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 third quarter ended September
30, 2015.
Q3 2015 Financial
Highlights(1)(2)
- Revenues of RUB 15.4 billion ($233.1 million),
up 18% compared with Q3 2014
- Ex-TAC revenues (excluding traffic acquisition
costs) up 18% compared with Q3 2014
- Income from operations of RUB 3.2 billion
($48.1 million), down 29% compared with Q3 2014
- Adjusted EBITDA of RUB 6.0 billion ($90.9
million), up 2% compared with Q3 2014
- Operating margin of 20.6%
- Adjusted EBITDA margin of 39.0%
- Adjusted ex-TAC EBITDA margin
of 49.5%
- Net income of RUB 4.3 billion ($64.6 million),
down 2% compared with Q3 2014
- Adjusted net income of RUB 3.5 billion ($52.9
million), down 10% compared with Q3 2014
- Net income margin of 27.7%
- Adjusted net income margin of 22.7%
- Adjusted ex-TAC net income
margin of 28.8%
- Cash, cash equivalents and deposits of RUB
55.1 billion ($831.9 million) as of September 30, 2015
1 Pursuant to SEC rules regarding convenience translations,
Russian ruble (RUB) amounts have been translated into U.S. dollars
at a rate of RUB 66.2367 to $1.00, the official exchange rate
quoted as of September 30, 2015 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 US GAAP measures.
"This was an excellent quarter for the company on all fronts,"
said Arkady Volozh, Chief Executive Officer of Yandex. "We
stabilized our search share in Russia, became the default search
engine for Windows 10 in Russia, Turkey, and several other
countries, and achieved a historic decision from the Russian
antimonopoly service that we hope will return fair competition to
the market."
"Our consolidated revenues grew 18% in Q3," said Alexander
Shulgin, Chief Operating Officer of Yandex. "We smoothly
transitioned to the VCG auction, leading to lower CPCs for our
advertisers, higher quality traffic to their websites and an
increase in click through rates on Yandex.Direct."
The following table provides a summary of key financial results
for the three months and nine months ended September 30, 2014 and
2015:
|
|
|
In RUB millions |
Three
months |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Revenues |
13,057 |
15,439 |
18% |
36,100 |
41,698 |
16% |
Ex-TAC revenues2 |
10,295 |
12,157 |
18% |
28,119 |
32,677 |
16% |
Income from operations |
4,496 |
3,183 |
-29% |
10,845 |
6,865 |
-37% |
Adjusted EBITDA2 |
5,905 |
6,021 |
2% |
14,974 |
14,409 |
-4% |
Net income |
4,372 |
4,278 |
-2% |
9,448 |
6,828 |
-28% |
Adjusted net income2 |
3,914 |
3,507 |
-10% |
9,784 |
8,547 |
-13% |
|
|
|
|
|
|
|
Q3 2015 Operational Highlights
- Share of Russian search market (including
mobile) averaged 57.1% in Q3 2015 (according to LiveInternet)
- Search queries in Russia grew 4% compared
to Q3 2014
- Number of advertisers grew to 354,000, up
18% from Q3 2014 and up 1% from Q2 2015
- Switched to the VCG auction in Yandex.Direct
and changed the ranking formula
- Introduced 'Protect' online security technology built directly
into Yandex.Browser
Subsequent Events
- Announced cooperation with Microsoft to deliver Windows
10 with Yandex search in Russia, Ukraine, Turkey and
several other countries
Revenues
|
|
|
In RUB
millions |
Three
months |
Nine
months |
|
ended
September 30, |
ended
September 30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Advertising revenues: |
|
|
|
|
|
|
Text-based
advertising |
|
|
|
|
|
|
Yandex
websites |
9,310 |
10,503 |
13% |
25,263 |
28,318 |
12% |
Ad network |
2,772 |
3,740 |
35% |
8,140 |
10,095 |
24% |
Total text-based
advertising |
12,082 |
14,243 |
18% |
33,403 |
38,413 |
15% |
Display
advertising |
|
|
|
|
|
|
Yandex
websites |
716 |
634 |
-11% |
2,037 |
1,898 |
-7% |
Ad network |
114 |
191 |
67% |
291 |
381 |
31% |
Total display
advertising |
830 |
825 |
-1% |
2,328 |
2,279 |
-2% |
Total advertising revenues |
12,912 |
15,068 |
17% |
35,731 |
40,692 |
14% |
Other |
145 |
371 |
156% |
369 |
1,006 |
173% |
Total revenues |
13,057 |
15,439 |
18% |
36,100 |
41,698 |
16% |
|
|
|
|
|
|
|
Text-based advertising revenues increased 18%
compared with Q3 2014 and constituted 92% of our total
revenues.
Text-based advertising revenues from Yandex
websites grew 13% compared with Q3 2014 and accounted for
68% of our total revenues in Q3 2015.
Text-based advertising revenues from our ad
network increased 35% compared with Q3 2014 and
contributed 24% of total revenues during Q3 2015, as we added new
partners to the network earlier in the year.
Paid clicks on Yandex's and its partners'
websites, in aggregate, increased 15% in Q3 2015 compared with Q3
2014. Our average cost per click in Q3 2015 grew 3% compared with
Q3 2014.
Display advertising revenue decreased 1%
compared to Q3 2014 and contributed 5% to our total revenues.
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 includes personnel-related costs and
expenses, relevant office space rental, and related share-based
compensation expense. Increases across all cost categories,
excluding D&A, reflect investments in overall growth. In Q3
2015, our headcount reduced by 46 employees, a decrease of 2%
compared to September 30, 2014 and a decrease of 1% compared to
June 30, 2015. As of September 30, 2015, the total number of
Yandex's full-time employees was 5,412.
Costs of revenues, including traffic acquisition costs
(TAC)
|
|
|
In RUB millions |
Three
months |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
TAC: |
|
|
|
|
|
|
Related to the Yandex ad network |
1,825 |
2,333 |
28% |
5,418 |
6,312 |
17% |
Related to distribution partners |
937 |
949 |
1% |
2,563 |
2,709 |
6% |
Total TAC |
2,762 |
3,282 |
19% |
7,981 |
9,021 |
13% |
Total TAC as a % of total revenues |
21.2% |
21.3% |
|
22.1% |
21.6% |
|
Other cost of revenues |
808 |
1,036 |
28% |
2,348 |
2,992 |
27% |
Other cost of revenues as a % of
revenues |
6.2% |
6.7% |
|
6.5% |
7.2% |
|
Total cost of revenues |
3,570 |
4,318 |
21% |
10,329 |
12,013 |
16% |
Total cost of revenues as a % of
revenues |
27.3% |
28.0% |
|
28.6% |
28.8% |
|
|
|
|
|
|
|
|
TAC grew 19% compared with Q3 2014 and slightly
increased as a percentage of total revenues to 21.3% in Q3 2015.
This is compared with 21.2% in Q3 2014 and 21.7% in Q2 2015. Our ad
network TAC grew 28% in Q3 2015 compared with Q3 2014, slower than
revenues from our advertising network, primarily reflecting changes
in our partner revenue mix. Partner TAC includes traffic
acquisition costs related to both our text-based and our display
advertising networks.
Other cost of revenues in Q3 2015 increased 28%
compared with Q3 2014, primarily reflecting an increase in expenses
for content and outsource services, personnel expenses and rent
expenses attributable to the material appreciation of the U.S.
dollar in Q3 2015 compared to Q3 2014, since the rent for our
Moscow headquarters is U.S. dollar-denominated.
Product development
|
|
|
In RUB
millions |
Three
months |
Nine
months |
|
ended
September 30, |
ended
September 30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Product development |
2,086 |
3,168 |
52% |
6,169 |
9,815 |
59% |
As a % of revenues |
16.0% |
20.5% |
|
17.1% |
23.5% |
|
|
|
|
|
|
|
|
Growth in product development expenses in Q3
2015 primarily reflects growth of personnel expenses mainly related
to salary increases effective in early 2015, as well as increases
in our rent expenses described above. As of the end of Q3 2015, our
development headcount has grown by one employee to 3,273
employees compared with the end of Q3 2014 and Q2 2015.
Selling, general and administrative
(SG&A)
|
|
|
In RUB
millions |
Three
months |
Nine
months |
|
ended
September 30, |
ended
September 30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Sales, general and administrative |
1,810 |
2,618 |
45% |
5,479 |
7,489 |
37% |
As a % of revenues |
13.9% |
17.0% |
|
15.2% |
18.0% |
|
|
|
|
|
|
|
|
SG&A costs grew 45% compared with Q3 2014. The growth was
driven by several factors, including additional advertising and
marketing expenses in Q3 2015, increase in personnel costs
(connected with salary increases in the beginning of the year),
growth of costs for legal services and increases in rent expenses
for our Moscow headquarters related to the SG&A category.
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 |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
SBC expense included in cost of
revenues |
27 |
41 |
52% |
69 |
125 |
81% |
SBC expense included in product
development |
191 |
457 |
139% |
526 |
1,231 |
134% |
SBC expense included in SG&A |
86 |
173 |
101% |
239 |
469 |
96% |
Total SBC expense |
304 |
671 |
121% |
834 |
1,825 |
119% |
As a % of revenues |
2.3% |
4.3% |
|
2.3% |
4.4% |
|
|
|
|
|
|
|
|
Total SBC expense increased 121% in Q3 2015 compared with Q3
2014. The increase is related to the material appreciation of the
U.S. dollar in Q3 2015 versus Q3 2014, new equity-based grants made
in 2014 and 2015, as well as the exchange of certain equity awards
in Q2 and Q3 2015 (as described below).
Depreciation and amortization (D&A)
expense
|
|
|
In RUB
millions |
Three
months |
Nine
months |
|
ended
September 30, |
ended
September 30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Depreciation and amortization |
1,095 |
2,152 |
97% |
3,278 |
5,516 |
68% |
As a % of revenues |
8.4% |
13.9% |
|
9.1% |
13.2% |
|
|
|
|
|
|
|
|
D&A expense increased 97% in Q3 2015 compared with Q3 2014,
reflecting investments in servers and data centers made in 2014 and
the first half of 2015.
As a result of the factors described above, income from
operations was RUB 3.2 billion ($48.1 million) in Q3 2015,
a 29% decline from Q3 2014, while adjusted EBITDA
reached RUB 6.0 billion ($90.9 million) in Q3 2015, up 2% from Q3
2014.
Interest income, net in Q3 2015 was RUB 415
million, up from RUB 224 million in Q3 2014. The significant growth
of interest income was partly offset by an increase in interest
expense on our U.S. dollar denominated 1.125% convertible senior
notes following the material appreciation of the U.S. dollar
against the ruble.
Foreign exchange gain in Q3 2015 was RUB 1,947
million, up from RUB 1,824 million in Q3 2014. This gain reflects
the appreciation of the U.S. dollar during Q3 2015 from RUB 55.5240
to $1.00 on June 30, 2015, to RUB 66.2367 to $1.00 on September 30,
2015. 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 other income,
net in the 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 Q3 2015.
Income tax expense for Q3 2015 was RUB 1,396
million, down from RUB 1,418 million in Q3 2014. Our effective tax
rate of 24.6% in Q3 2015, generally in line with the effective tax
rate in Q3 2014.
Adjusted net income in Q3 2015 was RUB 3.5
billion ($52.9 million), a 10% decrease from Q3 2014.
Adjusted net income margin was 22.7% in Q3
2015. This is compared with adjusted net income margin of 20.1% in
Q2 2015 and 30.0% in Q3 2014.
Net income was RUB 4.3 billion ($64.6 million)
in Q3 2015, down 2% compared with Q3 2014.
As of September 30, 2015, Yandex had cash, cash
equivalents and deposits of RUB 55.1 billion ($831.9
million).
Net operating cash flow and capital
expenditures for Q3 2015 were RUB 6.6 billion ($99.4
million) and RUB 2.5 billion ($38.1 million), respectively.
During Q3 2015, we repurchased $42.4 million in aggregate
principal amount of our 1.125% convertible senior
notes due 2018 for approximately $36.6
million.
The total number of shares issued and
outstanding as of September 30, 2015 was 318,917,852,
including 266,022,246 Class A shares, 52,895,605 Class B shares,
and one Priority share and excluding 11,138,902 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 will be cancelled. There were also employee share
options outstanding to purchase up to an additional 4.1 million
shares, at a weighted average exercise price of $5.90 per share, of
which options to purchase 4.1 million shares were fully vested;
equity-settled share appreciation rights (SARs) equal to 0.3
million shares, at a weighted average measurement price of $27.27,
0.2 million of which were fully vested; and restricted share units
(RSUs) covering 6.4 million shares, of which restricted share
units to acquire 1.6 million shares were fully vested.
In Q3 2015, we completed additional exchanges of outstanding SAR
awards for new RSU awards based on an exchange ratio of 2:1. In all
but one instance, the exchanges were effected for non-senior
employees and the replacement RSUs are subject to the same vesting
schedule as was in place for the replaced SARs. An exchange was
also offered to and accepted by one senior employee; in this case
the replacement RSUs were granted on the condition that vesting be
reset to begin as of January 1, 2016.
As a result of the exchanges, a total of 42 employees exchanged
an aggregate of 256,850 SARs for an aggregate of 128,426 RSUs
during Q3 2015. These exchanges are reflected in the outstanding
equity award numbers as of September 30, 2015 set out above.
Outlook for 2015
We are increasing our previously announced revenue guidance and
now expect our ruble-based revenue to grow in the range of 14% to
16% in the full year 2015 compared with 2014.
Conference Call Information
Yandex's management will hold an earnings conference call on
October 27, 2015 at 8:00 AM U.S. Eastern Time (3:00 PM Moscow time;
12:00 PM London time).
To access the conference call live, please dial:
US: +1 877 280 2296 UK/International: +44(0)20 3427 1916 Russia:
8 800 500 9311
Passcode: 3446284
A replay of the call will be available through November 2, 2015.
To access the replay, please dial:
US: +1 866 932 5017 UK/International: +44(0)20 3427 0598 Russia:
+8 10 800 2870 1012
Passcode: 3446284
A live and archived webcast of this conference call will be
available at http://edge.media-server.com/m/p/s88txo8a
ABOUT YANDEX
Yandex (NASDAQ:YNDX) is one of the largest European internet
companies, providing a wide variety of search and other online
services. Yandex's mission is to help users solve their everyday
problems by building people-centric products and services. Based on
innovative technologies, the company provides the most relevant,
locally tailored experience on all digital platforms and devices.
Yandex operates Russia's most popular search engine and also serves
Ukraine, Belarus, Kazakhstan and Turkey.
More information on Yandex can be found at
http://company.yandex.com.
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 2015. 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, fluctuations in the value of the Russian ruble,
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, 2014, which is
on file with the Securities and Exchange Commission 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
October 27, 2015, and Yandex undertakes no duty to update this
information unless required by law.
USE OF NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are
prepared and presented in accordance with US GAAP, we present the
following non-GAAP financial measures: ex-TAC revenue, 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 US 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 US GAAP measures", included following the accompanying
financial tables. We define the various non-GAAP financial measures
we use as follows:
- Ex-TAC revenue means US GAAP revenues less
total traffic acquisition costs (TAC)
- Adjusted EBITDA means net income plus (1)
depreciation and amortization, (2) share-based compensation
expense, (3) accrual of expense related to the contingent
compensation that may be payable to employees in connection with
certain business combinations and (4) provision for income taxes,
less (A) interest income and (B) other income, net
- Adjusted EBITDA margin means adjusted EBITDA
divided by US GAAP revenues
- Adjusted ex-TAC EBITDA margin means adjusted
EBITDA divided by ex-TAC revenues
- Adjusted net income means US 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) impairment of
investment in equity securities recorded in Q3 2014 adjusted for
reduction in income tax attributable to impairment of investment in
such securities and (4) amortization of debt discount related to
our convertible debt adjusted for the related reduction in income
tax; less (A) foreign exchange gains adjusted for the increase in
income tax attributable to the foreign exchange gains and (B) gain
from repurchases of our convertible notes adjusted for the related
increase in income tax
- Adjusted net income margin means adjusted net
income divided by US 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 costs, particularly share-based compensation, that are
recurring. 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
US GAAP financial measures:
TAC
We believe that it may be useful for investors and analysts to
review certain measures both in accordance with US GAAP and net of
the effect of TAC, which we view as comparable to sales commissions
but, unlike sales commissions, are not deducted from US 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 clear 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 US 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 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.
Gain from repurchases of convertible debt
Adjusted net income also excludes a gain from the repurchase of
$42.4 million in principal amount of our 1.125% convertible senior
notes due 2018 for approximately $36.6 million that we recorded in
the quarter ended September 30, 2015. We have eliminated this gain
from adjusted net income as it is not indicative of our ongoing
operating performance.
The tables at the end of this release provide detailed
reconciliations of each non-GAAP financial measure we use to the
most directly comparable US 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, |
September 30, |
September 30, |
|
2014* |
2015 |
2015 |
|
RUB |
RUB |
$ |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
17,645 |
18,039 |
272.3 |
Term deposits |
5,863 |
20,163 |
304.4 |
Investments in debt securities |
3,124 |
-- |
-- |
Accounts receivable, net |
3,703 |
4,641 |
70.1 |
Prepaid expenses |
1,556 |
1,398 |
21.2 |
Deferred tax assets |
180 |
82 |
1.2 |
Other current assets |
3,736 |
4,015 |
60.6 |
Total current assets |
35,807 |
48,338 |
729.8 |
|
|
|
|
Property and equipment, net |
17,107 |
24,208 |
365.5 |
Intangible assets, net |
2,425 |
2,568 |
38.8 |
Goodwill |
8,920 |
9,004 |
135.9 |
Long-term prepaid expenses |
1,590 |
1,520 |
22.9 |
Restricted cash |
932 |
484 |
7.3 |
Term deposits |
25,663 |
16,903 |
255.2 |
Investments in non-marketable equity
securities |
871 |
1,051 |
15.9 |
Other non-current assets |
1,609 |
1,625 |
24.5 |
TOTAL ASSETS |
94,924 |
105,701 |
1,595.8 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued
liabilities |
5,058 |
6,853 |
103.4 |
Taxes payable |
2,930 |
2,588 |
39.1 |
Deferred revenue |
1,808 |
1,646 |
24.9 |
Total current liabilities |
9,796 |
11,087 |
167.4 |
Convertible debt |
26,325 |
26,260 |
396.5 |
Deferred tax liabilities |
1,587 |
1,416 |
21.4 |
Other accrued liabilities |
1,480 |
1,255 |
18.9 |
Total liabilities |
39,188 |
40,018 |
604.2 |
|
|
|
|
Commitments and contingencies |
|
|
|
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: 71,870,411 and 61,295,523, and Class C:
71,870,411 and 61,295,523); shares issued (Class A: 267,970,405 and
277,161,148, Class B: 62,051,348 and 52,895,605, and Class C:
8,919,063 and 7,000,000, respectively); shares outstanding (Class
A: 255,592,322 and 266,022,246, Class B: 62,051,348 and 52,895,605,
and Class C: nil) |
182 |
116 |
1.8 |
Treasury shares at cost (Class A: 12,378,083
and 11,138,902) |
(14,179) |
(12,893) |
(194.7) |
Additional paid-in capital |
16,192 |
16,663 |
251.6 |
Accumulated other comprehensive
income |
1,023 |
2,451 |
36.9 |
Retained earnings |
52,518 |
59,346 |
896.0 |
Total shareholders' equity |
55,736 |
65,683 |
991.6 |
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
94,924 |
105,701 |
1,595.8 |
|
|
|
|
_________________________ |
|
|
|
* Derived from audited 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 September 30, |
|
2014 |
2015 |
2015 |
|
RUB |
RUB |
$ |
|
|
|
|
Revenues |
13,057 |
15,439 |
233.1 |
Operating costs and expenses: |
|
|
|
Cost of revenues(1) |
3,570 |
4,318 |
65.2 |
Product development(1) |
2,086 |
3,168 |
47.8 |
Sales, general and administrative(1) |
1,810 |
2,618 |
39.5 |
Depreciation and amortization |
1,095 |
2,152 |
32.5 |
Total operating costs and expenses |
8,561 |
12,256 |
185.0 |
Income from operations |
4,496 |
3,183 |
48.1 |
Interest income, net |
224 |
415 |
6.3 |
Other income, net |
1,070 |
2,076 |
31.3 |
Net income before income taxes |
5,790 |
5,674 |
85.7 |
Provision for income taxes |
1,418 |
1,396 |
21.1 |
Net income |
4,372 |
4,278 |
64.6 |
Net income per Class A and Class B
share: |
|
|
|
Basic |
13.74 |
13.42 |
0.20 |
Diluted |
13.49 |
13.28 |
0.20 |
Weighted average number of Class A and Class
B shares outstanding |
|
|
|
Basic |
318,081,690 |
318,800,527 |
318,800,527 |
Diluted |
324,094,946 |
322,118,209 |
322,118,209 |
|
(1)These balances exclude
depreciation and amortization expenses, which are presented
separately, and include share‑based compensation expenses of: |
|
|
|
|
Cost of revenues |
27 |
41 |
0.6 |
Product development |
191 |
457 |
6.9 |
Sales, general and administrative |
86 |
173 |
2.6 |
|
|
|
|
|
YANDEX N.V. |
|
Unaudited
Condensed Consolidated Statements of Income |
|
(in millions of Russian
rubles and U.S. dollars, except share and per share
data) |
|
|
Nine months ended
September 30, |
|
2014 |
2015 |
2015 |
|
RUB |
RUB |
$ |
|
|
|
|
Revenues |
36,100 |
41,698 |
629.5 |
Operating costs and expenses: |
|
|
|
Cost of revenues(1) |
10,329 |
12,013 |
181.4 |
Product development(1) |
6,169 |
9,815 |
148.2 |
Sales, general and administrative(1) |
5,479 |
7,489 |
113.0 |
Depreciation and amortization |
3,278 |
5,516 |
83.3 |
Total operating costs and expenses |
25,255 |
34,833 |
525.9 |
Income from operations |
10,845 |
6,865 |
103.6 |
Interest income, net |
599 |
1,255 |
18.9 |
Other income, net |
1,121 |
1,122 |
17.0 |
Net income before income taxes |
12,565 |
9,242 |
139.5 |
Provision for income taxes |
3,117 |
2,414 |
36.4 |
Net income |
9,448 |
6,828 |
103.1 |
Net income per Class A and Class B
share: |
|
|
|
Basic |
29.54 |
21.45 |
0.32 |
Diluted |
28.95 |
21.15 |
0.32 |
Weighted average number of Class A and Class
B shares outstanding |
|
|
|
Basic |
319,862,807 |
318,353,267 |
318,353,267 |
Diluted |
326,344,768 |
322,791,055 |
322,791,055 |
|
(1)These balances exclude
depreciation and amortization expenses, which are presented
separately, and include share‑based compensation expenses of: |
|
|
|
|
Cost of revenues |
69 |
125 |
1.9 |
Product development |
526 |
1,231 |
18.6 |
Sales, general and administrative |
239 |
469 |
7.1 |
|
|
|
|
|
YANDEX N.V. |
|
|
|
|
Unaudited Condensed
Consolidated Statements of Cash Flows |
|
|
|
|
(in millions of Russian
rubles and U.S. dollars) |
|
|
|
|
|
|
|
|
|
Three months
ended September 30, |
|
2014 |
2015 |
2015 |
|
RUB |
RUB |
$ |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income |
4,372 |
4,278 |
64.6 |
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
Depreciation and amortization of property and
equipment |
1,042 |
2,034 |
30.7 |
Amortization of acquisition‑related
intangible assets |
53 |
118 |
1.8 |
Amortization of debt discount and issuance
costs |
198 |
241 |
3.6 |
Share‑based compensation expense |
304 |
671 |
10.1 |
Deferred income taxes |
28 |
4 |
0.1 |
Foreign exchange gains |
(1,824) |
(1,947) |
(29.4) |
Impairment of investment in equity
securities |
700 |
-- |
-- |
Gain from repurchases of convertible
debt |
-- |
(93) |
(1.4) |
Other |
31 |
(31) |
(0.5) |
Changes in operating
assets and liabilities excluding the effect of acquisitions: |
|
Accounts receivable, net |
(256) |
(80) |
(1.2) |
Prepaid expenses and other assets |
(639) |
121 |
1.8 |
Accounts payable and accrued
liabilities |
983 |
1,394 |
21.1 |
Deferred revenue |
207 |
(127) |
(1.9) |
Net cash provided by operating
activities |
5,199 |
6,583 |
99.4 |
CASH FLOWS (USED
IN)/PROVIDED BY INVESTING ACTIVITIES: |
|
|
Purchase of property and equipment |
(2,470) |
(2,524) |
(38.1) |
Proceeds from sale of property and
equipment |
36 |
8 |
0.1 |
Acquisitions of businesses, net of cash
acquired |
(5,683) |
-- |
-- |
Investments in non‑marketable equity
securities |
(9) |
(21) |
(0.3) |
Investments in debt securities |
(2,546) |
-- |
-- |
Proceeds from maturity of debt
securities |
-- |
582 |
8.7 |
Investments in term deposits |
(4,296) |
(4,700) |
(71.0) |
Maturities of term deposits |
1,716 |
7,263 |
109.7 |
Loans granted |
-- |
(22) |
(0.3) |
Escrow cash deposit |
(519) |
-- |
-- |
Net cash (used in)/provided by investing
activities |
(13,771) |
586 |
8.8 |
CASH FLOWS USED IN FINANCING ACTIVITIES: |
|
|
|
Proceeds from exercise of share
options |
37 |
48 |
0.7 |
Repurchases of convertible debt |
(1,739) |
(2,192) |
(33.1) |
Repurchases of ordinary shares |
(23) |
-- |
-- |
Payment for contingent consideration |
-- |
(89) |
(1.3) |
Net cash used in financing activities |
(1,725) |
(2,233) |
(33.7) |
Effect of exchange rate changes on cash and
cash equivalents |
2,380 |
3,673 |
55.5 |
Net change in cash and cash
equivalents |
(7,917) |
8,609 |
130.0 |
Cash and cash equivalents at beginning of
period |
20,836 |
9,430 |
142.3 |
Cash and cash equivalents at end of
period |
12,919 |
18,039 |
272.3 |
|
|
|
|
|
YANDEX N.V. |
|
|
|
|
Unaudited Condensed
Consolidated Statements of Cash Flows |
|
|
|
|
(in millions of Russian
rubles and U.S. dollars) |
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, |
|
2014 |
2015 |
2015 |
|
RUB |
RUB |
$ |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income |
9,448 |
6,828 |
103.1 |
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
Depreciation and amortization of property and
equipment |
3,151 |
5,177 |
78.2 |
Amortization of acquisition‑related
intangible assets |
127 |
339 |
5.1 |
Amortization of debt discount and issuance
costs |
571 |
732 |
11.1 |
Share‑based compensation expense |
834 |
1,825 |
27.6 |
Deferred income taxes |
(21) |
(101) |
(1.5) |
Foreign exchange gains |
(1,846) |
(794) |
(12.0) |
Impairment of investment in equity
securities |
700 |
-- |
-- |
Gain from repurchases of convertible
debt |
-- |
(243) |
(3.7) |
Other |
5 |
(96) |
(1.4) |
Changes in operating
assets and liabilities excluding the effect of acquisitions: |
|
|
Accounts receivable, net |
(362) |
(863) |
(13.0) |
Prepaid expenses and other assets |
(2,128) |
782 |
11.7 |
Accounts payable and accrued
liabilities |
1,319 |
661 |
9.9 |
Deferred revenue |
23 |
(171) |
(2.6) |
Net cash provided by operating
activities |
11,821 |
14,076 |
212.5 |
CASH FLOWS USED IN INVESTING ACTIVITIES: |
|
|
|
Purchase of property and equipment |
(6,681) |
(11,386) |
(171.9) |
Proceeds from sale of property and
equipment |
36 |
35 |
0.5 |
Acquisitions of businesses, net of cash
acquired |
(5,829) |
(186) |
(2.8) |
Investments in non‑marketable equity
securities |
(45) |
(75) |
(1.1) |
Proceeds from sale of equity
securities |
120 |
-- |
-- |
Investments in debt securities |
(2,546) |
-- |
-- |
Proceeds from maturity of debt
securities |
-- |
3,426 |
51.6 |
Investments in term deposits |
(16,222) |
(26,610) |
(401.7) |
Maturities of term deposits |
1,716 |
22,638 |
341.8 |
Loans granted |
(209) |
(22) |
(0.3) |
Escrow cash deposit |
(656) |
58 |
0.9 |
Net cash used in investing activities |
(30,316) |
(12,122) |
(183.0) |
CASH FLOWS USED IN FINANCING ACTIVITIES: |
|
|
|
Proceeds from exercise of share
options |
123 |
139 |
2.1 |
Proceeds from issuance of convertible
debt |
2,981 |
-- |
-- |
Repurchases of convertible debt |
(1,739) |
(4,909) |
(74.2) |
Payment of debt issuance costs |
(42) |
-- |
-- |
Repurchases of ordinary shares |
(7,357) |
-- |
-- |
Payment for contingent consideration |
-- |
(89) |
(1.3) |
Net cash used in financing activities |
(6,034) |
(4,859) |
(73.4) |
Effect of exchange rate changes on cash and
cash equivalents |
4,054 |
3,299 |
49.8 |
Net change in cash and cash
equivalents |
(20,475) |
394 |
5.9 |
Cash and cash equivalents at beginning of
period |
33,394 |
17,645 |
266.4 |
Cash and cash equivalents at end of
period |
12,919 |
18,039 |
272.3 |
|
|
|
|
|
YANDEX
N.V.
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES TO THE NEAREST COMPARABLE US GAAP MEASURES
|
Reconciliation of
Ex-TAC Revenues to US GAAP Revenues |
|
In RUB millions |
Three
months |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Total revenues |
13,057 |
15,439 |
18% |
36,100 |
41,698 |
16% |
Less: traffic acquisition costs
(TAC) |
2,762 |
3,282 |
19% |
7,981 |
9,021 |
13% |
Ex-TAC revenues |
10,295 |
12,157 |
18% |
28,119 |
32,677 |
16% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to US GAAP Net Income |
|
In RUB millions |
Three
months |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Net income |
4,372 |
4,278 |
-2% |
9,448 |
6,828 |
-28% |
Add: depreciation and amortization |
1,095 |
2,152 |
97% |
3,278 |
5,516 |
68% |
Add: share-based compensation
expense |
304 |
671 |
121% |
834 |
1,825 |
119% |
Add: compensation expense related to
contingent consideration |
10 |
15 |
50% |
17 |
203 |
n/m |
Less: interest income, net |
(224) |
(415) |
85% |
(599) |
(1,255) |
110% |
Less: other income, net |
(1,070) |
(2,076) |
94% |
(1,121) |
(1,122) |
0% |
Add: provision for income taxes |
1,418 |
1,396 |
-2% |
3,117 |
2,414 |
-23% |
Adjusted EBITDA |
5,905 |
6,021 |
2% |
14,974 |
14,409 |
-4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Income to US GAAP Net Income |
|
In RUB millions |
Three
months |
Nine
months |
|
ended September
30, |
ended September
30, |
|
2014 |
2015 |
Change |
2014 |
2015 |
Change |
Net income |
4,372 |
4,278 |
-2% |
9,448 |
6,828 |
-28% |
Add: SBC expense |
304 |
671 |
121% |
834 |
1,825 |
119% |
Less: reduction in income tax
attributable to SBC expense |
(5) |
(10) |
100% |
(15) |
(30) |
100% |
Add: compensation expense related to
contingent consideration |
10 |
15 |
50% |
17 |
203 |
n/m |
Less: foreign exchange gain |
(1,824) |
(1,947) |
7% |
(1,846) |
(794) |
-57% |
Add: increase in income tax
attributable to foreign exchange gain |
383 |
386 |
1% |
387 |
139 |
-64% |
Add: impairment of investment in equity
securities |
700 |
-- |
-100% |
700 |
-- |
-100% |
Less: reduction in income tax
attributable to impairment of investment in equity securities |
(175) |
-- |
-100% |
(175) |
-- |
-100% |
Less: gain from repurchases of
convertible debt |
-- |
(93) |
n/m |
-- |
(243) |
n/m |
Add: increase in income tax
attributable to gain from repurchases of convertible debt |
-- |
23 |
n/m |
-- |
61 |
n/m |
Add: amortization of debt discount |
195 |
241 |
24% |
568 |
732 |
29% |
Less: reduction in income tax
attributable to amortization of debt discount |
(46) |
(57) |
24% |
(134) |
(174) |
30% |
Adjusted net income |
3,914 |
3,507 |
-10% |
9,784 |
8,547 |
-13% |
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA Margin and Adjusted Ex-TAC EBITDA Margin to US GAAP
Net Income Margin |
|
|
|
|
|
|
|
|
In RUB
millions |
|
US 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 September 30,
2015 |
4,278 |
27.7% |
1,743 |
6,021 |
39.0% |
49.5% |
Nine months ended September 30,
2015 |
6,828 |
16.4% |
7,581 |
14,409 |
34.6% |
44.1% |
|
|
|
|
|
|
|
(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, net, other income,
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 GAAP
revenues, please see the table above. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net Income Margin and Adjusted Ex-TAC Net Income Margin to
US GAAP Net Income Margin |
|
|
|
|
|
|
|
|
In RUB
millions |
|
US 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 September 30,
2015 |
4,278 |
27.7% |
(771) |
3,507 |
22.7% |
28.8% |
Nine months ended September 30,
2015 |
6,828 |
16.4% |
1,719 |
8,547 |
20.5% |
26.2% |
|
|
|
|
|
|
|
(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 gain (as adjusted for the increase in income tax
attributable to the gain), gain from repurchases of convertible
debt (as adjusted for the increase in income tax attributable to
the gain) and amortization of debt discount (as adjusted for the
reduction in income tax attributable to the expense). 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 US GAAP
revenues, please see the table above. |
CONTACT: Investor Relations
Katya Zhukova
Phone: +7 495 974-35-38
E-mail: askIR@yandex-team.ru
Media Relations
Ochir Mandzhikov, Vladimir Isaev
Phone: +7 495 739-70-00
E-mail: pr@yandex-team.ru
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