Yandex (NASDAQ and MOEX: YNDX), one of Europe's largest internet
companies and the leading search and ride-hailing provider in
Russia, today announced its unaudited financial results for the
second quarter ended June 30, 2020.
Q2 2020 Financial Highlights
(1)
Q2 2020 consolidated financial results
- Revenues of RUB 41.4 billion ($591.9
million), in line with Q2 2019
- Net loss of RUB 3.7 billion ($52.3
million), down 203% compared with net income of RUB 3.6 billion in
Q2 2019; net loss margin of -8.8%
- Adjusted net income of RUB 1.9 billion
($27.3 million), down 67% compared with Q2 2019; adjusted
net income margin of 4.6%
- Adjusted EBITDA of RUB 8.5 billion ($121.3
million), down 35% compared with Q2 2019; adjusted EBITDA
margin of 20.5%
Cash, cash equivalents and term deposits as of June 30,
2020:
- RUB 241.9 billion ($3,457.8 million) on a consolidated basis,
including the net proceeds from a public offering and concurrent
private placement of 21.5 million Class A shares on June 24,
2020
- Of which RUB 24.4 billion ($348.3 million) is related to Taxi
segment
- RUB 17.8 billion ($254.2 million) related to Yandex.Market is
not included in Yandex N.V. consolidated balance sheet as of June
30, 2020
(1) Pursuant to SEC rules regarding convenience translations,
Russian ruble (RUB) amounts have been translated into U.S. dollars
at a rate of RUB 69.9513 to $1.00, the official exchange rate
quoted as of June 30, 2020 by the Central Bank of the Russian
Federation.
Q2 2020 Operational and Corporate
Highlights
Search
- Share of Russian search market, including
mobile, averaged 59.6% in Q2 2020, up from 56.9% in Q2 2019 and
58.1% in Q1 2020, according to Yandex.Radar
- Search share on Android in Russia was 57.5% in
Q2 2020, up from 52.3% in Q2 2019 and 55.5% in Q1 2020, according
to Yandex.Radar
- Mobile search traffic was 56.6% of our total
search traffic in Q2 2020. Mobile revenues represented 51.3% of our
search revenues in Q2 2020
- Search queries in Russia grew 29% compared
with Q2 2019
- Paid clicks on Yandex’s and its partners’
websites, in aggregate, increased 22% compared with Q2 2019
- Average cost per click decreased 30% compared
with Q2 2019
Business Units and Experiments
- Number of rides in the Taxi service declined
6% year-on-year compared with Q2 2019
- Number of Media Services subscribers was 4.5
million as of the end of Q2 2020
- Zen's daily average audience reached 16.8
million users in June 2020, up 59% from June 2019
Corporate
- Yandex entered into a binding agreement with Sberbank to
reorganize their two Joint Ventures – Yandex.Market and
Yandex.Money. The transactions closed on July 23. As a result of
these transactions, Yandex has become the controlling shareholder
in Yandex.Market, while simultaneously exiting the Yandex.Money
Joint Venture. Yandex paid net cash consideration of RUB 39.6
billion to Sberbank at the closing date.
- Yandex issued 21,522,840 new Class A shares and raised gross
proceeds of $1.06 billion (before deducting underwriting fees and
expenses) in a public offering and concurrent private placement in
June
- Yandex repurchased 732,175 Class A shares in Q2 2020, as part
of the share repurchase program announced in November 2019
“It has been both a challenging as well as eventful quarter for
us,” said Arkady Volozh, Chief Executive Officer of Yandex. “Our
top priority has been to ensure the well-being of our staff, our
partners and our users, as we dedicated significant resources to
support them through a variety of targeted social initiatives. The
COVID-19 pandemic has put pressure on our core advertising and
ride-hailing businesses, while at the same time creating a number
of new opportunities that we believe further strengthen the
company’s long-term potential. We are also excited to regain full
operating control over Yandex.Market, which we believe will unlock
significant synergies from the deeper integration of the e-commerce
business with other parts of the Yandex ecosystem and accelerate
its path to profitability.”
“We are pleased with the results we achieved during this very
challenging quarter,” said Greg Abovsky, Chief Operating Officer
and Chief Financial Officer of Yandex. “Our immediate focus on cost
optimization and improving operational efficiency after the start
of the lockdown has definitely paid off and enabled us to mitigate
the negative impact of the pandemic on our financial performance.
While we have limited visibility in terms of the pace of further
recovery, we have been encouraged by the trends that we have seen
in July. In addition, we believe that the recent capital raise
provides us with ample financial flexibility to continue investing
into existing strategic projects and to pursue new exciting
opportunities.”
Impact of COVID-19 PandemicThe COVID-19
pandemic and the resulting strict lockdown measures had a material
impact on our financial results and operations in Q2 2020,
particularly on our advertising and ride-hailing businesses, as
well as classifieds and car-sharing services. The adverse impact
was partially offset by the acceleration in FoodTech businesses
(both Yandex.Eats and Lavka) and Media Services. During the second
quarter Yandex incurred COVID-19 related expenses of RUB 408
million consisting of the costs of personal protective equipment
(masks, sanitizers etc.), our Helping Hand project and our driver
and courier support fund. In addition, we have invested in various
social initiatives to support small and medium sized businesses,
restaurants and taxi fleet companies during the challenging
pandemic period, as well as in distance education initiatives.
The trends in April were particularly challenging, but we began
to see a moderate recovery in advertising and ride-hailing from the
end of the month, which continued in May and June (in classifieds
and car-sharing the recovery began in June). In July we see a
continuing improvement of revenue growth across all the businesses
affected by COVID-19.
With regards to our financial position as of the end of June 30,
2020, our analysis of the effect of COVID-19 on goodwill,
non-current assets and redeemable non-controlling interests shows
no measurable impact. At the same time, the full impact of COVID-19
is still unknown and there is a limited visibility on the
sustainability and the further dynamic of the performance recovery
across Yandex businesses.
The extent to which the COVID-19 crisis impacts the Company’s
results will depend on future developments, which are still highly
uncertain and cannot be predicted, including new information which
may emerge concerning the severity of COVID-19 and the actions to
contain the virus or treat its impact, among others. The
development of the situation with respect to COVID-19 may also lead
to changes in estimates and assumptions that affect the reported
amounts of assets and liabilities. Actual results could differ from
those estimates.
Consolidated ResultsThe following table
provides a summary of our key consolidated
financial results for the three and six months
ended June 30, 2019 and 2020:
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues |
41,397 |
41,407 |
0% |
78,681 |
88,410 |
12% |
Ex-TAC revenues2,3 |
35,833 |
37,252 |
4% |
67,782 |
78,896 |
16% |
Income from operations |
7,134 |
215 |
-97% |
11,949 |
5,503 |
-54% |
Adjusted EBITDA2 |
13,097 |
8,485 |
-35% |
23,865 |
20,632 |
-14% |
Net income/(loss) |
3,563 |
(3,658) |
-203% |
6,117 |
1,837 |
-70% |
Adjusted net
income2 |
5,825 |
1,913 |
-67% |
11,265 |
7,061 |
-37% |
(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) Numbers for the previous periods were restated to reflect
minor adjustments of TAC revenue and expenses associated to the
presentation of certain content related streams.
Our segment disclosure is available in the Segment financial
results section below.
Consolidated revenues breakdown
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Online advertising revenues: |
|
|
|
|
|
|
Yandex properties |
22,895 |
20,425 |
-11% |
43,830 |
44,765 |
2% |
Advertising network |
6,246 |
4,335 |
-31% |
12,351 |
10,104 |
-18% |
Total online advertising revenues |
29,141 |
24,760 |
-15% |
56,181 |
54,869 |
-2% |
Revenues related to Taxi segment |
8,798 |
12,473 |
42% |
16,422 |
23,841 |
45% |
Other |
3,458 |
4,174 |
21% |
6,078 |
9,700 |
60% |
Total revenues |
41,397 |
41,407 |
0% |
78,681 |
88,410 |
12% |
Online advertising revenues decreased 15% in Q2
2020 compared with Q2 2019 and generated 60% of total revenues. The
negative dynamic of online advertising revenue was driven by the
decrease in advertising budgets and slowdown of business activity
on the back of the coronavirus outbreak and the resulting lockdown
measures. Online advertising revenues include revenues derived from
performance and brand advertising on Yandex properties and in our
advertising network.
Online advertising revenues from Yandex
properties decreased 11% in Q2 2020 compared with Q2 2019
and accounted for 49% of total revenues.
Online advertising revenues from our advertising
network decreased 31% in Q2 2020 compared with Q2 2019 and
accounted for 10% of total revenues.
Revenues related to the Taxi segment grew 42%
in Q2 2020 compared with Q2 2019 and accounted for 30% of total
revenues, compared with 21% of total revenues in Q2 2019. This
increase was mainly attributed to the growth of our FoodTech
services, including the contributions from Yandex.Lavka and
Yandex.Eats, as well as the growth of our corporate Taxi business,
the revenues of which we recognize on a gross basis.
Other revenues grew 21% in Q2 2020 compared
with Q2 2019 and amounted to 10% of total revenues. The growth was
primarily driven by subscription revenues of Media Services, our
initiatives related to IoT (Internet of Things) and expansion of
our Cloud business, partially offset by a decline in revenues of
Yandex.Drive due to the suspension of car-sharing services in
Moscow and Saint-Petersburg during the majority of Q2 2020.
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 2020 Yandex's headcount
decreased by 198 full-time employees, compared to Q1 2020. The
total number of full-time employees was 10,227 as of June 30, 2020,
down by 2% compared with March 31, 2020, and up 14% from June 30,
2019.
Cost of revenues, including traffic acquisition costs
(TAC)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
TAC: |
|
|
|
|
|
|
Related to the Yandex advertising network |
3,772 |
2,724 |
-28% |
7,388 |
6,343 |
-14% |
Related to distribution partners |
1,792 |
1,431 |
-20% |
3,511 |
3,171 |
-10% |
Total TAC |
5,564 |
4,155 |
-25% |
10,899 |
9,514 |
-13% |
Total TAC as a % of total revenues |
13.4% |
10.0% |
|
13.9% |
10.8% |
|
Costs related to Taxi segment |
2,731 |
5,905 |
116% |
5,157 |
9,841 |
91% |
Costs related to Taxi segment as a % of revenues |
6.6% |
14.3% |
|
6.6% |
11.1% |
|
Other cost of revenues |
4,282 |
5,852 |
37% |
8,106 |
12,792 |
58% |
Other cost of revenues as a % of revenues |
10.3% |
14.1% |
|
10.3% |
14.5% |
|
Total cost of revenues |
12,577 |
15,912 |
27% |
24,162 |
32,147 |
33% |
Total cost of revenues as a % of revenues |
30.4% |
38.4% |
|
30.7% |
36.4% |
|
TAC decreased 25% in Q2 2020 compared with Q2 2019 and
represented 10% of total revenues, down 340 basis points compared
with Q2 2019 and 140 basis points down compared with Q1 2020
reflecting the decline of advertising revenues and optimization of
TAC rates.
Costs related to the Taxi segment increased
116% compared with Q2 2019. The growth was primarily a result of
the increase of the costs of goods sold (COGS) in our FoodTech
services, mainly reflecting the growth of Yandex.Lavka, our
hyperlocal grocery delivery service, and the increase of costs
related to our corporate Taxi business. We are the principal in
transactions with our Taxi corporate clients and, therefore, we
recognize both revenues and the cost of revenues on a gross
basis.
Other cost of revenues in Q2 2020 increased 37%
compared with Q2 2019 as a result of our investments in content
within Media Services and Search and Portal, as well as our IoT
initiatives.
Product development
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Product development |
6,896 |
8,970 |
30% |
14,103 |
16,898 |
20% |
As a % of revenues |
16.6% |
21.7% |
|
17.9% |
19.1% |
|
Product development expenses grew 30% in Q2 2020 compared to Q2
2019, primarily reflecting growth of share-based compensation and
the increase of personnel expenses driven by new hires and salary
increases.
Sales, general and administrative
(SG&A)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Sales, general and administrative |
11,034 |
12,258 |
11% |
21,454 |
25,800 |
20% |
As a % of revenues |
26.7% |
29.6% |
|
27.3% |
29.2% |
|
SG&A expenses grew 11% in Q2 2020 compared to Q2 2019. The
growth was driven by the increase of share-based compensation and
personnel costs, partially offset by savings on advertising and
marketing expenses, particularly in the Taxi and Classifieds
segments, and other overheads.
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, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
SBC expense included in cost of revenues |
64 |
138 |
116% |
132 |
214 |
62% |
SBC expense included in product development |
1,480 |
2,598 |
76% |
3,413 |
4,280 |
25% |
SBC expense included in SG&A |
656 |
1,473 |
125% |
1,344 |
2,466 |
83% |
Total SBC expense |
2,200 |
4,209 |
91% |
4,889 |
6,960 |
42% |
As a % of revenues |
5.3% |
10.2% |
|
6.2% |
7.9% |
|
Total SBC expense increased 91% in Q2 2020 compared with Q2
2019. The growth was primarily related to new equity-based grants
made in 2019-2020 as well as the replacement of cash bonuses by
equity compensation for some senior employees, as part of the
Company’s COVID-19 related cost optimization initiatives.
Depreciation and amortization (D&A)
expense
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Depreciation and amortization |
3,756 |
4,052 |
8% |
7,013 |
8,062 |
15% |
As a % of revenues |
9.1% |
9.8% |
|
8.9% |
9.1% |
|
D&A expense increased 8% in Q2 2020 compared with Q2 2019.
The D&A expense increase was mainly driven by investments in
intangible assets, servers and other equipment. Intangible assets
amortization increased in line with investment growth in content
creation and license procurement.
Income from operations
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Income from
operations |
7,134 |
215 |
-97% |
11,949 |
5,503 |
-54% |
Income from operations decreased 97% in Q2 2020 compared with Q2
2019. The decrease primarily reflects the decline of online
advertising revenues and continuing investments in our rapidly
growing new businesses.
Segment financial results
Search & Portal
Our Search and Portal segment offers a broad range of services
in Russia, Belarus, Kazakhstan and Uzbekistan.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues: |
|
|
|
|
|
|
Search and Portal |
29,090 |
25,455 |
-12% |
56,199 |
55,581 |
-1% |
Search and Portal, excluding IoT* |
28,899 |
24,913 |
-14% |
55,786 |
54,639 |
-2% |
Revenues Ex-TAC: |
|
|
|
|
|
|
Search and Portal |
22,826 |
20,814 |
-9% |
44,013 |
44,961 |
2% |
Search and Portal, excluding IoT* |
22,635 |
20,272 |
-10% |
43,600 |
44,019 |
1% |
Adjusted EBITDA: |
|
|
|
|
|
|
Search and Portal |
13,747 |
11,194 |
-19% |
26,594 |
25,859 |
-3% |
Search and Portal, excluding IoT* |
13,870 |
11,345 |
-18% |
26,887 |
26,137 |
-3% |
Adjusted EBITDA margin: |
|
|
|
|
|
|
Search and Portal |
47.3% |
44.0% |
-3.3% |
47.3% |
46.5% |
-0.8% |
Search and Portal,
excluding IoT* |
48.0% |
45.5% |
-2.5% |
48.2% |
47.8% |
-0.4% |
*IoT
stands for Internet of
Things Revenues
declined by 12% year-on-year in Q2 2020, reflecting the adverse
impact of the deterioration of the advertising business amid the
coronavirus outbreak and the resulting lockdown measures.
Ex-TAC revenues declined by 9% in Q2 2020 compared to Q2 2019,
reflecting the adverse impact of the deterioration of the
advertising business partially offset by optimization of traffic
acquisition costs.
Taxi
The Taxi segment includes our Ride-hailing business (including
Yandex.Taxi and Uber in Russia and neighboring countries), FoodTech
business (including Yandex.Eats, our ready-to-eat delivery service,
Yandex.Chef, a meal kit subscription service, and Yandex.Lavka, our
hyperlocal grocery delivery service) and our Self-Driving Cars
(“SDC”) division.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues: |
|
|
|
|
|
|
Ride-hailing & FoodTech |
8,810 |
12,448 |
41% |
16,449 |
23,870 |
45% |
SDC |
- |
55 |
n/m |
- |
55 |
n/m |
Total revenues |
8,810 |
12,503 |
42% |
16,449 |
23,925 |
45% |
Adjusted EBITDA: |
|
|
|
|
|
|
Ride-hailing & FoodTech |
726 |
993 |
37% |
837 |
1,861 |
122% |
SDC |
(303) |
(740) |
144% |
(530) |
(1,494) |
182% |
Total Adjusted EBITDA |
423 |
253 |
-40% |
307 |
367 |
20% |
Adjusted EBITDA margin: |
|
|
|
|
|
|
Ride-hailing & FoodTech |
8.2% |
8.0% |
-0.2% |
5.1% |
7.8% |
2.7% |
SDC |
n/m |
n/m |
n/m |
n/m |
n/m |
n/m |
Total Adjusted EBITDA
margin |
4.8% |
2.0% |
-2.8% |
1.9% |
1.5% |
-0.4% |
Taxi segment revenues increased by 42%, primarily driven by the
solid performance of our food delivery business as well as the
growth of Yandex.Lavka and our corporate Taxi business, where we
recognize revenue on a gross basis.
Adjusted EBITDA of Taxi was RUB 253 million in Q2 2020, compared
to RUB 423 million in Q2 2019. The decrease of adjusted EBITDA was
driven by investments in the expansion of Yandex.Lavka footprint
and development of autonomous vehicles, partially offset by the
improving profitability of our ride-hailing business and smaller
losses related to our ready-to-eat delivery business.
Classifieds
The Classifieds segment includes Auto.ru, Yandex.Realty and
Yandex.Jobs.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues |
1,302 |
886 |
-32% |
2,408 |
2,374 |
-1% |
Adjusted EBITDA: |
265 |
80 |
-70% |
(63) |
(24) |
-62% |
Adjusted EBITDA
margin: |
20.4% |
9.0% |
-11.4% |
-2.6% |
-1.0% |
1.6% |
Classifieds revenues declined 32% in Q2 2020 compared with Q2
2019, primarily as a result of closure of auto dealerships on the
back of the strict lockdown regime due to the COVID-19 pandemic,
and a slowdown in real estate demand.
Media Services
The Media Services segment includes KinoPoisk, Yandex.Music,
Yandex.Afisha, our production center Yandex.Studio and our
subscription service Yandex.Plus.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues |
876 |
1,700 |
94% |
1,610 |
3,133 |
95% |
Adjusted EBITDA: |
(438) |
(857) |
96% |
(878) |
(1,567) |
78% |
Adjusted EBITDA
margin: |
-50.0% |
-50.4% |
-0.4% |
-54.5% |
-50.0% |
4.5% |
Media Services revenues grew 94% in Q2 2020 compared with Q2
2019. The increase was primarily driven by growth of subscription
revenues in Yandex.Music and KinoPoisk, particularly duing the
COVID-19 lockdown. Increasing Adjusted EBITDA losses reflect our
investments in content and marketing on the back of increased
demand for our services.
Other Bets and Experiments
The Other Bets and Experiments category includes Yandex.Drive,
Zen, Geolocation Services, Yandex.Cloud and Yandex.Education.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues |
3,420 |
2,802 |
-18% |
5,898 |
7,713 |
31% |
Adjusted EBITDA: |
(947) |
(2,283) |
141% |
(2,186) |
(4,200) |
92% |
Adjusted EBITDA
margin: |
-27.7% |
-81.5% |
-53.8% |
-37.1% |
-54.5% |
-17.4% |
Other Bets and Experiments revenues declined 18% in Q2 2020
compared with Q2 2019. The decrease was primarily driven by
Yandex.Drive, our car-sharing service, partially offset by revenue
growth in other experiments. The decline of Yandex.Drive revenues
was due to the suspension of car-sharing services in Moscow and
Saint-Petersburg from mid-April to mid-June. The Adjusted EBITDA
loss amounted to RUB 2.3 billion, up from a loss of RUB 0.9 billion
in Q2 2019, driven by costs associated with Yandex.Drive, followed
by Geo and Cloud.
Eliminations
Eliminations related to 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 units.
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Revenues: |
|
|
|
|
|
|
Segment revenues |
43,498 |
43,346 |
0% |
82,564 |
92,726 |
12% |
Eliminations |
(2,101) |
(1,939) |
-8% |
(3,883) |
(4,316) |
11% |
Total revenues |
41,397 |
41,407 |
0% |
78,681 |
88,410 |
12% |
Adjusted EBITDA: |
|
|
|
|
|
|
Segment Adjusted EBITDA |
13,050 |
8,387 |
-36% |
23,774 |
20,435 |
-14% |
Eliminations |
47 |
98 |
109% |
91 |
197 |
116% |
Total adjusted
EBITDA |
13,097 |
8,485 |
-35% |
23,865 |
20,632 |
-14% |
Adjusted EBITDA decreased 35% in Q2 2020
compared with Q2 2019. The decline was mainly driven by the
COVID-19 related adverse effects on Search and Portal and
Yandex.Drive segments and higher investments in Media Services.
Adjusted EBITDA includes RUB 408 million of
COVID-19 related expenses for personal protective equipment (masks,
sanitizers etc.), the Company’s Helping Hand project and our driver
and courier support fund, RUB 177 million of advisory fees related
to the reorganization of Yandex.Market and Yandex.Money, as well as
other expenses related to various initiatives to support small and
medium sized businesses, restaurants and taxi fleet companies
during the challenging pandemic period.
Yandex.MarketWe recognized the financial
results of the Yandex.Market group in our Q2 2020 consolidated
results using the equity method, as the previously announced
transaction with Sberbank was not completed in Q2 2020.
Yandex.Market group revenues grew 89% in Q2 2020 compared with Q2
2019 and amounted to RUB 7.2 billion on the back of solid
performance across both the price comparison and the marketplace
businesses. Price Comparison revenues grew by 33% year-on-year,
while gross merchandise value (GMV) of Beru marketplace increased
247% compared with Q2 2019. Adjusted EBITDA loss of Yandex.Market
group was RUB 1.8 billion compared with RUB 2.0 billion loss in Q2
2019. The results of Yandex.Market will be included in our
consolidated results from July 24, 2020.
Interest income in Q2 2020 was RUB 971 million,
compared with RUB 834 million in Q2 2019.
Interest expense in Q2 2020 was RUB 678
million, up from RUB 12 million in Q2 2019, reflecting interest on
the convertible bonds issued in February 2020.
Foreign exchange loss in Q2 2020 was RUB 1,282
million, compared with a foreign exchange loss of RUB 270 million
in Q2 2019. This loss reflects the appreciation of the Russian
ruble during Q2 2020 from RUB 77.7325 to $1.00 on March 31, 2020,
to RUB 69.9513 to $1.00 on June 30, 2020. 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 (loss)/income, net line
in the condensed consolidated statements of income. Although the
U.S. dollar value of Yandex's U.S. dollar-denominated assets and
liabilities was not impacted by these currency fluctuations, they
resulted in a downward revaluation of the ruble equivalent of these
U.S. dollar-denominated monetary assets and liabilities in Q2
2020.
Income tax expense for Q2 2020 was RUB 1,993
million, down from RUB 3,033 million in Q2 2019. Our effective tax
rate of minus 119.7% in Q2 2020 was lower than in Q2 2019. Adjusted
for SBC expense, deferred tax asset valuation allowances, certain
losses from the share of Yandex.Market’s financial results which
are non-deductible and certain tax provisions recognized, our
effective tax rate for Q2 2020 was 27.9%, compared with 24.1% for
Q2 2019 as adjusted for SBC expense and similar effects in that
year.
Net loss was RUB 3.7 billion ($52.3 million) in
Q2 2020, down 203% compared with the net income of RUB 3.6 billion
in Q2 2019 as a result of the decline in the income of operations,
foreign exchange losses and interest expenses.
Adjusted net income in Q2 2020 was RUB 1.9
billion ($27.3 million), a 67% decrease from Q2 2019.
Adjusted net income margin was 4.6% in Q2 2020,
compared with 14.1% in Q2 2019.
In June 2020, Yandex conducted a public offering and a
concurrent private placement of 21,522,840 new Class A shares and
received net proceeds of $1.05 billion (after deducting
underwriting fees and expenses).
As of June 30, 2020, Yandex had cash, cash equivalents
and term deposits of RUB 241.9 billion ($3,457.8 million),
including cash, cash equivalents and term deposits of Yandex.Taxi
in total amount of RUB 24.4 billion ($348.3 million).
Net cash flow used in operating activities for
Q2 2020 was RUB 0.1 billion ($1.9 million) and capital
expenditures were RUB 10.3 billion ($146.9 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 entitles them
to economic interests in the respective business unit
subsidiaries.
The total number of shares issued and
outstanding as of June 30, 2020 was 350,074,421, including
314,365,746 Class A shares, 35,708,674 Class B shares, and one
Priority share and excluding 3,064,733 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. Any such
Class C shares will be cancelled.
There were also employee share options outstanding to purchase
up to an additional 3.2 million shares, at a weighted average
exercise price of $38.15 per share, 1.8 million of which were fully
vested; equity-settled share appreciation rights (SARs) for 0.1
million shares, at a weighted average measurement price of $32.72,
all of which were fully vested; and restricted share units (RSUs)
covering 12.4 million shares, of which RSUs to acquire 3.0 million
shares were fully vested.
Financial outlook
Given the persisting uncertainty around the full economic impact
of the coronavirus pandemic and potential further disruptions
caused by the health crisis and related governmental and businesses
responses, we are unable at this time to reliably predict the pace
and the shape of the recovery for our businesses. As such, we are
not providing 2020 guidance until there is greater clarity
regarding the impact of the current pandemic on the business
environment generally and on Yandex in particular.
Conference Call Information
Yandex’s management will hold an earnings conference call on
July 28, 2020 at 8:00 AM U.S. Eastern Time (3:00 PM Moscow time;
1:00 PM London time).
We recommend using the dial-in option if you plan to ask
questions. In this case please connect at least 10 minutes prior to
the call start time (using dial-in number and passcode specified
below) and clearly state the information requested after the
tone.
To access the conference call live, please dial:
US: +1 646 741 3167UK/International: +44 (0) 207 192 8338Russia:
8 10 800 2114 4011Passcode: 4372045
A replay of the call will be available until August 4, 2020. To
access the replay, please dial:
US: +1 917 677 7532UK/International: +44 (0) 844 571 8951Russia:
+7 495 249 9138Passcode: 4372045
A live and archived webcast of this conference call will be
available at
https://edge.media-server.com/mmc/p/4v6b74bv
ABOUT YANDEX
Yandex (NASDAQ and MOEX: 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 36 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. 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, the impact of the ongoing COVID-19 pandemic and regulatory
and business responses to that crisis, 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, 2019 and “Risk Factors” in the Shareholder Circular
filed as Exhibit 99.2 to our Current Report on Form 6-K, which were
filed with the U.S. Securities and Exchange Commission (SEC) on
April 2, 2020 and November 18, 2019, respectively, and are
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 28, 2020, 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 effective tax rate, 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/(loss) plus (1) depreciation and amortization,
(2) SBC expense, (3) accrual of expense related to the
contingent compensation payable to employees in connection with
certain business combinations, (4) one-off restructuring expenses,
(5) interest expense, (6) loss from equity method investments,
(7) other loss/(income), net and (8) income tax expense, less
interest income
- 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/(loss) plus (1) SBC expense adjusted for the income tax
reduction attributable to SBC expense, (2) accrual of expense
related to the contingent compensation payable to certain employees
in connection with certain business combinations, (3) foreign
exchange losses/(gains) adjusted for (reduction)/increase in income
tax attributable to foreign exchange losses/(gains), (4) one-off
restructuring expenses and (5) amortization of debt discount
related to our convertible debt adjusted for the related reduction
in income tax, less 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 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 EBITDA,
adjusted net income and related margin measures excluding these
effects, in order to provide greater clarity regarding our
operating performance.
One-off restructuring expenses
Adjusted net income and adjusted EBITDA for H1 2020 exclude
expenses related to restructuring targeted amendments to Corporate
Governance Structure approved by shareholders in December
2019. We believe that it is useful to present adjusted net
income, adjusted EBITDA and related margin measures excluding
impacts not related to our operating activities.
Amortization of debt discount
We also adjust net income for interest expense representing
amortization of the debt discount related to our convertible senior
notes due 2025 issued in Q1 2020. 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, |
|
|
2019* |
|
2020 |
|
|
2020 |
|
|
|
RUB |
|
RUB |
|
$ |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
56,415 |
|
|
184,292 |
|
|
2,634.6 |
|
Term deposits |
|
31,891 |
|
|
57,582 |
|
|
823.2 |
|
Accounts receivable, net |
|
17,832 |
|
|
16,137 |
|
|
230.7 |
|
Prepaid expenses |
|
3,315 |
|
|
3,311 |
|
|
47.3 |
|
Funds receivable, net |
|
1,226 |
|
|
1,162 |
|
|
16.6 |
|
Other current assets |
|
9,605 |
|
|
13,076 |
|
|
186.9 |
|
Total current assets |
|
120,284 |
|
|
275,560 |
|
|
3,939.3 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
47,856 |
|
|
54,123 |
|
|
773.7 |
|
Operating lease right-of-use
assets |
|
21,218 |
|
|
15,201 |
|
|
217.3 |
|
Intangible assets, net |
|
10,365 |
|
|
9,838 |
|
|
140.6 |
|
Non-current content assets,
net |
|
3,295 |
|
|
4,318 |
|
|
61.7 |
|
Goodwill |
|
52,205 |
|
|
52,247 |
|
|
746.9 |
|
Long-term prepaid
expenses |
|
2,289 |
|
|
2,324 |
|
|
33.4 |
|
Investments in non-marketable
equity securities |
|
28,073 |
|
|
26,097 |
|
|
373.1 |
|
Deferred tax assets |
|
1,847 |
|
|
1,325 |
|
|
18.9 |
|
Other non-current assets |
|
3,694 |
|
|
3,833 |
|
|
54.8 |
|
TOTAL
ASSETS |
|
291,126 |
|
|
444,866 |
|
|
6,359.7 |
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
34,978 |
|
|
32,562 |
|
|
465.5 |
|
Income and non-income taxes
payable |
|
8,020 |
|
|
4,884 |
|
|
69.8 |
|
Deferred revenue |
|
3,542 |
|
|
3,823 |
|
|
54.7 |
|
Total current liabilities |
|
46,540 |
|
|
41,269 |
|
|
590.0 |
|
Convertible debt |
|
- |
|
|
77,893 |
|
|
1,113.5 |
|
Deferred tax liabilities |
|
1,951 |
|
|
3,301 |
|
|
47.2 |
|
Operating lease
liabilities |
|
10,841 |
|
|
7,471 |
|
|
106.8 |
|
Other accrued liabilities |
|
2,359 |
|
|
1,805 |
|
|
25.8 |
|
Total liabilities |
|
61,691 |
|
|
131,739 |
|
|
1,883.3 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
Redeemable noncontrolling
interests |
|
14,246 |
|
|
15,081 |
|
|
215.6 |
|
Shareholders’ equity: |
|
|
|
|
|
|
Priority share: €1.00 par value; shares authorized (1 and 1),
shares issued (1 and 1) and outstanding (nil and 1) |
|
— |
|
|
— |
|
|
— |
|
Preference shares: €0.01 par value; nil shares authorized,
issued and outstanding |
|
— |
|
|
— |
|
|
— |
|
Ordinary shares: par value (Class A €0.01, Class B €0.10 and
Class C €0.09); shares authorized (Class A: 500,000,000, Class B:
37,138,658 and Class C: 37,748,658); shares issued (Class A:
293,527,655 and 317,430,479, Class B: 37,138,658 and 35,708,674,
and Class C: 610,000 and 1,429,984, respectively); shares
outstanding (Class A: 292,719,508 and 314,365,746, Class B:
37,138,658 and 35,708,674, and Class C: nil) |
|
261 |
|
|
275 |
|
|
3.9 |
|
Treasury shares at cost (Class A: 808,147 and 3,064,733,
Priority share: 1 and nil, respectively) |
|
(411 |
) |
|
(3,689 |
) |
|
(52.7 |
) |
Additional paid-in capital |
|
68,050 |
|
|
145,880 |
|
|
2,085.5 |
|
Accumulated other comprehensive income |
|
4,841 |
|
|
11,561 |
|
|
165.3 |
|
Retained earnings |
|
122,187 |
|
|
123,495 |
|
|
1,765.4 |
|
Total equity attributable to Yandex N.V. |
|
194,928 |
|
|
277,522 |
|
|
3,967.4 |
|
Noncontrolling interests |
|
20,261 |
|
|
20,524 |
|
|
293.4 |
|
Total shareholders’
equity |
|
215,189 |
|
|
298,046 |
|
|
4,260.8 |
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
291,126 |
|
|
444,866 |
|
|
6,359.7 |
|
* Derived from audited
consolidated financial statements
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Income
(in millions of Russian rubles and U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
Revenues |
|
41,397 |
|
|
41,407 |
|
|
591.9 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
Cost of revenues(1) |
|
12,577 |
|
|
15,912 |
|
|
227.5 |
|
Product development(1) |
|
6,896 |
|
|
8,970 |
|
|
128.2 |
|
Sales, general and
administrative(1) |
|
11,034 |
|
|
12,258 |
|
|
175.3 |
|
Depreciation and
amortization |
|
3,756 |
|
|
4,052 |
|
|
57.9 |
|
Total operating costs and
expenses |
|
34,263 |
|
|
41,192 |
|
|
588.9 |
|
Income from operations |
|
7,134 |
|
|
215 |
|
|
3.0 |
|
Interest income |
|
834 |
|
|
971 |
|
|
13.9 |
|
Interest expense |
|
(12 |
) |
|
(678 |
) |
|
(9.7 |
) |
Loss from equity method
investments |
|
(946 |
) |
|
(977 |
) |
|
(14.0 |
) |
Other loss, net |
|
(414 |
) |
|
(1,196 |
) |
|
(17.0 |
) |
Net income/(loss) before
income taxes |
|
6,596 |
|
|
(1,665 |
) |
|
(23.8 |
) |
Income tax expense |
|
3,033 |
|
|
1,993 |
|
|
28.5 |
|
Net income/(loss) |
|
3,563 |
|
|
(3,658 |
) |
|
(52.3 |
) |
Net loss attributable to
noncontrolling interests |
|
289 |
|
|
347 |
|
|
5.0 |
|
Net income/(loss) attributable
to Yandex N.V. |
|
3,852 |
|
|
(3,311 |
) |
|
(47.3 |
) |
Net income/(loss) per
Class A and Class B share: |
|
|
|
|
|
|
Basic |
|
11.80 |
|
|
(10.09 |
) |
|
(0.14 |
) |
Diluted |
|
11.47 |
|
|
(9.90 |
) |
|
(0.14 |
) |
Weighted average number of
Class A and Class B shares outstanding |
|
|
|
|
|
|
Basic |
|
326,335,979 |
|
|
328,039,776 |
|
|
328,039,776 |
|
Diluted |
|
334,912,393 |
|
|
334,514,961 |
|
|
334,514,961 |
|
|
|
|
|
|
|
|
(1) These balances exclude
depreciation and amortization expenses, which are presented
separately, and include share-based compensation expenses of: |
|
|
|
|
|
|
|
Cost of revenues |
|
64 |
|
|
138 |
|
|
2.0 |
|
Product development |
|
1,480 |
|
|
2,598 |
|
|
37.1 |
|
Sales, general and
administrative |
|
656 |
|
|
1,473 |
|
|
21.1 |
|
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, |
|
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
|
|
RUB |
|
RUB |
|
$ |
|
|
|
|
|
|
|
|
|
Revenues |
|
78,681 |
|
|
88,410 |
|
|
1,263.9 |
|
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of revenues(1) |
|
24,162 |
|
|
32,147 |
|
|
459.6 |
|
|
Product development(1) |
|
14,103 |
|
|
16,898 |
|
|
241.6 |
|
|
Sales, general and
administrative(1) |
|
21,454 |
|
|
25,800 |
|
|
368.7 |
|
|
Depreciation and
amortization |
|
7,013 |
|
|
8,062 |
|
|
115.3 |
|
|
Total operating costs and
expenses |
|
66,732 |
|
|
82,907 |
|
|
1,185.2 |
|
|
Income from operations |
|
11,949 |
|
|
5,503 |
|
|
78.7 |
|
|
Interest income |
|
1,661 |
|
|
1,699 |
|
|
24.3 |
|
|
Interest expense |
|
(13 |
) |
|
(903 |
) |
|
(12.9 |
) |
|
Loss from equity method
investments |
|
(1,584 |
) |
|
(2,083 |
) |
|
(29.8 |
) |
|
Other (loss)/income, net |
|
(649 |
) |
|
3,325 |
|
|
47.5 |
|
|
Net income before income
taxes |
|
11,364 |
|
|
7,541 |
|
|
107.8 |
|
|
Income tax expense |
|
5,247 |
|
|
5,704 |
|
|
81.5 |
|
|
Net income |
|
6,117 |
|
|
1,837 |
|
|
26.3 |
|
|
Net loss attributable to
noncontrolling interests |
|
687 |
|
|
713 |
|
|
10.2 |
|
|
Net income attributable to
Yandex N.V. |
|
6,804 |
|
|
2,550 |
|
|
36.5 |
|
|
Net income per Class A
and Class B share: |
|
|
|
|
|
|
|
Basic |
|
20.89 |
|
|
7.75 |
|
|
0.11 |
|
|
Diluted |
|
20.39 |
|
|
7.57 |
|
|
0.11 |
|
|
Weighted average number of
Class A and Class B shares outstanding |
|
|
|
|
|
|
|
Basic |
|
325,741,663 |
|
|
329,069,513 |
|
|
329,069,513 |
|
|
Diluted |
|
333,750,613 |
|
|
335,854,248 |
|
|
335,854,248 |
|
|
|
|
|
|
|
|
|
|
(1) These balances exclude
depreciation and amortization expenses, which are presented
separately, and include share-based compensation expenses of: |
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
132 |
|
|
214 |
|
|
3.1 |
|
|
Product development |
|
3,413 |
|
|
4,280 |
|
|
61.2 |
|
|
Sales, general and
administrative |
|
1,344 |
|
|
2,466 |
|
|
35.2 |
|
|
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Cash Flows
(in millions of Russian rubles and U.S.
dollars)
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
|
RUB |
|
RUB |
|
$ |
CASH FLOWS PROVIDED BY/(USED
IN) OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income/(loss) |
|
3,563 |
|
|
(3,658 |
) |
|
(52.3 |
) |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation of property and
equipment |
|
3,100 |
|
|
3,336 |
|
|
47.7 |
|
Amortization of intangible
assets |
|
656 |
|
|
716 |
|
|
10.2 |
|
Amortization of contents
assets |
|
223 |
|
|
961 |
|
|
13.7 |
|
Operating lease right-of-use
assets amortization |
|
2,097 |
|
|
1,504 |
|
|
21.5 |
|
Amortization of debt discount
and issuance costs |
|
- |
|
|
493 |
|
|
7.0 |
|
Share-based compensation
expense |
|
2,200 |
|
|
4,209 |
|
|
60.2 |
|
Deferred income tax
expense |
|
772 |
|
|
1,167 |
|
|
16.7 |
|
Foreign exchange losses |
|
270 |
|
|
1,282 |
|
|
18.3 |
|
Loss from equity method
investments |
|
946 |
|
|
977 |
|
|
14.0 |
|
Other |
|
182 |
|
|
39 |
|
|
0.6 |
|
Changes in operating assets
and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
Accounts receivable, net |
|
(908 |
) |
|
526 |
|
|
7.5 |
|
Prepaid expenses and other
assets |
|
(950 |
) |
|
(3,496 |
) |
|
(49.9 |
) |
Accounts payable and accrued
liabilities |
|
(1,361 |
) |
|
(6,890 |
) |
|
(98.5 |
) |
Deferred revenue |
|
256 |
|
|
136 |
|
|
1.9 |
|
Change in content assets |
|
(777 |
) |
|
(1,517 |
) |
|
(21.7 |
) |
Change in content
liabilities |
|
274 |
|
|
85 |
|
|
1.2 |
|
Net cash provided by/(used in)
operating activities |
|
10,543 |
|
|
(130 |
) |
|
(1.9 |
) |
CASH FLOWS USED IN INVESTING
ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and
equipment and intangible assets |
|
(7,724 |
) |
|
(10,276 |
) |
|
(146.9 |
) |
Proceeds from sale of property
and equipment |
|
22 |
|
|
29 |
|
|
0.4 |
|
Acquisitions of businesses,
net of cash acquired |
|
- |
|
|
(95 |
) |
|
(1.4 |
) |
Investments in non-marketable
equity securities |
|
(65 |
) |
|
- |
|
|
- |
|
Investments in term
deposits |
|
(27,755 |
) |
|
(60,247 |
) |
|
(861.2 |
) |
Maturities of term
deposits |
|
5,552 |
|
|
66,287 |
|
|
947.6 |
|
Loans granted, net of proceeds
from repayments |
|
84 |
|
|
16 |
|
|
0.2 |
|
Net cash used in investing
activities |
|
(29,886 |
) |
|
(4,286 |
) |
|
(61.3 |
) |
CASH FLOWS (USED IN)/PROVIDED
BY FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from exercise of
share options |
|
20 |
|
|
34 |
|
|
0.5 |
|
Repurchases of share
options |
|
- |
|
|
(642 |
) |
|
(9.2 |
) |
Proceeds from issuance of
ordinary shares |
|
- |
|
|
72,650 |
|
|
1,038.7 |
|
Ordinary shares issuance
costs |
|
- |
|
|
(4 |
) |
|
(0.1 |
) |
Repurchases of ordinary
shares |
|
- |
|
|
(1,719 |
) |
|
(24.6 |
) |
Payment for contingent
consideration |
|
(14 |
) |
|
- |
|
|
- |
|
Payment for finance
leases |
|
- |
|
|
(26 |
) |
|
(0.4 |
) |
Other financing
activities |
|
20 |
|
|
(33 |
) |
|
(0.5 |
) |
Purchase of redeemable
noncontrolling interests |
|
(187 |
) |
|
(47 |
) |
|
(0.7 |
) |
Net cash (used in)/provided by
financing activities |
|
(161 |
) |
|
70,213 |
|
|
1,003.7 |
|
Effect of exchange rate
changes on cash and cash balances |
|
(512 |
) |
|
(6,651 |
) |
|
(95.0 |
) |
Net change in cash and cash
equivalents |
|
(20,016 |
) |
|
59,146 |
|
|
845.5 |
|
Cash and cash equivalents at
beginning of period |
|
53,869 |
|
|
125,189 |
|
|
1,789.7 |
|
Cash and cash equivalents at
end of period |
|
33,853 |
|
|
184,335 |
|
|
2,635.2 |
|
|
|
|
|
|
|
|
Reconciliation
of cash and cash balances: |
|
|
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
53,825 |
|
|
125,142 |
|
|
1,789.0 |
|
Restricted cash, beginning of
period |
|
44 |
|
|
47 |
|
|
0.7 |
|
Cash and cash balances,
beginning of period |
|
53,869 |
|
|
125,189 |
|
|
1,789.7 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period |
|
33,809 |
|
|
184,292 |
|
|
2,634.6 |
|
Restricted cash, end of
period |
|
44 |
|
|
43 |
|
|
0.6 |
|
Cash and cash balances, end of
period |
|
33,853 |
|
|
184,335 |
|
|
2,635.2 |
|
YANDEX N.V.
Unaudited Condensed Consolidated
Statements of Cash Flows
(in millions of Russian rubles and U.S.
dollars)
|
|
|
|
|
|
|
|
|
Six months ended
June 30, |
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
|
RUB |
|
RUB |
|
$ |
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
|
6,117 |
|
|
1,837 |
|
|
26.3 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation of property and
equipment |
|
5,740 |
|
|
6,669 |
|
|
95.4 |
|
Amortization of intangible
assets |
|
1,273 |
|
|
1,393 |
|
|
19.9 |
|
Amortization of contents
assets |
|
387 |
|
|
1,548 |
|
|
22.1 |
|
Operating lease right-of-use
assets amortization |
|
4,009 |
|
|
4,146 |
|
|
59.3 |
|
Amortization of debt discount
and issuance costs |
|
- |
|
|
637 |
|
|
9.1 |
|
Share-based compensation
expense |
|
4,889 |
|
|
6,960 |
|
|
99.5 |
|
Deferred income tax
expense |
|
1,760 |
|
|
740 |
|
|
10.6 |
|
Foreign exchange
losses/(gains) |
|
549 |
|
|
(3,157 |
) |
|
(45.1 |
) |
Loss from equity method
investments |
|
1,584 |
|
|
2,083 |
|
|
29.8 |
|
Other |
|
186 |
|
|
132 |
|
|
1.9 |
|
Changes in operating assets
and liabilities excluding the effect of acquisitions: |
|
|
|
|
|
|
Accounts receivable, net |
|
(1,576 |
) |
|
1,553 |
|
|
22.2 |
|
Prepaid expenses and other
assets |
|
(3,320 |
) |
|
(4,204 |
) |
|
(60.1 |
) |
Accounts payable and accrued
liabilities |
|
190 |
|
|
(9,718 |
) |
|
(139.0 |
) |
Deferred revenue |
|
34 |
|
|
176 |
|
|
2.4 |
|
Change in content assets |
|
(1,709 |
) |
|
(2,603 |
) |
|
(37.2 |
) |
Change in content
liabilities |
|
957 |
|
|
(628 |
) |
|
(9.0 |
) |
Net cash provided by operating
activities |
|
21,070 |
|
|
7,564 |
|
|
108.1 |
|
CASH FLOWS USED IN INVESTING
ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and
equipment and intangible assets |
|
(9,705 |
) |
|
(12,681 |
) |
|
(181.3 |
) |
Proceeds from sale of property
and equipment |
|
29 |
|
|
38 |
|
|
0.5 |
|
Acquisitions of businesses,
net of cash acquired |
|
(347 |
) |
|
(95 |
) |
|
(1.4 |
) |
Investments in non-marketable
equity securities |
|
(65 |
) |
|
(15 |
) |
|
(0.2 |
) |
Investments in term
deposits |
|
(47,755 |
) |
|
(121,992 |
) |
|
(1,743.9 |
) |
Maturities of term
deposits |
|
5,552 |
|
|
93,586 |
|
|
1,337.9 |
|
Loans granted, net of proceeds
from repayments |
|
84 |
|
|
16 |
|
|
0.2 |
|
Net cash used in investing
activities |
|
(52,207 |
) |
|
(41,143 |
) |
|
(588.2 |
) |
CASH FLOWS (USED IN)/PROVIDED
BY FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from exercise of
share options |
|
51 |
|
|
48 |
|
|
0.7 |
|
Repurchases of share
options |
|
- |
|
|
(642 |
) |
|
(9.2 |
) |
Proceeds from issuance of
convertible debt |
|
- |
|
|
82,046 |
|
|
1,172.9 |
|
Proceeds from issuance of
ordinary shares |
|
- |
|
|
72,650 |
|
|
1,038.6 |
|
Ordinary shares issuance
costs |
|
- |
|
|
(4 |
) |
|
(0.1 |
) |
Repurchases of ordinary
shares |
|
- |
|
|
(10,165 |
) |
|
(145.3 |
) |
Payment for contingent
consideration |
|
(47 |
) |
|
(10 |
) |
|
(0.1 |
) |
Proceeds from sale of
noncontrolling interests |
|
20 |
|
|
- |
|
|
- |
|
Payment for finance
leases |
|
- |
|
|
(140 |
) |
|
(2.0 |
) |
Other financing
activities |
|
(12 |
) |
|
(66 |
) |
|
(0.9 |
) |
Purchase of redeemable
noncontrolling interests |
|
(212 |
) |
|
(47 |
) |
|
(0.7 |
) |
Net cash (used in)/provided by
financing activities |
|
(200 |
) |
|
143,670 |
|
|
2,053.9 |
|
Effect of exchange rate
changes on cash and cash balances |
|
(3,696 |
) |
|
17,791 |
|
|
254.4 |
|
Net change in cash and cash
equivalents |
|
(35,033 |
) |
|
127,882 |
|
|
1,828.2 |
|
Cash and cash equivalents at
beginning of period |
|
68,886 |
|
|
56,453 |
|
|
807.0 |
|
Cash and cash equivalents at
end of period |
|
33,853 |
|
|
184,335 |
|
|
2,635.2 |
|
|
|
|
|
|
|
|
Reconciliation
of cash and cash balances: |
|
|
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
68,798 |
|
|
56,415 |
|
|
806.5 |
|
Restricted cash, beginning of
period |
|
88 |
|
|
38 |
|
|
0.5 |
|
Cash and cash balances,
beginning of period |
|
68,886 |
|
|
56,453 |
|
|
807.0 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period |
|
33,809 |
|
|
184,292 |
|
|
2,634.6 |
|
Restricted cash, end of
period |
|
44 |
|
|
43 |
|
|
0.6 |
|
Cash and cash balances, end of
period |
|
33,853 |
|
|
184,335 |
|
|
2,635.2 |
|
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, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Total revenues |
41,397 |
41,407 |
0% |
78,681 |
88,410 |
12% |
Less: traffic acquisition costs (TAC) |
5,564 |
4,155 |
-25% |
10,899 |
9,514 |
-13% |
Ex-TAC revenues |
35,833 |
37,252 |
4% |
67,782 |
78,896 |
16% |
Reconciliation of Adjusted EBITDA to U.S.
GAAP Net Income/(loss)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Net income/(loss) |
3,563 |
(3,658) |
-203% |
6,117 |
1,837 |
-70% |
Add: depreciation and amortization |
3,756 |
4,052 |
8% |
7,013 |
8,062 |
15% |
Add: share-based compensation expense |
2,200 |
4,209 |
91% |
4,889 |
6,960 |
42% |
Add: compensation expense related to contingent consideration |
7 |
9 |
29% |
14 |
9 |
-36% |
Add: one-off restructuring expenses |
- |
- |
n/m |
- |
98 |
n/m |
Less: interest income |
(834) |
(971) |
16% |
(1,661) |
(1,699) |
2% |
Add: interest expense |
12 |
678 |
n/m |
13 |
903 |
n/m |
Add: loss from equity method investments |
946 |
977 |
3% |
1,584 |
2,083 |
32% |
Add: other loss/(income), net |
414 |
1,196 |
189% |
649 |
(3,325) |
n/m |
Add: income tax expense |
3,033 |
1,993 |
-34% |
5,247 |
5,704 |
9% |
Adjusted EBITDA |
13,097 |
8,485 |
-35% |
23,865 |
20,632 |
-14% |
Reconciliation of Adjusted Net Income to
U.S. GAAP Net Income/(loss)
|
|
|
|
|
|
|
In RUB
millions |
Three months ended June 30, |
Six months ended June 30, |
|
2019 |
2020 |
Change |
2019 |
2020 |
Change |
Net income/(loss) |
3,563 |
(3,658) |
-203% |
6,117 |
1,837 |
-70% |
Add: SBC expense |
2,200 |
4,209 |
91% |
4,889 |
6,960 |
42% |
Less: reduction in income tax attributable to SBC expense |
(21) |
(32) |
52% |
(39) |
(48) |
23% |
Add: compensation expense related to contingent consideration |
7 |
9 |
29% |
14 |
9 |
-36% |
Add: foreign exchange losses/(gains) |
270 |
1,282 |
375% |
549 |
(3,157) |
n/m |
Less: (reduction)/increase in income tax attributable to foreign
exchange losses/(gains) |
(73) |
(267) |
266% |
(144) |
884 |
n/m |
Add: one-off restructuring expenses |
- |
- |
n/m |
- |
98 |
n/m |
Less: effect of deconsolidation of former subsidiaries |
(121) |
- |
n/m |
(121) |
- |
n/m |
Add: amortization of debt discount |
- |
493 |
n/m |
- |
637 |
n/m |
Less: reduction in income tax attributable to amortization of debt
discount |
- |
(123) |
n/m |
- |
(159) |
n/m |
Adjusted net
income |
5,825 |
1,913 |
-67% |
11,265 |
7,061 |
-37% |
Reconciliation of Adjusted EBITDA Margin
and Adjusted Ex-TAC EBITDA Margin to U.S. GAAP Net Income/(Loss)
Margin
|
|
|
|
|
|
|
|
In RUB
millions |
|
|
|
|
|
|
|
|
U.S. GAAP Actual Net
Income/(loss) |
Net Income/ (Loss) Margin
(1) |
Adjustment (2) |
Adjusted EBITDA |
Adjusted EBITDA Margin (3) |
Adjusted Ex-TAC EBITDA Margin
(4) |
Three months ended June 30, 2020 |
(3,658) |
-8.8% |
12,143 |
8,485 |
20.5% |
22.8% |
Six
months ended June 30, 2020 |
1,837 |
2.1% |
18,795 |
20,632 |
23.3% |
26.2% |
(1) Net income/(loss) margin is defined as net income/(loss)
divided by total revenues.(2) Adjusted to eliminate depreciation
and amortization expense, SBC expense, expense related to
contingent compensation, one-off restructuring expenses, interest
income, interest expense, loss from equity method investments,
other loss/(income), net and income tax expense. For a
reconciliation of adjusted EBITDA to net income/(loss), please see
the table above.(3) Adjusted EBITDA margin is defined as adjusted
EBITDA divided by total revenues.(4) Adjusted ex-TAC EBITDA margin
is defined as adjusted EBITDA divided by ex-TAC revenues. For a
reconciliation of ex-TAC revenues to U.S. GAAP revenues, please see
the table above.
Reconciliation of Adjusted Net Income
Margin and Adjusted Ex-TAC Net Income Margin to U.S. GAAP Net
Income/(Loss) Margin
|
|
|
|
|
|
|
|
In RUB
millions |
|
|
|
|
|
|
|
|
U.S. GAAP Actual Net
Income/(loss) |
Net Income/ (Loss) Margin
(1) |
Adjustment (2) |
Adjusted Net Income |
Adjusted Net Income Margin
(3) |
Adjusted Ex-TAC Net Income Margin
(4) |
Three months ended June 30, 2020 |
(3,658) |
-8.8% |
5,571 |
1,913 |
4.6% |
5.1% |
Six
months ended June 30, 2020 |
1,837 |
2.1% |
5,224 |
7,061 |
8.0% |
8.9% |
(1)
Net income/(loss) margin is defined as net income/(loss) divided by
total
revenues.(2)
Adjusted to eliminate SBC expense (as adjusted for the income tax
reduction attributable to SBC expense), expense related to
contingent compensation, foreign exchange losses/(gains) as
adjusted for the reduction/(increase) in income tax attributable to
the losses/(gains), one-off restructuring expenses and amortization
of debt discount (as adjusted for the related reduction in income
tax). For a reconciliation of adjusted net income to net
income/(loss), 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 RelationsYulia GerasimovaPhone: +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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