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 second quarter ended June 30,
2019.
Q2 2019 Financial Highlights(1)(2)(3)
Q2 2019 consolidated financial results
- Revenues of RUB 41.4 billion ($656.3 million),
up 40% compared with Q2 2018
- Net income of RUB 3.4 billion ($54.2
million), down 90% compared with Q2 2018; net income
margin of 8.3%
- Adjusted net income of RUB 5.8 billion
($92.3 million), up 16% compared with Q2 2018; adjusted net
income margin of 14.1%
- Adjusted EBITDA of RUB 13.1 billion ($207.6
million), up 50% compared with Q2 2018; adjusted EBITDA
margin of 31.6%
Q2 2019 financial results excluding Yandex.Market in
2018 and 2019
- Revenues excluding Yandex.Market of RUB 41.4
billion ($656.3 million), up 41% compared with Q2 2018
- Net income excluding Yandex.Market of RUB 4.5
billion ($70.6 million), down 3% compared with Q2 2018
- Adjusted net income excluding Yandex.Market of
RUB 6.9 billion ($108.8 million), up 31% compared with Q2 2018;
adjusted net income margin excluding Yandex.Market of 16.6%
- Adjusted EBITDA excluding Yandex.Market of RUB
13.1 billion ($207.6 million), up 48% compared with Q2 2018;
adjusted EBITDA margin excluding Yandex.Market of
31.6%
Cash, cash equivalents and term deposits as of June 30,
2019:
- RUB 75.0 billion ($1,189.2 million) on a consolidated
basis
- Of which RUB 24.9 billion ($395.5 million) related to Taxi
segment
Q2 2019 Operational and Corporate
Highlights
- Share of Russian search market, including
mobile, averaged 56.9% in Q2 2019, up from 56.2% in Q2 2018 and
down slightly from 57.0% in Q1 2019, according to Yandex.Radar
- Search share on Android in Russia was 52.3% in
Q2 2019, up from 47.8% in Q2 2018 and 51.2% in Q1 2019, according
to Yandex.Radar
- Search queries in Russia grew 9% compared with
Q2 2018
- Paid clicks on Yandex’s and its partners’
websites, in aggregate, increased 17% compared with Q2 2018.
Excluding Yandex.Market, paid clicks grew 20%
compared to Q2 2018
- Average cost per click grew 2% compared with
Q2 2018. Excluding Yandex.Market, average cost per
click increased 1% compared to Q2 2018
- Number of rides in the Taxi segment grew 49%
year-on-year compared with Q2 2018
- Yandex introduced the smart home
concept, powered by its AI-assistant Alice
- Yandex.Auto became the official supplier of
infotainment systems for Renault,
Nissan, and LADA in Russia
Q2 2019 Subsequent
Events
- MLU B.V., Yandex’s ride-sharing and food
delivery joint venture with Uber, announced an agreement to acquire
the IP and call-centers of the Vezet group of
companies in Russia
“We have delivered consolidated revenue growth of more than 40%
year-on-year for the fifth straight quarter,” said Arkady Volozh,
Chief Executive Officer of Yandex. “Thanks to our focus on
sustainable, long-term investments, we have built a strong
ecosystem that is continuing to play a key role in the rapid growth
of both our existing and new businesses. As a result, non-core
businesses contributed one-third of consolidated revenues in Q2.
Our advanced capabilities in machine learning are helping to
deliver exciting results in self-driving. We also continue
integrating Alice, our voice assistant, into a growing number of
different platforms to help users get things done more easily,
including at home and in their cars.”
“We had a great quarter, with revenues up 41% year-on-year,
excluding Yandex.Market,” said Greg Abovsky, Chief Operating
Officer and Chief Financial Officer of Yandex. “In Q2 our Taxi
segment had strong momentum and became profitable, and we also
continued to improve profitability in ride-sharing as well as the
unit economics of our food delivery business. We are extremely
excited about this business. Our recently announced agreement to
acquire the IP and call centers of Vezet Group is in line with our
plans to further invest in the regions and to boost safety and
security technologies in the taxi market.”
The following table provides a summary of our key
consolidated financial results for the three and
six months ended June 30, 2018 and 2019, which includes
Yandex.Market financial results through April 27, 2018:
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Revenues |
29,672 |
41,397 |
40 |
% |
56,245 |
78,681 |
40 |
% |
Ex-TAC revenues2 |
24,948 |
35,803 |
44 |
% |
47,204 |
67,745 |
44 |
% |
Income from operations |
4,262 |
6,987 |
64 |
% |
7,421 |
12,372 |
67 |
% |
Adjusted EBITDA2 |
8,756 |
13,097 |
50 |
% |
16,460 |
23,865 |
45 |
% |
Net income |
32,575 |
3,416 |
-90 |
% |
34,426 |
6,540 |
-81 |
% |
Adjusted net
income2 |
5,012 |
5,825 |
16 |
% |
9,021 |
11,265 |
25 |
% |
The table below provides a summary of our key financial
results excluding Yandex.Market for the three and six
months ended June 30, 2018 and 2019:
|
|
|
|
|
|
|
In RUB
millions, excluding Yandex.Market |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Revenues ex. Yandex.Market |
29,350 |
41,397 |
41 |
% |
55,018 |
78,681 |
43 |
% |
Ex-TAC revenues2 ex. Yandex.Market |
24,633 |
35,803 |
45 |
% |
46,011 |
67,745 |
47 |
% |
Income from operations ex. Yandex.Market |
4,377 |
6,987 |
60 |
% |
7,740 |
12,372 |
60 |
% |
Adjusted EBITDA2 ex. Yandex.Market |
8,857 |
13,097 |
48 |
% |
16,723 |
23,865 |
43 |
% |
Net income ex. Yandex.Market |
4,571 |
4,453 |
-3 |
% |
6,573 |
8,298 |
26 |
% |
Adjusted net income2
ex. Yandex.Market |
5,241 |
6,862 |
31 |
% |
9,365 |
13,023 |
39 |
% |
(1) Pursuant to SEC rules regarding convenience translations,
Russian ruble (RUB) amounts have been translated into U.S. dollars
at a rate of RUB 63.0756 to $1.00, the official exchange rate
quoted as of June 30, 2019 by the Central Bank of the Russian
Federation. (2) The
following measures presented in this release are “non-GAAP
financial measures”: ex-TAC revenues; adjusted EBITDA; adjusted
EBITDA margin; adjusted ex-TAC EBITDA margin; adjusted net income;
adjusted net income margin and adjusted ex-TAC net income margin.
Please see the section headed “Use of Non-GAAP Financial Measures”
below for a discussion of how we define these measures, as well as
reconciliations at the end of this release of each of these
measures to the most directly comparable U.S. GAAP measures.
(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 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 (income)/loss from equity method investments
line in the consolidated statements of income. Financial results
excluding Yandex.Market exclude the results of Yandex.Market and
Yandex's share of Yandex.Market’s net loss after the
deconsolidation from the three and six months periods ended June
30, 2018 and 2019.
Our segment disclosure is available in the Segment financial
results table below Income from operations.
Consolidated revenues breakdown
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Online advertising revenues: |
|
|
|
|
|
|
Yandex properties |
18,863 |
22,854 |
21 |
% |
36,338 |
43,766 |
20 |
% |
Advertising network |
5,619 |
6,287 |
12 |
% |
10,984 |
12,415 |
13 |
% |
Total online advertising revenues |
24,482 |
29,141 |
19 |
% |
47,322 |
56,181 |
19 |
% |
Revenues related to Taxi segment |
4,064 |
8,798 |
116 |
% |
7,180 |
16,422 |
129 |
% |
Other |
1,126 |
3,458 |
207 |
% |
1,743 |
6,078 |
249 |
% |
Total revenues |
29,672 |
41,397 |
40 |
% |
56,245 |
78,681 |
40 |
% |
|
|
|
|
|
|
|
In RUB
millions, excluding Yandex.Market |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Online advertising revenues |
|
|
|
|
|
|
Yandex properties |
18,454 |
22,854 |
24 |
% |
34,743 |
43,766 |
26 |
% |
Advertising network |
5,593 |
6,287 |
12 |
% |
10,905 |
12,415 |
14 |
% |
Total online advertising revenues |
24,047 |
29,141 |
21 |
% |
45,648 |
56,181 |
23 |
% |
Revenues related to Taxi segment |
4,064 |
8,798 |
116 |
% |
7,180 |
16,422 |
129 |
% |
Other |
1,239 |
3,458 |
179 |
% |
2,190 |
6,078 |
178 |
% |
Total revenues |
29,350 |
41,397 |
41 |
% |
55,018 |
78,681 |
43 |
% |
Online advertising revenues grew 19% in Q2 2019
compared with Q2 2018 and generated 70% 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
Q2 2018, online advertising revenues grew 21% in Q2 2019 compared
with Q2 2018.
Online advertising revenues from Yandex
properties increased 21% in Q2 2019 compared with Q2 2018
and accounted for 55% of total revenues. Excluding revenues
of Yandex.Market from Q2 2018, online advertising revenues
from Yandex properties increased 24% in Q2 2019 compared with Q2
2018.
Online advertising revenues from our advertising
network increased 12% in Q2 2019 compared with Q2 2018 and
accounted for 15% of total revenues. The growth was primarily
driven by the ongoing strong contribution from medium and small
partners.
Revenues related to Taxi segment grew 116% in
Q2 2019 compared with Q2 2018 and accounted for 21% of total
revenues. This increase mainly reflected the solid performance of
our ride-sharing business due to the increase in the number of
rides and incentives optimization, the strong growth of our
corporate Taxi offering, which we recognize on a gross basis, as
well as the growing contribution of our food delivery
businesses.
Other revenues grew 207% in Q2 2019 compared
with Q2 2018 and amounted to 8% of total revenues. The growth was
primarily driven by our car-sharing service Yandex.Drive,
subscription revenues of Media Services and our initiatives related
to IoT (Internet of Things).
Consolidated Operating Costs and Expenses
Yandex’s operating costs and expenses consist of cost of
revenues, product development expenses, sales, general and
administrative expenses (SG&A) and depreciation and
amortization expenses (D&A). Apart from D&A, each of the
above expense categories include personnel-related costs and
expenses, relevant office space rental, and related share-based
compensation expense. Increases across all cost categories reflect
investments in overall growth. In Q2 2019 Yandex's headcount
increased by 376 full-time employees. The total number of full-time
employees was 9,005 as of June 30, 2019, up by 4% compared with
March 31, 2019, and up 9% from June 30, 2018.
Cost of revenues, including traffic acquisition costs
(TAC)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
TAC: |
|
|
|
|
|
|
Related to the Yandex advertising network |
3,439 |
|
3,802 |
|
11 |
% |
6,607 |
|
7,425 |
|
12 |
% |
Related to distribution partners |
1,285 |
|
1,792 |
|
39 |
% |
2,434 |
|
3,511 |
|
44 |
% |
Total TAC |
4,724 |
|
5,594 |
|
18 |
% |
9,041 |
|
10,936 |
|
21 |
% |
Total TAC as a % of total revenues |
15.9% |
|
13.5% |
|
|
16.1% |
|
13.9% |
|
|
Costs related to Taxi segment |
1,486 |
|
2,717 |
|
83 |
% |
2,177 |
|
5,126 |
|
135 |
% |
Costs related to Taxi segment as a % of revenues |
5.0% |
|
6.6% |
|
|
3.9% |
|
6.5% |
|
|
Other cost of revenues |
2,050 |
|
4,266 |
|
108 |
% |
3,754 |
|
8,100 |
|
116 |
% |
Other cost of revenues as a % of revenues |
6.9% |
|
10.3% |
|
|
6.7% |
|
10.3% |
|
|
Total cost of revenues |
8,260 |
|
12,577 |
|
52 |
% |
14,972 |
|
24,162 |
|
61 |
% |
Total cost of revenues
as a % of revenues |
27.8% |
|
30.4% |
|
|
26.6% |
|
30.7% |
|
|
TAC grew 18% in Q2 2019 compared with Q2 2018 and represented
13.5% of total revenues, 240 basis points lower than in Q2 2018 and
81 basis points lower compared with Q1 2019 as a result of revenue
mix effect.
Costs related to Taxi segment increased 83%
compared with Q2 2018. The growth was mainly due to an increase of
our outsourced costs and services provided to Taxi corporate
clients and the logistics costs related to food delivery. We are
the principal in transactions with our Taxi corporate clients,
therefore, we recognize both revenues and cost of revenues on a
gross basis. Costs related to Taxi corporate clients represent
payments we make to the drivers to fulfill our contract obligations
to the taxi corporate clients.
Other cost of revenues in Q2 2019 increased
108% compared with Q2 2018, mainly reflecting the growth of costs
related to Yandex.Drive, our investments in music and video content
library within Media Services, as well as our IoT initiatives.
Product development
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Product development |
5,386 |
|
6,995 |
|
30 |
% |
11,189 |
|
13,701 |
|
22 |
% |
As a % of revenues |
18.1% |
|
16.8% |
|
|
19.9% |
|
17.5% |
|
|
Product development expenses grew slower than revenues and
primarily reflected new hires, the growth of share-based
compensation and salary increases in Q2 2019. Excluding
Yandex.Market from Q2 2018, product development expenses grew 33%
in Q2 2019 compared with Q2 2018.
Sales, general and administrative
(SG&A)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Sales, general and administrative |
8,838 |
|
11,082 |
|
25 |
% |
16,847 |
|
21,433 |
|
27 |
% |
As a % of revenues |
29.8% |
|
26.8% |
|
|
30.0% |
|
27.2% |
|
|
SG&A expenses grew 25% in Q2 2019 compared to Q2 2018. The
growth was mainly driven by the increase of personnel costs as a
result of new hires and salary increases as well as by the growth
of our rent and utilities expenses due to our headcount increase.
Excluding Yandex.Market from Q2 2018, SG&A expenses grew 29% in
Q2 2019 compared with Q2 2018.
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 June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
SBC expense included in cost of revenues |
43 |
|
64 |
|
49 |
% |
79 |
|
132 |
|
67 |
% |
SBC expense included in product development |
1,058 |
|
1,579 |
|
49 |
% |
2,204 |
|
3,011 |
|
37 |
% |
SBC expense included in SG&A |
460 |
|
704 |
|
53 |
% |
911 |
|
1,323 |
|
45 |
% |
Total SBC expense |
1,561 |
|
2,347 |
|
50 |
% |
3,194 |
|
4,466 |
|
40 |
% |
As a % of revenues |
5.3% |
|
5.7% |
|
|
5.7% |
|
5.7% |
|
|
Total SBC expense increased 50% in Q2 2019 compared with Q2
2018. The growth was primarily related to new equity-based grants
made in 2018-2019.
Depreciation and amortization (D&A)
expense
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Depreciation and amortization |
2,926 |
|
3,756 |
|
28 |
% |
5,816 |
|
7,013 |
|
21 |
% |
As a % of revenues |
9.9% |
|
9.1% |
|
|
10.3% |
|
8.9% |
|
|
D&A expense increased 28% in Q2 2019 compared with Q2 2018.
The D&A expense increase primarily reflects our investments in
servers and data center equipment, costs related to land lease of
the Korston Site, which we acquired in December 2018 for our new
Moscow headquarters, as well as purchases of office equipment.
Income from operations
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Income from operations |
4,262 |
6,987 |
64 |
% |
7,421 |
12,372 |
67 |
% |
Income from operations increased 64% in Q2 2019 compared with Q2
2018.
Segment financial results
|
|
|
|
|
|
|
In RUB millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Revenues: |
|
|
|
|
|
|
Search and Portal |
23,965 |
|
29,090 |
|
21 |
% |
45,534 |
|
56,199 |
|
23 |
% |
Search and Portal, excluding IoT* |
23,965 |
|
28,899 |
|
21 |
% |
45,534 |
|
55,786 |
|
23 |
% |
E-commerce** |
442 |
|
- |
|
-100 |
% |
1,697 |
|
- |
|
-100 |
% |
Taxi |
4,064 |
|
8,810 |
|
117 |
% |
7,180 |
|
16,449 |
|
129 |
% |
Classifieds |
915 |
|
1,302 |
|
42 |
% |
1,621 |
|
2,408 |
|
49 |
% |
Media Services |
395 |
|
876 |
|
122 |
% |
816 |
|
1,610 |
|
97 |
% |
Other Bets and Experiments |
1,130 |
|
3,420 |
|
203 |
% |
1,909 |
|
5,898 |
|
209 |
% |
Eliminations |
(1,239 |
) |
(2,101 |
) |
70 |
% |
(2,512 |
) |
(3,883 |
) |
55 |
% |
Total revenues |
29,672 |
|
41,397 |
|
40 |
% |
56,245 |
|
78,681 |
|
40 |
% |
Total revenues, excluding Yandex.Market** |
29,350 |
|
41,397 |
|
41 |
% |
55,018 |
|
78,681 |
|
43 |
% |
Adjusted EBITDA: |
|
|
|
|
|
|
Search and Portal |
11,661 |
|
13,747 |
|
18 |
% |
22,215 |
|
26,594 |
|
20 |
% |
Search and Portal, excluding IoT* |
11,694 |
|
13,870 |
|
19 |
% |
22,290 |
|
26,887 |
|
21 |
% |
E-commerce** |
(101 |
) |
- |
|
-100 |
% |
(263 |
) |
- |
|
-100 |
% |
Taxi |
(1,882 |
) |
423 |
|
-122 |
% |
(3,594 |
) |
307 |
|
-109 |
% |
Classifieds |
44 |
|
265 |
|
n/m |
|
(243 |
) |
(63 |
) |
-74 |
% |
Media Services |
(260 |
) |
(438 |
) |
68 |
% |
(357 |
) |
(878 |
) |
146 |
% |
Other Bets and Experiments |
(733 |
) |
(947 |
) |
29 |
% |
(1,356 |
) |
(2,186 |
) |
61 |
% |
Eliminations |
27 |
|
47 |
|
74 |
% |
58 |
|
91 |
|
57 |
% |
Total adjusted EBITDA |
8,756 |
|
13,097 |
|
50 |
% |
16,460 |
|
23,865 |
|
45 |
% |
Total adjusted EBITDA, excluding Yandex.Market** |
8,857 |
|
13,097 |
|
48 |
% |
16,723 |
|
23,865 |
|
43 |
% |
Adjusted EBITDA margin: |
|
|
|
|
|
|
Search and Portal |
48.7% |
|
47.3% |
|
-1.4 |
% |
48.8% |
|
47.3% |
|
-1.5 |
% |
Search and Portal, excluding IoT* |
48.8% |
|
48.0% |
|
-0.8 |
% |
49.0% |
|
48.2% |
|
-0.8 |
% |
E-commerce** |
-22.9% |
|
n/m |
|
n/m |
|
-15.5% |
|
n/m |
|
n/m |
|
Taxi |
-46.3% |
|
4.8% |
|
51.1 |
% |
-50.1% |
|
1.9% |
|
52.0 |
% |
Classifieds |
4.8% |
|
20.4% |
|
15.6 |
% |
-15.0% |
|
-2.6% |
|
12.4 |
% |
Media Services |
-65.8% |
|
-50.0% |
|
15.8 |
% |
-43.8% |
|
-54.5% |
|
-10.7 |
% |
Other Bets and Experiments |
-64.9% |
|
-27.7% |
|
37.2 |
% |
-71.0% |
|
-37.1% |
|
33.9 |
% |
Total adjusted EBITDA margin |
29.5% |
|
31.6% |
|
2.1 |
% |
29.3% |
|
30.3% |
|
1.0 |
% |
Total adjusted EBITDA margin, excluding Yandex.Market** |
30.2% |
|
31.6% |
|
1.4 |
% |
30.4% |
|
30.3% |
|
-0.1 |
% |
Financial result of segments are presented in the new segment
structure that we introduced in Q1 2019. The historical data is
provided in the supplementary slides related to Q2 2019
results.
*IoT stands for Internet of Things
**Our E-commerce segment revenues include revenues of
Yandex.Market through April 27, 2018. As a result of
deconsolidation, we record our share of Yandex.Market’s financial
results within the (income)/loss from equity method investments
line in the consolidated statements of income.
- Search and Portal segment offers a broad range of services in
Russia, Belarus, Kazakhstan, Uzbekistan and Turkey, other than
those described below. Since Q1 2019 our Search and Portal segment
also includes Yandex.Health, previously reported in Other Bets and
Experiments;
- 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), Food Delivery
business (including Yandex.EATs, UberEATs and Yandex.Chef, a meal
kit subscription service) and Self-Driving Cars division;
- Classifieds segment includes Auto.ru, Yandex.Realty and
Yandex.Jobs;
- Media Services segment includes KinoPoisk, Yandex.Music,
Yandex.Afisha, Yandex.TV program, our production center
Yandex.Studio and our subscription service Yandex.Plus;
- Other Bets and Experiments category includes Zen, Yandex.Cloud,
Yandex.Drive, Geolocation Services and Yandex.Education.
Geolocation Services and Yandex.Education previously were a part of
our Search and Portal segment;
- Eliminations in our revenues represent the elimination of
transactions between the reportable segments, primarily related to
advertising. Eliminations related to our adjusted EBITDA mainly
reflect reallocation of a portion of Search and Portal D&A
expenses related to leasehold improvements to office rent expenses
of our business unites.
Adjusted EBITDA increased 50% in Q2 2019
compared with Q2 2018.
Adjusted EBITDA excluding Yandex.Market
increased 48% in Q2 2019 compared with Q2 2018. The growth was
mainly driven by the improved adjusted EBITDA of our Taxi segment
and solid performance of Search and Portal, which were slightly
offset by our investments in the Media Services and Cloud
businesses as well as IoT initiatives.
Adjusted EBITDA of Taxi was RUB 423 million in Q2 2019, up from
negative RUB 1,882 million in Q2 2018. The significant increase of
adjusted EBITDA was driven by consistently improving profitability
of our ride-sharing business, partially offset by our investments
in food delivery and autonomous vehicles.
Interest income in Q2 2019 was RUB 834 million,
compared with RUB 817 million in Q2 2018.
Interest expense in Q2 2019 was RUB 12 million,
down from RUB 243 million in Q2 2018.
Foreign exchange loss in Q2 2019 was RUB 270
million, compared with a foreign exchange gain of RUB 1,224 million
in Q2 2018. This loss reflects the appreciation of the Russian
ruble during Q2 2019 from RUB 64.7347 to $1.00 on March 31, 2019,
to RUB 63.0756 to $1.00 on June 30, 2019. 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/(loss), 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 a downward revaluation of the ruble equivalent of
these U.S. dollar-denominated monetary assets and liabilities in Q2
2019.
Income tax expense for Q2 2019 was RUB 3,033
million, up from RUB 2,068 million in Q2 2018. Our effective tax
rate of 47.0% in Q2 2019 was higher than in Q2 2018, primarily due
to the gain from deconsolidation of Yandex.Market recognized in Q2
2018 which is non-taxable. Adjusted for this and similar effects,
SBC expense, deferred tax asset valuation allowances provided on
operations of our Uber and Food Delivery businesses acquired in
late 2017 and early 2018, our effective tax rate for Q2 2019 was
33.4%, compared with 23.4% for Q2 2018 as adjusted for SBC expense
and similar provisions in that year. The increase in the adjusted
effective tax rate was primarily driven by certain additional
valuation allowances provided in Q2 2019.
Net income was RUB 3.4 billion ($54.2 million)
in Q2 2019, down 90% compared with Q2 2018.
Adjusted net income in Q2 2019 was RUB 5.8
billion ($92.3 million), a 16% increase from Q2 2018. Excluding
Yandex.Market, adjusted net income increased 31% in Q2 2019
compared to Q2 2018.
Adjusted net income margin was 14.1% in Q2
2019, compared with 16.9% in Q2 2018.
As of June 30, 2019, Yandex had cash, cash equivalents
and term deposits of RUB 75.0 billion ($1,189.2 million),
including cash, cash equivalents and term deposits of Yandex.Taxi
in total amount of RUB 24.9 billion ($395.5 million).
Net cash flow provided by operating activities
for Q2 2019 was RUB 10.5 billion ($167.1 million) and
capital expenditures were RUB 7.7 billion ($122.5
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 June 30, 2019 was 326,898,551 including
289,149,892 Class A shares, 37,748,658 Class B shares, and one
Priority share and excluding 3,417,763 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 3.5 million shares, at a weighted average
exercise price of $35.72 per share, 1.5 million of which were fully
vested; equity-settled share appreciation rights (SARs) for 0.2
million shares, at a weighted average measurement price of $32.63,
all of which were fully vested; and restricted share units (RSUs)
covering 13.7 million shares, of which RSUs to acquire 4.9 million
shares were fully vested. Equity awards in respect of business unit
subsidiaries are described under Redeemable noncontrolling
interests above.
Financial outlook
Based on our recent performance, we currently expect our
ruble-based revenues excluding Yandex.Market to grow in the range
of 32% to 36% for the full year 2019 compared with 2018.
We reiterate our Search and Portal ruble-based revenue growth
outlook of 19% to 21% 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
July 26, 2019 at 8:00 AM U.S. Eastern Time (3:00 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: 6329555
A replay of the call will be available until August 2, 2019. To
access the replay, please dial:
US: +1 917 677 7532UK/International: +44 (0) 844 571 8951Russia:
+7 495 249 9138Passcode: 6329555
A live and archived webcast of this conference call will be
available at
https://edge.media-server.com/mmc/p/o8kpp9gk
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 34 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, changes in the political, legal
and/or regulatory environment, competitive pressures, changes in
advertising patterns, changes in user preferences, 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, 2018, 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 July 26, 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) income tax
expense, less (1) effect of Yandex.Market deconsolidation, (2)
interest income, (3) (income)/loss from equity method investments
and (4) 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)
amortization of debt discount related to our convertible debt
adjusted for the related reduction in income tax, less (1) foreign
exchange (gains)/losses adjusted for increase/(reduction) in income
tax attributable to foreign exchange (gains)/losses and (2) effect
of deconsolidation of former subsidiaries
- 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.
Effect of deconsolidation of Yandex.Market/former
subsidiaries
We believe that it is useful to present adjusted net income and
related margin measures excluding the effect of deconsolidation of
former subsidiaries 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. Adjusted net income in Q2 2018
excludes a gain from deconsolidation of Yandex.Market following the
formation of Yandex.Market joint venture by Yandex and Sberbank in
April 2018.
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 which matured in Q4 2018. 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.
The tables at the end of this release provide detailed
reconciliations of each non-GAAP financial measure we use from 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, |
|
June 30, |
|
June 30, |
|
|
2018* |
|
2019 |
|
|
2019 |
|
|
|
RUB |
|
RUB |
|
$ |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
68,798 |
|
|
33,809 |
|
|
536.0 |
|
Term deposits |
|
- |
|
|
41,201 |
|
|
653.2 |
|
Investments in marketable
equity securities |
|
- |
|
|
4,469 |
|
|
70.9 |
|
Accounts receivable, net |
|
14,570 |
|
|
16,048 |
|
|
254.4 |
|
Prepaid expenses |
|
2,119 |
|
|
2,445 |
|
|
38.7 |
|
Funds receivable, net |
|
2,217 |
|
|
3,038 |
|
|
48.2 |
|
Other current assets |
|
4,177 |
|
|
6,388 |
|
|
101.3 |
|
Total current assets |
|
91,881 |
|
|
107,398 |
|
|
1,702.7 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
39,740 |
|
|
43,319 |
|
|
686.8 |
|
Operating lease right-of-use
assets |
|
16,944 |
|
|
16,398 |
|
|
260.0 |
|
Intangible assets, net |
|
11,545 |
|
|
10,893 |
|
|
172.7 |
|
Non-current content assets,
net |
|
335 |
|
|
1,656 |
|
|
26.3 |
|
Goodwill |
|
52,662 |
|
|
52,967 |
|
|
839.7 |
|
Long-term prepaid
expenses |
|
1,800 |
|
|
2,103 |
|
|
33.2 |
|
Investments in non-marketable
equity securities |
|
36,484 |
|
|
30,473 |
|
|
483.1 |
|
Deferred tax assets |
|
3,523 |
|
|
2,211 |
|
|
35.1 |
|
Other non-current assets |
|
3,473 |
|
|
3,101 |
|
|
49.2 |
|
TOTAL
ASSETS |
|
258,387 |
|
|
270,519 |
|
|
4,288.8 |
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
22,550 |
|
|
26,072 |
|
|
413.4 |
|
Income and non-income taxes
payable |
|
4,059 |
|
|
6,550 |
|
|
103.8 |
|
Deferred revenue |
|
2,792 |
|
|
2,796 |
|
|
44.3 |
|
Total current liabilities |
|
29,401 |
|
|
35,418 |
|
|
561.5 |
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
1,572 |
|
|
2,138 |
|
|
33.9 |
|
Operating lease
liabilities |
|
12,204 |
|
|
9,876 |
|
|
156.6 |
|
Other accrued liabilities |
|
569 |
|
|
1,026 |
|
|
16.2 |
|
Total liabilities |
|
43,746 |
|
|
48,458 |
|
|
768.2 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
Redeemable noncontrolling
interests |
|
13,035 |
|
|
13,528 |
|
|
214.5 |
|
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: 292,437,655 and 292,567,655,
Class B: 37,878,658 and 37,748,658, and Class C: nil and 130,000,
respectively); shares outstanding (Class A: 286,848,365 and
289,149,892, Class B: 37,878,658 and 37,748,658, and Class C:
nil) |
|
263 |
|
|
263 |
|
|
4.2 |
|
Treasury shares at cost (Class
A: 5,589,290 and 3,417,763, respectively) |
|
(10,769 |
) |
|
(6,638 |
) |
|
(105.2 |
) |
Additional paid-in
capital |
|
69,729 |
|
|
70,016 |
|
|
1,110.0 |
|
Accumulated other
comprehensive income |
|
8,182 |
|
|
5,692 |
|
|
90.2 |
|
Retained earnings |
|
111,465 |
|
|
117,920 |
|
|
1,869.5 |
|
Total equity attributable to
Yandex N.V. |
|
178,870 |
|
|
187,253 |
|
|
2,968.7 |
|
Noncontrolling interests |
|
22,736 |
|
|
21,280 |
|
|
337.4 |
|
Total shareholders’
equity |
|
201,606 |
|
|
208,533 |
|
|
3,306.1 |
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
258,387 |
|
|
270,519 |
|
|
4,288.8 |
|
|
|
|
|
|
|
|
|
|
|
* Derived from audited
consolidated financial statements except for restatement of
balances due to adoption of ASC 842 Leases, which required the
recognition of right-of-use assets and lease liabilities for
operating leases
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
June 30, |
|
|
2018* |
|
2019 |
|
|
2019 |
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
Revenues |
|
29,672 |
|
|
41,397 |
|
|
656.3 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
Cost of revenues(1) |
|
8,260 |
|
|
12,577 |
|
|
199.4 |
|
Product development(1) |
|
5,386 |
|
|
6,995 |
|
|
110.9 |
|
Sales, general and
administrative(1) |
|
8,838 |
|
|
11,082 |
|
|
175.7 |
|
Depreciation and
amortization |
|
2,926 |
|
|
3,756 |
|
|
59.5 |
|
Total operating costs and
expenses |
|
25,410 |
|
|
34,410 |
|
|
545.5 |
|
Income from operations |
|
4,262 |
|
|
6,987 |
|
|
110.8 |
|
Interest income |
|
817 |
|
|
834 |
|
|
13.2 |
|
Interest expense |
|
(243 |
) |
|
(12 |
) |
|
(0.2 |
) |
Effect of Yandex.Market
deconsolidation |
|
28,244 |
|
|
- |
|
|
- |
|
Income/(loss) from equity
method investments |
|
211 |
|
|
(946 |
) |
|
(15.0 |
) |
Other income/(loss), net |
|
1,352 |
|
|
(414 |
) |
|
(6.6 |
) |
Net income before income
taxes |
|
34,643 |
|
|
6,449 |
|
|
102.2 |
|
Income tax expense |
|
2,068 |
|
|
3,033 |
|
|
48.0 |
|
Net income |
|
32,575 |
|
|
3,416 |
|
|
54.2 |
|
Net loss attributable to
noncontrolling interests |
|
715 |
|
|
289 |
|
|
4.5 |
|
Net income attributable to
Yandex N.V. |
|
33,290 |
|
|
3,705 |
|
|
58.7 |
|
Net income per Class A
and Class B share: |
|
|
|
|
|
|
Basic |
|
101.44 |
|
|
11.35 |
|
|
0.18 |
|
Diluted |
|
99.00 |
|
|
11.03 |
|
|
0.17 |
|
Weighted average number of
Class A and Class B shares outstanding |
|
|
|
|
|
|
Basic |
|
328,163,442 |
|
|
326,335,979 |
|
|
326,335,979 |
|
Diluted |
|
336,270,128 |
|
|
334,912,393 |
|
|
334,912,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) These balances exclude depreciation and amortization
expenses, which are presented separately, and include share-based
compensation expenses
of:
Cost of revenues |
|
43 |
|
|
64 |
|
|
1.0 |
|
Product development |
|
1,058 |
|
|
1,579 |
|
|
25.0 |
|
Sales, general and
administrative |
|
460 |
|
|
704 |
|
|
11.2 |
|
* Adjusted for restatement of operating costs and expenses
and other income/(loss), net due to adoption of ASC 842 Leases,
which required the recognition of right-of-use assets and lease
liabilities for operating leases
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Income
(in millions of Russian rubles and U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
Six months ended
June 30, |
|
|
2018* |
|
2019 |
|
|
2019 |
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
Revenues |
|
56,245 |
|
|
78,681 |
|
|
1,247.4 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
Cost of revenues(1) |
|
14,972 |
|
|
24,162 |
|
|
383.1 |
|
Product development(1) |
|
11,189 |
|
|
13,701 |
|
|
217.2 |
|
Sales, general and
administrative(1) |
|
16,847 |
|
|
21,433 |
|
|
339.8 |
|
Depreciation and
amortization |
|
5,816 |
|
|
7,013 |
|
|
111.2 |
|
Total operating costs and
expenses |
|
48,824 |
|
|
66,309 |
|
|
1,051.3 |
|
Income from operations |
|
7,421 |
|
|
12,372 |
|
|
196.1 |
|
Interest income |
|
1,525 |
|
|
1,661 |
|
|
26.3 |
|
Interest expense |
|
(464 |
) |
|
(13 |
) |
|
(0.2 |
) |
Effect of Yandex.Market
deconsolidation |
|
28,244 |
|
|
- |
|
|
- |
|
Income/(loss) from equity
method investments |
|
302 |
|
|
(1,584 |
) |
|
(25.1 |
) |
Other income/(loss), net |
|
861 |
|
|
(649 |
) |
|
(10.2 |
) |
Net income before income
taxes |
|
37,889 |
|
|
11,787 |
|
|
186.9 |
|
Income tax expense |
|
3,463 |
|
|
5,247 |
|
|
83.2 |
|
Net income |
|
34,426 |
|
|
6,540 |
|
|
103.7 |
|
Net loss attributable to
noncontrolling interests |
|
1,244 |
|
|
687 |
|
|
10.9 |
|
Net income attributable to
Yandex N.V. |
|
35,670 |
|
|
7,227 |
|
|
114.6 |
|
Net income per Class A
and Class B share: |
|
|
|
|
|
|
Basic |
|
108.88 |
|
|
22.19 |
|
|
0.35 |
|
Diluted |
|
106.16 |
|
|
21.65 |
|
|
0.34 |
|
Weighted average number of
Class A and Class B shares outstanding |
|
|
|
|
|
|
Basic |
|
327,618,094 |
|
|
325,741,663 |
|
|
325,741,663 |
|
Diluted |
|
335,991,164 |
|
|
333,750,613 |
|
|
333,750,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) These balances exclude depreciation and amortization
expenses, which are presented separately, and include
share-based compensation expenses of:
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
79 |
|
|
132 |
|
|
2.1 |
|
Product development |
|
2,204 |
|
|
3,011 |
|
|
47.7 |
|
Sales, general and
administrative |
|
911 |
|
|
1,323 |
|
|
21.0 |
|
* Adjusted for restatement of operating costs and expenses
and other income/(loss), net due to adoption of ASC 842 Leases,
which required the recognition of right-of-use assets and lease
liabilities for operating leases
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Cash Flows(in millions of Russian
rubles and U.S. dollars)
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
2018* |
|
2019 |
|
|
2019 |
|
|
|
RUB |
|
RUB |
|
$ |
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
|
32,575 |
|
|
3,416 |
|
|
54.2 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation of property and
equipment |
|
2,376 |
|
|
3,100 |
|
|
49.1 |
|
Amortization of intangible
assets |
|
550 |
|
|
656 |
|
|
10.4 |
|
ROU assets amortization* |
|
1,233 |
|
|
2,097 |
|
|
33.2 |
|
Amortization of debt discount
and issuance costs |
|
187 |
|
|
- |
|
|
- |
|
Share-based compensation
expense |
|
1,561 |
|
|
2,347 |
|
|
37.2 |
|
Deferred income taxes |
|
(721 |
) |
|
772 |
|
|
12.2 |
|
Foreign exchange
(gains)/losses |
|
(1,224 |
) |
|
270 |
|
|
4.3 |
|
Effect of deconsolidation of
Yandex.Market |
|
(28,244 |
) |
|
- |
|
|
- |
|
(Income)/loss from equity
method investments |
|
(213 |
) |
|
946 |
|
|
15.0 |
|
Other |
|
(90 |
) |
|
182 |
|
|
2.9 |
|
Changes in operating assets
and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
Accounts receivable, net |
|
(747 |
) |
|
(908 |
) |
|
(14.4 |
) |
Prepaid expenses and other
assets |
|
(2,298 |
) |
|
(1,504 |
) |
|
(23.8 |
) |
Accounts payable and accrued
liabilities |
|
1,683 |
|
|
(1,087 |
) |
|
(17.3 |
) |
Deferred revenue |
|
194 |
|
|
256 |
|
|
4.1 |
|
Net cash provided by operating
activities |
|
6,822 |
|
|
10,543 |
|
|
167.1 |
|
CASH FLOWS USED IN INVESTING
ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and
equipment and intangible assets |
|
(9,005 |
) |
|
(7,724 |
) |
|
(122.5 |
) |
Proceeds from sale of property
and equipment |
|
147 |
|
|
22 |
|
|
0.4 |
|
Investments in non-marketable
equity securities |
|
(38 |
) |
|
(65 |
) |
|
(1.0 |
) |
Investments in term
deposits |
|
(10,953 |
) |
|
(27,755 |
) |
|
(440.0 |
) |
Maturities of term
deposits |
|
3,448 |
|
|
5,552 |
|
|
88.0 |
|
Deconsolidation of cash and
cash equivalents of Yandex.Market |
|
(2,181 |
) |
|
- |
|
|
- |
|
Loans granted, net of proceeds
from repayments |
|
(48 |
) |
|
84 |
|
|
1.3 |
|
Net cash used in investing
activities |
|
(18,630 |
) |
|
(29,886 |
) |
|
(473.8 |
) |
CASH FLOWS USED IN FINANCING
ACTIVITIES: |
|
|
|
|
|
|
Proceeds from exercise of
share options |
|
52 |
|
|
20 |
|
|
0.3 |
|
Purchase of redeemable
noncontrolling interests |
|
- |
|
|
(187 |
) |
|
(3.0 |
) |
Repurchases of ordinary
shares |
|
(221 |
) |
|
- |
|
|
- |
|
Payment for contingent
consideration |
|
(156 |
) |
|
(14 |
) |
|
(0.2 |
) |
Other financing
activities |
|
(44 |
) |
|
20 |
|
|
0.3 |
|
Net cash used in financing
activities |
|
(369 |
) |
|
(161 |
) |
|
(2.6 |
) |
Effect of exchange rate
changes on cash and cash balances |
|
1,681 |
|
|
(512 |
) |
|
(8.0 |
) |
Net change in cash and cash
balances |
|
(10,496 |
) |
|
(20,016 |
) |
|
(317.3 |
) |
Cash and cash balances at
beginning of period |
|
46,612 |
|
|
53,869 |
|
|
854.0 |
|
Cash and cash balances at end
of period |
|
36,116 |
|
|
33,853 |
|
|
536.7 |
|
|
|
|
|
|
|
|
Reconciliation
of cash and cash balances: |
|
|
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
46,443 |
|
|
53,825 |
|
|
853.3 |
|
Restricted cash, beginning of
period |
|
169 |
|
|
44 |
|
|
0.7 |
|
Cash and cash balances,
beginning of period |
|
46,612 |
|
|
53,869 |
|
|
854.0 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period |
|
35,930 |
|
|
33,809 |
|
|
536.0 |
|
Restricted cash, end of
period |
|
186 |
|
|
44 |
|
|
0.7 |
|
Cash and cash balances, end of
period |
|
36,116 |
|
|
33,853 |
|
|
536.7 |
|
|
* Adjusted for restatement of cash flows from operating
activities due to adoption of ASC 842 Leases, which required the
recognition of right-of-use (ROU) assets and lease liabilities for
operating leases
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Cash Flows(in millions of Russian
rubles and U.S. dollars)
|
|
|
|
|
|
|
|
|
Six months ended
June 30, |
|
|
2018* |
|
2019 |
|
|
2019 |
|
|
|
RUB |
|
RUB |
|
$ |
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
|
34,426 |
|
|
6,540 |
|
|
103.7 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation of property and
equipment |
|
4,728 |
|
|
5,740 |
|
|
91.0 |
|
Amortization of intangible
assets |
|
1,088 |
|
|
1,273 |
|
|
20.2 |
|
ROU assets amortization* |
|
2,371 |
|
|
4,009 |
|
|
63.6 |
|
Amortization of debt discount
and issuance costs |
|
357 |
|
|
- |
|
|
- |
|
Share-based compensation
expense |
|
3,194 |
|
|
4,466 |
|
|
70.8 |
|
Deferred income taxes |
|
(1,432 |
) |
|
1,760 |
|
|
27.9 |
|
Foreign exchange
(gains)/losses |
|
(742 |
) |
|
549 |
|
|
8.7 |
|
Effect of deconsolidation of
Yandex.Market |
|
(28,244 |
) |
|
- |
|
|
- |
|
(Income)/loss from equity
method investments |
|
(304 |
) |
|
1,584 |
|
|
25.1 |
|
Other |
|
(149 |
) |
|
186 |
|
|
2.9 |
|
Changes in operating assets
and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
Accounts receivable, net |
|
(1,152 |
) |
|
(1,576 |
) |
|
(25.0 |
) |
Prepaid expenses and other
assets |
|
(2,676 |
) |
|
(4,642 |
) |
|
(73.6 |
) |
Accounts payable and accrued
liabilities |
|
610 |
|
|
1,147 |
|
|
18.2 |
|
Deferred revenue |
|
(66 |
) |
|
34 |
|
|
0.5 |
|
Net cash provided by operating
activities |
|
12,009 |
|
|
21,070 |
|
|
334.0 |
|
CASH FLOWS USED IN INVESTING
ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and
equipment and intangible assets |
|
(10,161 |
) |
|
(9,705 |
) |
|
(153.9 |
) |
Proceeds from sale of property
and equipment |
|
164 |
|
|
29 |
|
|
0.5 |
|
Acquisitions of businesses,
net of cash acquired |
|
20,763 |
|
|
(347 |
) |
|
(5.5 |
) |
Investments in non-marketable
equity securities |
|
(139 |
) |
|
(65 |
) |
|
(1.0 |
) |
Investments in term
deposits |
|
(55,592 |
) |
|
(47,755 |
) |
|
(757.1 |
) |
Maturities of term
deposits |
|
27,100 |
|
|
5,552 |
|
|
88.0 |
|
Deconsolidation of cash and
cash equivalents of Yandex.Market |
|
(2,181) |
|
|
- |
|
|
- |
|
Loans granted, net of proceeds
from repayments |
|
(189 |
) |
|
84 |
|
|
1.3 |
|
Net cash used in investing
activities |
|
(20,235 |
) |
|
(52,207 |
) |
|
(827.7 |
) |
CASH FLOWS USED IN FINANCING
ACTIVITIES: |
|
|
|
|
|
|
Proceeds from exercise of
share options |
|
104 |
|
|
51 |
|
|
0.8 |
|
Purchase of redeemable
noncontrolling interests |
|
- |
|
|
(212 |
) |
|
(3.4 |
) |
Proceeds from sale of
noncontrolling interests |
|
- |
|
|
20 |
|
|
0.3 |
|
Repurchases of ordinary
shares |
|
(221 |
) |
|
- |
|
|
- |
|
Payment for contingent
consideration |
|
(641 |
) |
|
(47 |
) |
|
(0.7 |
) |
Other financing
activities |
|
(63 |
) |
|
(12 |
) |
|
(0.2 |
) |
Net cash used in financing
activities |
|
(821 |
) |
|
(200 |
) |
|
(3.2 |
) |
Effect of exchange rate
changes on cash and cash balances |
|
1,932 |
|
|
(3,696 |
) |
|
(58.5 |
) |
Net change in cash and cash
balances |
|
(7,115 |
) |
|
(35,033 |
) |
|
(555.4 |
) |
Cash and cash balances at
beginning of period |
|
43,231 |
|
|
68,886 |
|
|
1,092.1 |
|
Cash and cash balances at end
of period |
|
36,116 |
|
|
33,853 |
|
|
536.7 |
|
|
|
|
|
|
|
|
Reconciliation
of cash and cash balances: |
|
|
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
42,662 |
|
|
68,798 |
|
|
1,090.7 |
|
Restricted cash, beginning of
period |
|
569 |
|
|
88 |
|
|
1.4 |
|
Cash and cash balances,
beginning of period |
|
43,231 |
|
|
68,886 |
|
|
1,092.1 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period |
|
35,930 |
|
|
33,809 |
|
|
536.0 |
|
Restricted cash, end of
period |
|
186 |
|
|
44 |
|
|
0.7 |
|
Cash and cash balances, end of
period |
|
36,116 |
|
|
33,853 |
|
|
536.7 |
|
* Adjusted for restatement of cash flows from operating
activities due to adoption of ASC 842 Leases, which required the
recognition of right-of-use (ROU) assets and lease liabilities for
operating leases
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 June 30, |
Six months ended June 30, |
|
2018 |
2019 |
Change |
2018 |
2019 |
Change |
Total revenues |
29,672 |
41,397 |
40 |
% |
56,245 |
78,681 |
40 |
% |
Less: traffic acquisition costs (TAC) |
4,724 |
5,594 |
18 |
% |
9,041 |
10,936 |
21 |
% |
Ex-TAC revenues |
24,948 |
35,803 |
44 |
% |
47,204 |
67,745 |
44 |
% |
Reconciliation of Adjusted EBITDA to U.S.
GAAP Net Income
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Net income |
32,575 |
|
3,416 |
|
-90 |
% |
34,426 |
|
6,540 |
|
-81 |
% |
Add: depreciation and amortization |
2,926 |
|
3,756 |
|
28 |
% |
5,816 |
|
7,013 |
|
21 |
% |
Add: share-based compensation expense |
1,561 |
|
2,347 |
|
50 |
% |
3,194 |
|
4,466 |
|
40 |
% |
Add: compensation expense related to contingent consideration |
7 |
|
7 |
|
0 |
% |
29 |
|
14 |
|
-52 |
% |
Less: effect of Yandex.Market deconsolidation |
(28,244 |
) |
- |
|
n/m |
|
(28,244 |
) |
- |
|
n/m |
|
Less: interest income |
(817 |
) |
(834 |
) |
2 |
% |
(1,525 |
) |
(1,661 |
) |
9 |
% |
Add: interest expense |
243 |
|
12 |
|
-95 |
% |
464 |
|
13 |
|
-97 |
% |
Less: (income)/loss from equity method investments |
(211 |
) |
946 |
|
n/m |
|
(302 |
) |
1,584 |
|
n/m |
|
Less: other (income)/loss, net |
(1,352 |
) |
414 |
|
n/m |
|
(861 |
) |
649 |
|
n/m |
|
Add: income tax expense |
2,068 |
|
3,033 |
|
47 |
% |
3,463 |
|
5,247 |
|
52 |
% |
Adjusted EBITDA |
8,756 |
|
13,097 |
|
50 |
% |
16,460 |
|
23,865 |
|
45 |
% |
Reconciliation of Adjusted Net Income to
U.S. GAAP Net Income
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
|
2019 |
|
Change |
2018 |
|
2019 |
|
Change |
Net income |
32,575 |
|
3,416 |
|
-90 |
% |
34,426 |
|
6,540 |
|
-81 |
% |
Add: SBC expense |
1,561 |
|
2,347 |
|
50 |
% |
3,194 |
|
4,466 |
|
40 |
% |
Less: reduction in income tax attributable to SBC expense |
(27 |
) |
(21 |
) |
-22 |
% |
(47 |
) |
(39 |
) |
-17 |
% |
Add: compensation expense related to contingent consideration |
7 |
|
7 |
|
0 |
% |
29 |
|
14 |
|
-52 |
% |
Less: foreign exchange (gains)/losses |
(1,224 |
) |
270 |
|
n/m |
|
(742 |
) |
549 |
|
n/m |
|
Add: increase/(reduction) in income tax attributable to foreign
exchange (gains)/losses |
223 |
|
(73 |
) |
n/m |
|
137 |
|
(144 |
) |
n/m |
|
Less: effect of deconsolidation of former subsidiaries |
(28,244 |
) |
(121 |
) |
-100 |
% |
(28,244 |
) |
(121 |
) |
-100 |
% |
Add: amortization of debt discount |
187 |
|
- |
|
n/m |
|
357 |
|
- |
|
n/m |
|
Less: reduction in income tax attributable to amortization of debt
discount |
(46 |
) |
- |
|
n/m |
|
(89 |
) |
- |
|
n/m |
|
Adjusted net
income |
5,012 |
|
5,825 |
|
16 |
% |
9,021 |
|
11,265 |
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2019 |
3,416 |
8.3 |
% |
9,681 |
13,097 |
31.6 |
% |
36.6 |
% |
Six
months ended June 30, 2019 |
6,540 |
8.3 |
% |
17,325 |
23,865 |
30.3 |
% |
35.2 |
% |
(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,
effect of deconsolidation of former subsidiaries, interest income,
interest expense, (income)/loss from equity method investments,
other (income)/loss, net and income tax expense. 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 from 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 June 30, 2019 |
3,416 |
8.3 |
% |
2,409 |
5,825 |
14.1 |
% |
16.3 |
% |
Six
months ended June 30, 2019 |
6,540 |
8.3 |
% |
4,725 |
11,265 |
14.3 |
% |
16.6 |
% |
(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 (gains)/losses as adjusted for the
increase/(reduction) in income tax attributable to the
(gains)/losses, effect of deconsolidation of former subsidiaries
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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