses and other certain allowances, our effective tax rate for
Q4 2018 was 26.2%, compared with 24.3% for full year 2017 as
adjusted for SBC expense and similar provisions in that year.
Net income was RUB 5.9 billion ($85.1 million)
in Q4 2018, up 69% compared with Q4 2017. Excluding Yandex.Market,
net income increased 102% in Q4 2018 compared to Q4 2017.
Adjusted net income in Q4 2018 was RUB 6.9
billion ($100.0 million), a 32% increase from Q4 2017. Excluding
Yandex.Market, adjusted net income increased 53% in Q4 2018
compared to Q4 2017.
Adjusted net income margin was 17.9% in Q4
2018, compared with 18.8% in Q4 2017.
As of December 31, 2018, Yandex had cash and cash
equivalents of RUB 68.8 billion ($990.3 million),
including cash and cash equivalents of Yandex.Taxi in total amount
of RUB 27.3 billion ($393.3 million). Cash and cash equivalents of
the Yandex.Market joint venture, which are not included in Yandex
N.V. consolidated balance sheet, amounted to RUB 29.1 billion
($418.6 million) as of December 31, 2018.
Net cash flow provided by operating activities
for Q4 2018 was RUB 8.6 billion ($123.9 million) and
capital expenditures were RUB 13.9 billion ($199.5
million), which included one-time effect of the acquisition cost of
the property site for our new Moscow headquarters, which amounted
to RUB 9.7 billion (around $145 million, based on the exchange rate
as of transaction date) exclusive of 18% VAT.
During Q4 2018 we repaid in full the remaining amount of
outstanding principal in respect of convertible debt notes in the
face amount of $321.3 million.
Redeemable noncontrolling interests presented
in our condensed consolidated balance sheets relate to the equity
incentive arrangements we have made available to the senior
employees of the Taxi and Classifieds segments, pursuant to which
such persons are eligible to acquire depositary receipts, or
receive options to acquire depositary receipts, which entitle them
to economic interests in the respective business unit
subsidiaries.
The total number of shares issued and
outstanding as of December 31, 2018 was 324,727,024
including 286,848,365 Class A shares, 37,878,658 Class B shares,
and one Priority share and excluding 5,589,290 Class A shares held
in treasury and all Class C shares outstanding solely as a result
of the conversion of Class B shares into Class A shares. All such
Class C shares were cancelled.
There were also employee share options outstanding to purchase
up to an additional 3.6 million shares, at a weighted average
exercise price of $34.51 per share, 1.2 million of which were fully
vested; equity-settled share appreciation rights (SARs) for 0.2
million shares, at a weighted average measurement price of $32.44,
all of which were fully vested; and restricted share units (RSUs)
covering 13.9 million shares, of which RSUs to acquire 5.3 million
shares were fully vested. Equity awards in respect of business unit
subsidiaries are described under Redeemable noncontrolling
interests above.
Financial outlook
We expect our ruble-based revenues excluding Yandex.Market to
grow in the range of 28% to 32% for the full year 2019 compared
with 2018.
We expect our Search and Portal ruble-based revenue to grow in
the range of 18% to 20% in the full year 2019 compared with
2018.
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
Yandex’s management will hold an earnings conference call on
February 15, 2019 at 8:00 AM U.S. Eastern Time (4:00 PM Moscow
time; 1:00 PM London time).
To access the conference call live, please dial:
US: +1 866 966 1396UK/International: +44 (0) 844 571 8892Russia:
8 10 800 2357 5011Passcode: 8199859
A replay of the call will be available until February 22, 2019.
To access the replay, please dial:
US: +1 866 331 1332UK/International: +44 (0) 844 571 8951Russia:
+7 495 249 9138Passcode: 8199859
A live and archived webcast of this conference call will be
available at
https://edge.media-server.com/m6/p/g8ucpyib
ABOUT YANDEX
Yandex (NASDAQ:YNDX) is a technology company that builds
intelligent products and services powered by machine learning. Our
goal is to help consumers and businesses better navigate the online
and offline world. Since 1997, we have delivered world-class,
locally relevant search and information services. Additionally, we
have developed market-leading on-demand transportation services,
navigation products, and other mobile applications for millions of
consumers across the globe. Yandex, which has 30 offices worldwide,
has been listed on the NASDAQ since 2011.
More information on Yandex can be found at
https://yandex.com/company.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that
involve risks and uncertainties. These include statements regarding
our anticipated revenues for full year 2019. 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, macroeconomic and geopolitical developments affecting the
Russian economy or our business, competitive pressures, changes in
advertising patterns, changes in user preferences, changes in the
political, legal and/or regulatory environment, technological
developments, and our need to expend capital to accommodate the
growth of the business, as well as those risks and uncertainties
included under the captions “Risk Factors” and “Operating and
Financial Review and Prospects” in our Annual Report on
Form 20-F for the year ended December 31, 2017, which is
on file with the U.S. Securities and Exchange Commission (SEC) and
is available on our investor relations website at
http://ir.yandex.com/sec.cfm and on the SEC website at www.sec.gov.
All information in this release and in the attachments is as of
February 15, 2019, and Yandex undertakes no duty to update this
information unless required by law.
USE OF NON-GAAP FINANCIAL MEASURES
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with U.S. GAAP, we
present the following 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. 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 U.S. GAAP. For more
information on these non-GAAP financial measures, please see the
tables captioned “Reconciliations of non-GAAP financial measures to
the nearest comparable U.S. GAAP measures”, included following the
accompanying financial tables. We define the various non-GAAP
financial measures we use as follows:
- Ex-TAC revenues means U.S. GAAP revenues less
total traffic acquisition costs (TAC)
- Adjusted EBITDA means U.S. GAAP net income
plus (1) depreciation and amortization, (2) SBC expense,
(3) accrual of expense related to the contingent compensation
that may be payable to employees in connection with certain
business combinations, (4) interest expense, (5) provision for
income taxes, and (6) operating losses resulting from sanctions in
Ukraine imposed in May 2017, less (1) effect of deconsolidation of
Yandex.Market, (2) interest income and (3) other (income)/loss,
net
- Adjusted EBITDA margin means adjusted EBITDA
divided by U.S. GAAP revenues
- Adjusted ex-TAC EBITDA margin means adjusted
EBITDA divided by ex-TAC revenues
- Adjusted net income means U.S. GAAP net income
plus (1) SBC expense adjusted for the income tax reduction
attributable to SBC expense, (2) accrual of expense related to
the contingent compensation that may be payable to certain
employees in connection with certain business combinations, (3)
foreign exchange losses/(gains) adjusted for (reduction)/increase
in income tax attributable to foreign exchange losses/(gains), (4)
losses from repurchases of our convertible notes adjusted for the
related reduction in income tax, (5) amortization of debt discount
related to our convertible debt adjusted for the related reduction
in income tax and (6) losses resulting from sanctions in Ukraine
imposed in May 2017, less effect of deconsolidation of
Yandex.Market
- Adjusted net income margin means adjusted net
income divided by U.S. GAAP revenues
- Adjusted ex-TAC net income margin means
adjusted net income divided by ex-TAC revenues
These non-GAAP financial measures are used by management for
evaluating financial performance as well as decision-making.
Management believes that these metrics reflect the organic, core
operating performance of the company, and therefore are useful to
analysts and investors in providing supplemental information that
helps them understand, model and forecast the evolution of our
operating business.
Although our management uses these non-GAAP financial measures
for operational decision-making and considers these financial
measures to be useful for analysts and investors, we recognize that
there are a number of limitations related to such measures. In
particular, it should be noted that several of these measures
exclude some recurring costs, particularly share-based
compensation. In addition, the components of the costs that we
exclude in our calculation of the measures described above may
differ from the components that our peer companies exclude when
they report their results of operations.
Below we describe why we make particular adjustments to certain
U.S. GAAP financial measures:
TAC
We believe that it may be useful for investors and analysts to
review certain measures both in accordance with U.S. GAAP and net
of the effect of TAC, which we view as comparable to sales
commissions and bonuses but, unlike sales commissions and bonuses,
are not deducted from U.S. GAAP revenues. By presenting revenue,
adjusted EBITDA margin and adjusted net income margin net of TAC,
we believe that investors and analysts are able to obtain a clearer
picture of our business without the impact of the revenues we share
with our partners.
SBC
SBC is a significant expense item, and an important part of our
compensation and incentive programs. As it is a non-cash charge,
however, and highly dependent on our share price at the time of
equity award grants, we believe that it is useful for investors and
analysts to see certain financial measures excluding the impact of
these charges in order to obtain a clearer picture of our operating
performance.
Acquisition-related costs
We may incur expenses in connection with acquisitions that are
not indicative of our recurring core operating performance. In
particular, we are required under U.S. GAAP to accrue as expense
the contingent compensation that is payable to certain employees in
connection with certain business combinations. We eliminate these
acquisition-related expenses from adjusted EBITDA and adjusted net
income to provide management and investors a tool for comparing on
a period-to-period basis our operating performance in the ordinary
course of operations.
Foreign exchange gains and losses
Because we hold significant assets and liabilities in currencies
other than our Russian ruble operating currency, and because
foreign exchange fluctuations are outside of our operational
control, we believe that it is useful to present adjusted net
income and related margin measures excluding these effects, in
order to provide greater clarity regarding our operating
performance.
Amortization of debt discount
We also adjust net income for interest expense representing
amortization of the debt discount related to our convertible notes
issued in Q4 2013 and Q1 2014. We have eliminated this expense from
adjusted net income as it is non-cash in nature and is not
indicative of our ongoing operating performance.
Gains and losses from repurchases of convertible debt
Adjusted net income for the twelve months ended December 31,
2017 also excludes a loss from the repurchase of $12.0 million in
principal of our 1.125% convertible senior notes due 2018 for
approximately $11.6 million that we recorded in the first half of
2017. We have eliminated this loss from adjusted net income for the
twelve months ended December 31, 2017 as it is not indicative of
our ongoing operating performance.
Losses resulting from sanctions in Ukraine
We also adjusted our net income and EBITDA in 2017 for losses
and gains from write-off of assets and liabilities in our Ukrainian
legal entities. In May 2017, the government of Ukraine imposed
sanctions on our Ukrainian operations. The sanctions resulted in
the freezing of the assets held by our Ukrainian legal entities and
restricting our services in Ukraine. We believe that it is useful
to present adjusted net income and adjusted EBITDA measures
excluding the one-off impact of these events, which are not related
to our operating activities.
Effect of deconsolidation of Yandex.Market
Adjusted net income also excludes a gain from deconsolidation of
Yandex.Market following the formation of Yandex.Market joint
venture by Yandex and Sberbank in April 2018. We believe that it is
useful to present adjusted net income and related margin measures
excluding the effect of this significant item and to present
certain other financial metrics described above in order to provide
a clearer picture of our underlying operating performance and to
provide meaningful period-to-period comparisons.
The tables at the end of this release provide detailed
reconciliations of each non-GAAP financial measure we use to the
most directly comparable U.S. GAAP financial measure.
YANDEX N.V.
Unaudited Condensed Consolidated Balance
Sheets
(in millions of Russian rubles and U.S.
dollars, except share and per share data)
| |
|
|
|
|
|
|
|
|
|
As of |
|
|
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
2017* |
|
2018 |
|
2018 |
|
|
|
RUB |
|
RUB |
|
$ |
|
ASSETS |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
| Cash and cash
equivalents |
|
42,662 |
|
|
68,798 |
|
|
990.3 |
|
| Term deposits |
|
23,040 |
|
|
- |
|
|
- |
|
| Accounts receivable,
net |
|
9,746 |
|
|
14,570 |
|
|
209.7 |
|
| Prepaid expenses |
|
1,269 |
|
|
2,608 |
|
|
37.5 |
|
| Other current
assets |
|
4,039 |
|
|
6,444 |
|
|
92.8 |
|
| Total current
assets |
|
80,756 |
|
|
92,420 |
|
|
1,330.3 |
|
| |
|
|
|
|
|
|
| Property and equipment,
net |
|
21,171 |
|
|
39,740 |
|
|
572.0 |
|
| Intangible assets,
net |
|
5,023 |
|
|
11,545 |
|
|
166.2 |
|
| Goodwill |
|
9,328 |
|
|
54,070 |
|
|
778.3 |
|
| Long-term prepaid
expenses |
|
1,788 |
|
|
1,800 |
|
|
26.0 |
|
| Term deposits,
non-current |
|
5,005 |
|
|
- |
|
|
- |
|
| Investments in
non-marketable equity securities |
|
2,001 |
|
|
36,484 |
|
|
525.2 |
|
| Deferred tax
assets |
|
2,171 |
|
|
3,239 |
|
|
46.6 |
|
| Other non-current
assets |
|
3,301 |
|
|
3,808 |
|
|
54.8 |
|
| TOTAL
ASSETS |
|
130,544 |
|
|
243,106 |
|
|
3,499.4 |
|
| |
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
| Accounts payable and
accrued liabilities |
|
11,111 |
|
|
16,886 |
|
|
243.1 |
|
| Taxes payable |
|
4,213 |
|
|
4,059 |
|
|
58.4 |
|
| Deferred revenue |
|
2,464 |
|
|
2,792 |
|
|
40.2 |
|
| Convertible debt |
|
17,834 |
|
|
- |
|
|
- |
|
| Total current
liabilities |
|
35,622 |
|
|
23,737 |
|
|
341.7 |
|
| Deferred tax
liabilities |
|
959 |
|
|
1,572 |
|
|
22.6 |
|
| Other accrued
liabilities |
|
1,316 |
|
|
569 |
|
|
8.2 |
|
| Total liabilities |
|
37,897 |
|
|
25,878 |
|
|
372.5 |
|
| |
|
|
|
|
|
|
| Commitments and
contingencies |
|
|
|
|
|
|
| Redeemable
noncontrolling interests |
|
9,821 |
|
|
12,780 |
|
|
184.0 |
|
| Shareholders’
equity: |
|
|
|
|
|
|
| Priority share: €1.00
par value; 1 share authorized, issued and outstanding |
|
— |
|
|
— |
|
|
— |
|
| Preference shares:
€0.01 par value; 1,000,000,001 shares authorized, nil shares issued
and outstanding |
|
— |
|
|
— |
|
|
— |
|
| Ordinary shares: par
value (Class A €0.01, Class B €0.10 and Class C €0.09); shares
authorized (Class A: 1,000,000,000, Class B: 46,997,887 and Class
C: 46,997,887); shares issued (Class A: 289,364,467 and
292,437,655, Class B: 40,692,286 and 37,878,658, and Class C:
4,166,448 and nil, respectively); shares outstanding (Class A:
285,612,556 and 286,848,365, Class B: 40,692,286 and 37,878,658,
and Class C: nil) |
|
271 |
|
|
263 |
|
|
3.8 |
|
| Treasury shares at cost
(Class A: 3,751,911 and 5,589,290, respectively) |
|
(3,814 |
) |
|
(10,769 |
) |
|
(155.0 |
) |
| Additional paid-in
capital |
|
16,469 |
|
|
70,191 |
|
|
1,010.4 |
|
| Accumulated other
comprehensive income |
|
1,864 |
|
|
10,041 |
|
|
144.5 |
|
| Retained earnings |
|
68,036 |
|
|
113,795 |
|
|
1,638.0 |
|
| Total equity
attributable to Yandex N.V. |
|
82,826 |
|
|
183,521 |
|
|
2,641.7 |
|
| Noncontrolling
interests |
|
- |
|
|
20,927 |
|
|
301.2 |
|
| Total shareholders’
equity |
|
82,826 |
|
|
204,448 |
|
|
2,942.9 |
|
| TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
130,544 |
|
|
243,106 |
|
|
3,499.4 |
|
* Derived from audited consolidated financial
statements
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Income
(in millions of Russian rubles and U.S.
dollars, except share and per share data)
| |
|
|
|
|
|
|
|
|
|
Three months ended
December 31, |
|
|
|
2017 |
|
|
2018 |
|
|
2018 |
|
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
|
| Revenues |
|
27,860 |
|
|
38,842 |
|
|
559.1 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
| Cost of
revenues(1) |
|
6,797 |
|
|
11,856 |
|
|
170.7 |
|
| Product
development(1) |
|
5,201 |
|
|
5,854 |
|
|
84.3 |
|
| Sales, general and
administrative(1) |
|
8,022 |
|
|
10,458 |
|
|
150.5 |
|
| Depreciation and
amortization |
|
3,023 |
|
|
3,203 |
|
|
46.1 |
|
| Total operating costs
and expenses |
|
23,043 |
|
|
31,371 |
|
|
451.6 |
|
| Income from
operations |
|
4,817 |
|
|
7,471 |
|
|
107.5 |
|
| Interest income |
|
780 |
|
|
929 |
|
|
13.4 |
|
| Interest expense |
|
(226 |
) |
|
(221 |
) |
|
(3.2 |
) |
| Other income, net |
|
26 |
|
|
271 |
|
|
3.9 |
|
| Net income before
income taxes |
|
5,397 |
|
|
8,450 |
|
|
121.6 |
|
| Provision for income
taxes |
|
1,897 |
|
|
2,539 |
|
|
36.5 |
|
| Net income |
|
3,500 |
|
|
5,911 |
|
|
85.1 |
|
| Net loss attributable
to noncontrolling interests |
|
26 |
|
|
148 |
|
|
2.1 |
|
| Net income attributable
to Yandex N.V. |
|
3,526 |
|
|
6,059 |
|
|
87.2 |
|
| Net income per
Class A and Class B share: |
|
|
|
|
|
|
| Basic |
|
10.82 |
|
|
18.67 |
|
|
0.27 |
|
| Diluted |
|
10.61 |
|
|
18.27 |
|
|
0.26 |
|
| Weighted average number
of Class A and Class B shares outstanding |
|
|
|
|
|
|
| Basic |
|
326,011,908 |
|
|
324,503,123 |
|
|
324,503,123 |
|
| Diluted |
|
332,463,799 |
|
|
331,675,527 |
|
|
331,675,527 |
|
|
|
|
|
|
|
|
|
| (1) These balances
exclude depreciation and amortization expenses, which are presented
separately, and include share-based compensation expenses of: |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Cost of revenues |
|
36 |
|
54 |
|
0.8 |
|
| Product
development |
|
811 |
|
1,107 |
|
15.9 |
|
| Sales, general and
administrative |
|
547 |
|
481 |
|
6.9 |
|
| |
|
|
|
|
|
|
|
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Income
(in millions of Russian rubles and U.S.
dollars, except share and per share data)
| |
|
|
|
|
|
|
|
|
|
Twelve months ended
December 31, |
|
|
|
2017* |
|
2018 |
|
|
2018 |
|
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
|
| Revenues |
|
94,054 |
|
|
127,657 |
|
|
1,837.6 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
| Cost of
revenues(1) |
|
23,937 |
|
|
35,890 |
|
|
516.6 |
|
| Product
development(1) |
|
18,761 |
|
|
22,569 |
|
|
324.9 |
|
| Sales, general and
administrative(1) |
|
27,081 |
|
|
36,200 |
|
|
521.1 |
|
| Depreciation and
amortization |
|
11,239 |
|
|
12,137 |
|
|
174.7 |
|
| Total operating costs
and expenses |
|
81,018 |
|
|
106,796 |
|
|
1,537.3 |
|
| Income from
operations |
|
13,036 |
|
|
20,861 |
|
|
300.3 |
|
| Interest income |
|
2,909 |
|
|
3,382 |
|
|
48.7 |
|
| Interest expense |
|
(897 |
) |
|
(945 |
) |
|
(13.6 |
) |
| Effect of Yandex.Market
deconsolidation |
|
- |
|
|
28,244 |
|
|
406.6 |
|
| Other (loss)/income,
net |
|
(1,466 |
) |
|
2,922 |
|
|
42.0 |
|
| Net income before
income taxes |
|
13,582 |
|
|
54,464 |
|
|
784.0 |
|
| Provision for income
taxes |
|
4,926 |
|
|
8,603 |
|
|
123.9 |
|
| Net income |
|
8,656 |
|
|
45,861 |
|
|
660.1 |
|
| Net loss attributable
to noncontrolling interests |
|
120 |
|
|
1,726 |
|
|
24.9 |
|
| Net income attributable
to Yandex N.V. |
|
8,776 |
|
|
47,587 |
|
|
685.0 |
|
| Net income per
Class A and Class B share: |
|
|
|
|
|
|
| Basic |
|
27.02 |
|
|
145.67 |
|
|
2.10 |
|
| Diluted |
|
26.49 |
|
|
141.98 |
|
|
2.04 |
|
| Weighted average number
of Class A and Class B shares outstanding |
|
|
|
|
|
|
| Basic |
|
324,747,888 |
|
|
326,667,118 |
|
|
326,667,118 |
|
| Diluted |
|
331,243,961 |
|
|
335,162,062 |
|
|
335,162,062 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
(1) These balances exclude depreciation and amortization
expenses, which are presented separately, and include share-based
compensation expenses of:
| Cost of revenues |
|
178 |
|
|
180 |
|
|
2.6 |
|
| Product
development |
|
2,477 |
|
|
4,450 |
|
|
64.1 |
|
| Sales, general and
administrative |
|
1,538 |
|
|
1,922 |
|
|
27.7 |
|
| |
|
|
|
|
|
|
|
|
|
* Derived from audited consolidated financial statements
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Cash Flows(in millions of Russian
rubles and U.S. dollars)
| |
|
|
|
|
|
|
| |
|
Three months ended
December 31, |
| |
|
2017 |
|
|
2018 |
|
|
2018 |
|
| |
|
RUB |
|
RUB |
|
$ |
| CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES: |
|
|
|
|
|
|
| Net income |
|
3,500 |
|
|
5,911 |
|
|
85.1 |
|
| Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
| Depreciation of
property and equipment |
|
2,534 |
|
|
2,594 |
|
|
37.3 |
|
| Amortization of
intangible assets |
|
489 |
|
|
609 |
|
|
8.8 |
|
| Amortization of debt
discount and issuance costs |
|
173 |
|
|
170 |
|
|
2.4 |
|
| Share-based
compensation expense |
|
1,394 |
|
|
1,642 |
|
|
23.6 |
|
| Deferred income
taxes |
|
(584 |
) |
|
(657 |
) |
|
(9.5 |
) |
| Foreign exchange
losses/(gains) |
|
243 |
|
|
(904 |
) |
|
(13.0 |
) |
| Gain from sale of
equity securities |
|
(33 |
) |
|
- |
|
|
- |
|
| (Income)/loss from
equity method investments |
|
(143 |
) |
|
474 |
|
|
6.8 |
|
| Other |
|
(83 |
) |
|
125 |
|
|
1.9 |
|
| Changes in operating
assets and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
| Accounts receivable,
net |
|
(1,322 |
) |
|
(2,221 |
) |
|
(32.0 |
) |
| Prepaid expenses and
other assets |
|
(797 |
) |
|
(1,115 |
) |
|
(16.0 |
) |
| Accounts payable and
accrued liabilities |
|
1,993 |
|
|
1,374 |
|
|
19.8 |
|
| Deferred revenue |
|
227 |
|
|
605 |
|
|
8.7 |
|
| Net cash provided by
operating activities |
|
7,591 |
|
|
8,607 |
|
|
123.9 |
|
| CASH FLOWS PROVIDED BY
INVESTING ACTIVITIES: |
|
|
|
|
|
|
| Purchases of property
and equipment and intangible assets |
|
(2,563 |
) |
|
(13,857 |
) |
|
(199.5 |
) |
| Proceeds from sale of
property and equipment |
|
43 |
|
|
11 |
|
|
0.2 |
|
| Acquisitions of
businesses, net of cash acquired |
|
(554 |
) |
|
(836 |
) |
|
(12.0 |
) |
| Investments in
non-marketable equity securities |
|
(78 |
) |
|
- |
|
|
- |
|
| Proceeds from sale of
equity securities |
|
51 |
|
|
34 |
|
|
0.5 |
|
| Maturities of term
deposits |
|
14,863 |
|
|
38,408 |
|
|
552.9 |
|
| Loans granted, net of
proceeds from repayments |
|
(61 |
) |
|
11 |
|
|
0.1 |
|
| Net cash provided by
investing activities |
|
11,701 |
|
|
23,771 |
|
|
342.2 |
|
| CASH FLOWS USED IN
FINANCING ACTIVITIES: |
|
|
|
|
|
|
| Proceeds from exercise
of share options |
|
18 |
|
|
8 |
|
|
0.1 |
|
| Repurchase of equity
awards |
|
(77 |
) |
|
- |
|
|
- |
|
| Repayment of
convertible debt |
|
- |
|
|
(21,281 |
) |
|
(306.3 |
) |
| Repurchases of ordinary
shares |
|
- |
|
|
(320 |
) |
|
(4.6 |
) |
| Payment for contingent
consideration |
|
- |
|
|
(104 |
) |
|
(1.5 |
) |
| Other financing
activities |
|
(1 |
) |
|
32 |
|
|
0.4 |
|
| Net cash used in
financing activities |
|
(60 |
) |
|
(21,665 |
) |
|
(311.9 |
) |
| Effect of exchange rate
changes on cash and cash balances |
|
(162 |
) |
|
8,707 |
|
|
125.4 |
|
| Net change in cash and
cash balances |
|
19,070 |
|
|
19,420 |
|
|
279.6 |
|
| Cash and cash balances
at beginning of period |
|
24,161 |
|
|
49,466 |
|
|
712.0 |
|
| Cash and cash balances
at end of period |
|
43,231 |
|
|
68,886 |
|
|
991.6 |
|
| |
|
|
|
|
|
|
|
Reconciliation of cash and cash
balances: |
|
|
|
|
|
|
| Cash and cash
equivalents, beginning of period |
|
23,591 |
|
|
49,388 |
|
|
710.9 |
|
| Restricted cash,
beginning of period |
|
570 |
|
|
78 |
|
|
1.1 |
|
| Cash and cash balances,
beginning of period |
|
24,161 |
|
|
49,466 |
|
|
712.0 |
|
| |
|
|
|
|
|
|
| Cash and cash
equivalents, end of period |
|
42,662 |
|
|
68,798 |
|
|
990.3 |
|
| Restricted cash, end of
period |
|
569 |
|
|
88 |
|
|
1.3 |
|
| Cash and cash balances,
end of period |
|
43,231 |
|
|
68,886 |
|
|
991.6 |
|
|
|
YANDEX N.V.Unaudited Condensed
Consolidated Statements of Cash Flows(in millions
of Russian rubles and U.S. dollars)
| |
|
|
|
|
|
|
| |
|
Twelve months ended
December 31, |
| |
|
2017* |
|
2018 |
|
|
2018 |
|
| |
|
RUB |
|
RUB |
|
$ |
| CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES: |
|
|
|
|
|
|
| Net income |
|
8,656 |
|
|
45,861 |
|
|
660.1 |
|
| Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
| Depreciation of
property and equipment |
|
9,131 |
|
|
9,833 |
|
|
141.5 |
|
| Amortization of
intangible assets |
|
2,108 |
|
|
2,304 |
|
|
33.2 |
|
| Amortization of debt
discount and issuance costs |
|
684 |
|
|
728 |
|
|
10.5 |
|
| Share-based
compensation expense |
|
4,193 |
|
|
6,552 |
|
|
94.4 |
|
| Deferred income
taxes |
|
(1,513 |
) |
|
(1,862 |
) |
|
(26.8 |
) |
| Foreign exchange
losses/(gains) |
|
1,784 |
|
|
(3,155 |
) |
|
(45.4 |
) |
| Effect of
deconsolidation of Yandex.Market |
|
- |
|
|
(28,244 |
) |
|
(406.6 |
) |
| Gain from sale of
equity securities |
|
(33 |
) |
|
- |
|
|
- |
|
| Losses from repurchases
of convertible debt |
|
6 |
|
|
- |
|
|
- |
|
| (Income)/loss from
equity method investments |
|
(353 |
) |
|
195 |
|
|
2.8 |
|
| Other |
|
87 |
|
|
(63 |
) |
|
(1.0 |
) |
| Changes in operating
assets and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
| Accounts receivable,
net |
|
(1,996 |
) |
|
(4,705 |
) |
|
(67.7 |
) |
| Prepaid expenses and
other assets |
|
(2,224 |
) |
|
(5,887 |
) |
|
(84.7 |
) |
| Accounts payable and
accrued liabilities |
|
2,921 |
|
|
6,176 |
|
|
88.9 |
|
| Deferred revenue |
|
321 |
|
|
479 |
|
|
6.9 |
|
| Net cash provided by
operating activities |
|
23,772 |
|
|
28,212 |
|
|
406.1 |
|
| CASH FLOWS (USED
IN)/PROVIDED BY INVESTING ACTIVITIES: |
|
|
|
|
|
|
| Purchases of property
and equipment and intangible assets |
|
(12,389 |
) |
|
(28,323 |
) |
|
(407.7 |
) |
| Proceeds from sale of
property and equipment |
|
73 |
|
|
235 |
|
|
3.5 |
|
| Acquisitions of
businesses, net of cash acquired |
|
(918 |
) |
|
19,844 |
|
|
285.6 |
|
| Investments in
non-marketable equity securities |
|
(191 |
) |
|
(155 |
) |
|
(2.2 |
) |
| Proceeds from sale of
equity securities |
|
267 |
|
|
34 |
|
|
0.5 |
|
| Proceeds from maturity
of debt securities |
|
2,887 |
|
|
- |
|
|
- |
|
| Investments in term
deposits |
|
(70,082 |
) |
|
(55,592 |
) |
|
(800.2 |
) |
| Maturities of term
deposits |
|
72,731 |
|
|
85,751 |
|
|
1,234.3 |
|
| Deconsolidation of cash
and cash equivalents of Yandex.Market |
|
- |
|
|
(2,181 |
) |
|
(31.4 |
) |
| Loans granted, net of
proceeds from repayments |
|
(166 |
) |
|
(372 |
) |
|
(5.4 |
) |
| Net cash (used
in)/provided by investing activities |
|
(7,788 |
) |
|
19,241 |
|
|
277.0 |
|
| CASH FLOWS USED IN
FINANCING ACTIVITIES: |
|
|
|
|
|
|
| Proceeds from exercise
of share options |
|
328 |
|
|
115 |
|
|
1.7 |
|
| Repurchase of equity
awards |
|
(77 |
) |
|
- |
|
|
- |
|
| Repayment of
convertible debt |
|
- |
|
|
(21,281 |
) |
|
(306.3 |
) |
| Repurchases of
convertible debt |
|
(668 |
) |
|
- |
|
|
- |
|
| Repurchases of ordinary
shares |
|
- |
|
|
(10,085 |
) |
|
(145.2 |
) |
| Payment for contingent
consideration |
|
(195 |
) |
|
(1,504 |
) |
|
(21.7 |
) |
| Other financing
activities |
|
25 |
|
|
(49 |
) |
|
(0.7 |
) |
| Net cash used in
financing activities |
|
(587 |
) |
|
(32,804 |
) |
|
(472.2 |
) |
| Effect of exchange rate
changes on cash and cash balances |
|
(976 |
) |
|
11,006 |
|
|
158.4 |
|
| Net change in cash and
cash balances |
|
14,421 |
|
|
25,655 |
|
|
369.3 |
|
| Cash and cash balances
at beginning of period |
|
28,810 |
|
|
43,231 |
|
|
622.3 |
|
| Cash and cash balances
at end of period |
|
43,231 |
|
|
68,886 |
|
|
991.6 |
|
| |
|
|
|
|
|
|
|
Reconciliation of cash and cash
balances: |
|
|
|
|
|
|
| Cash and cash
equivalents, beginning of period |
|
28,232 |
|
|
42,662 |
|
|
614.1 |
|
| Restricted cash,
beginning of period |
|
578 |
|
|
569 |
|
|
8.2 |
|
| Cash and cash balances,
beginning of period |
|
28,810 |
|
|
43,231 |
|
|
622.3 |
|
| |
|
|
|
|
|
|
| Cash and cash
equivalents, end of period |
|
42,662 |
|
|
68,798 |
|
|
990.3 |
|
| Restricted cash, end of
period |
|
569 |
|
|
88 |
|
|
1.3 |
|
| Cash and cash balances,
end of period |
|
43,231 |
|
|
68,886 |
|
|
991.6 |
|
* Derived from audited consolidated financial statements
YANDEX N.V.
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO THE NEAREST COMPARABLE U.S. GAAP
MEASURES
Reconciliation of Ex-TAC Revenues to U.S.
GAAP Revenues
| |
|
|
|
|
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Total
revenues |
27,860 |
|
38,842 |
|
39% |
|
94,054 |
|
127,657 |
|
36% |
|
|
Less: traffic acquisition costs (TAC) |
4,789 |
|
6,164 |
|
29% |
|
17,345 |
|
20,498 |
|
18% |
|
|
Ex-TAC revenues |
23,071 |
|
32,678 |
|
42% |
|
76,709 |
|
107,159 |
|
40% |
|
|
|
Reconciliation of Adjusted EBITDA to U.S.
GAAP Net Income
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Net income |
3,500 |
|
5,911 |
|
69% |
|
8,656 |
|
45,861 |
|
n/m |
|
|
Add: depreciation and amortization |
3,023 |
|
3,203 |
|
6% |
|
11,239 |
|
12,137 |
|
8% |
|
|
Add: share-based compensation expense |
1,394 |
|
1,642 |
|
18% |
|
4,193 |
|
6,552 |
|
56% |
|
|
Add: compensation expense related to contingent consideration |
42 |
|
7 |
|
-83% |
|
203 |
|
44 |
|
-78% |
|
|
Less: effect of Yandex.Market deconsolidation |
- |
|
- |
|
n/m |
|
- |
|
(28,244 |
) |
n/m |
|
|
Less: interest income |
(780 |
) |
(929 |
) |
19% |
|
(2,909 |
) |
(3,382 |
) |
16% |
|
|
Add: interest expense |
226 |
|
221 |
|
-2% |
|
897 |
|
945 |
|
5% |
|
|
Less: other (income)/loss, net |
(26 |
) |
(271 |
) |
n/m |
|
1,466 |
|
(2,922 |
) |
n/m |
|
|
Add: provision for income taxes |
1,897 |
|
2,539 |
|
34% |
|
4,926 |
|
8,603 |
|
75% |
|
|
Add: operating losses resulting from sanctions in Ukraine |
17 |
|
- |
|
n/m |
|
404 |
|
- |
|
n/m |
|
|
Adjusted EBITDA |
9,293 |
|
12,323 |
|
33% |
|
29,075 |
|
39,594 |
|
36% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Net Income to
U.S. GAAP Net Income
| |
|
|
|
|
|
|
|
In RUB millions |
Three months ended
December 31, |
Twelve months ended
December 31, |
|
|
2017 |
|
2018 |
|
Change |
2017 |
|
2018 |
|
Change |
| Net income |
3,500 |
|
5,911 |
|
69% |
|
8,656 |
|
45,861 |
|
n/m |
|
|
Add: SBC expense |
1,394 |
|
1,642 |
|
18% |
|
4,193 |
|
6,552 |
|
56% |
|
|
Less: reduction in income tax attributable to SBC expense |
(16 |
) |
(28 |
) |
75% |
|
(62 |
) |
(104 |
) |
68% |
|
|
Add: compensation expense related to contingent consideration |
42 |
|
7 |
|
-83% |
|
203 |
|
44 |
|
-78% |
|
|
Add: foreign exchange losses/(gains) |
243 |
|
(904 |
) |
n/m |
|
1,784 |
|
(3,155 |
) |
n/m |
|
|
Less: (reduction)/increase in income tax attributable to foreign
exchange losses/(gains) |
(44 |
) |
194 |
|
n/m |
|
(326 |
) |
638 |
|
n/m |
|
|
Less: effect of deconsolidation of Yandex.Market |
- |
|
- |
|
n/m |
|
- |
|
(28,244 |
) |
n/m |
|
|
Add: losses from repuchases of convertible debt |
- |
|
- |
|
n/m |
|
6 |
|
- |
|
n/m |
|
|
Less: reduction in income tax attributable to losses from
repuchases of convertible debt |
- |
|
- |
|
n/m |
|
(1 |
) |
- |
|
n/m |
|
|
Add: amortization of debt discount |
173 |
|
170 |
|
-2% |
|
684 |
|
728 |
|
6% |
|
|
Less: reduction in income tax attributable to amortization of debt
discount |
(43 |
) |
(43 |
) |
0% |
|
(171 |
) |
(182 |
) |
6% |
|
|
Add: losses resulting from sanctions in Ukraine |
- |
|
- |
|
n/m |
|
393 |
|
- |
|
n/m |
|
|
Adjusted net income |
5,249 |
|
6,949 |
|
32% |
|
15,359 |
|
22,138 |
|
44% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA Margin
and Adjusted Ex-TAC EBITDA Margin to U.S. GAAP Net Income
Margin
|
|
|
|
|
|
|
|
|
|
In RUB millions |
|
|
|
|
|
|
|
| |
U.S. GAAP Actual
Net Income |
Net Income
Margin (1) |
Adjustment (2) |
Adjusted EBITDA |
Adjusted EBITDA
Margin (3) |
Adjusted Ex-TAC
EBITDA Margin (4) |
| Three
months ended December 31, 2018 |
5,911 |
15.2 |
% |
6,412 |
|
12,323 |
31.7 |
% |
37.7 |
% |
| Twelve months ended December 31, 2018 |
45,861 |
35.9 |
% |
(6,267 |
) |
39,594 |
31.0 |
% |
36.9 |
% |
(1) Net income margin
is defined as net income divided by total revenues.(2) Adjusted to
eliminate depreciation and amortization expense, SBC expense,
expense related to contingent compensation, interest income,
interest expense, effect of deconsolidation of Yandex.Market,
other (income)/loss, net and provision for income taxes. For
a reconciliation of adjusted EBITDA to net income, please see the
table above.(3) Adjusted EBITDA margin is defined as adjusted
EBITDA divided by total revenues.(4) Adjusted ex-TAC EBITDA margin
is defined as adjusted EBITDA divided by ex-TAC revenues. For a
reconciliation of ex-TAC revenues to U.S. GAAP revenues, please see
the table above.
Reconciliation of Adjusted Net Income
Margin and Adjusted Ex-TAC Net Income Margin to U.S. GAAP Net
Income Margin
|
In RUB millions |
|
|
|
|
|
|
|
| |
U.S. GAAP Actual
Net Income |
Net Income
Margin (1) |
Adjustment (2) |
Adjusted Net
Income |
Adjusted Net
Income Margin
(3) |
Adjusted Ex-TAC Net
Income Margin (4) |
| Three
months ended December 31, 2018 |
5,911 |
15.2 |
% |
1,038 |
|
6,949 |
17.9 |
% |
21.3 |
% |
| Twelve months ended December 31, 2018 |
45,861 |
35.9 |
% |
(23,723 |
) |
22,138 |
17.3 |
% |
20.7 |
% |
(1) Net income margin
is defined as net income divided by total revenues.(2) Adjusted to
eliminate SBC expense (as adjusted for the income tax reduction
attributable to SBC expense), expense related to contingent
compensation, foreign exchange losses/(gains) as adjusted for the
(reduction)/increase in income tax attributable to the
losses/(gains), effect of deconsolidation of Yandex.Market, and
amortization of debt discount (as adjusted for the related
reduction in income tax). For a reconciliation of adjusted net
income to net income, please see the table above.(3) Adjusted net
income margin is defined as adjusted net income divided by total
revenues.(4) Adjusted ex-TAC net income margin is defined as
adjusted net income divided by ex-TAC revenues. For a
reconciliation of ex-TAC revenues to U.S. GAAP revenues, please see
the table above.
Contacts:
Investor RelationsKatya ZhukovaPhone: +7 495 974-35-38E-mail:
askIR@yandex-team.ru
Media RelationsIlya GrabovskiyPhone: +7 495 739-70-00E-mail:
pr@yandex-team.ru
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