YNDX Yandex NV

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

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Commission file number: 001-35173

YANDEX N.V.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name in English)

The Netherlands

(Jurisdiction of incorporation or organization)

Schiphol Boulevard 165

Schiphol P7 1118 BG, The Netherlands

(Address of principal executive offices)

John Boynton, Chairman of the Board of Directors

Schiphol Boulevard 165

Schiphol 1118 BG, The Netherlands

Telephone: +31 20-206-6970

Facsimile: +31 20-446-6372

Email: askIR@yandex-team.ru

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. Class A Ordinary Shares

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.(1)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ◻

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ◻ No ⌧

Note—checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepared the financial statements included in this filing:

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ◻ Item 18 ◻

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

⁽¹⁾ In addition, we had 558,663 Class A shares held in treasury and nil Class C shares issued and fully paid as of December 31, 2022. Our Class C shares are issued from time to time solely for technical purposes, to facilitate the conversion of our Class B shares into Class A shares. They are held by a Conversion Foundation managed by members of our Board of Directors. For the limited period of time during which any Class C shares are outstanding, they will be voted in the same proportion as votes cast by holders of our Class A and Class B shares, so as not to influence the outcome of any vote.

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In this Annual Report on Form 20-F (this “Annual Report”), references to “Yandex,” the “company,” “we,” “us,” or similar terms are to Yandex N.V. and, as the context requires, its consolidated subsidiaries.

Our consolidated financial statements are prepared in accordance with U.S. GAAP and are expressed in Russian rubles. In this Annual Report, references to “rubles” or “RUB” are to Russian rubles, and references to “U.S. dollars” or “$” are to United States dollars.

Our fiscal year ends on December 31 of each year. References to any specific fiscal year refer to the year ended December 31 of the calendar year specified.

This Annual Report includes market data reported by Yandex Radar (February 2023), the Association of Russian Communication Agencies (AKAR) (March 2023), Growth from Knowledge (GfK) (January 2023), the Russian Federal State Statistics Service (Rosstat) (February 2023), the Bank of Russia (March 2023) and the Finance Ministry (April 2023).

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Forward-Looking Statements

This Annual Report contains forward-looking statements that involve risks and uncertainties. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” “may” or other words that convey judgments about future events or outcomes indicate such forward-looking statements. Forward-looking statements in this Annual Report may include statements about:

The forward-looking statements included in this Annual Report are subject to risks, uncertainties and assumptions. Our actual results of operations may differ materially from those stated in or implied by such forward-looking statements as a result of a variety of factors, including those described under Part I, Item 3.D. “Risk Factors” and elsewhere in this Annual Report.

We operate in an evolving environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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INTRODUCTION AND EXPLANATORY NOTE

Current geopolitical tensions, their impact on the Russian and global economy, and the related stresses in the broader social and business environment, continue to create exceptional challenges for our business and our team. This Annual Report focusses on our performance in 2022. In the current circumstances, our visibility over the short- and medium-term is extremely limited, and we are not able to provide any forward-looking comments at this stage. We provide detailed information on the current impact of these circumstances on our businesses in the Risk Factors section and elsewhere in this Annual Report.

Over the past 25 years, Yandex has built world-class technologies and services to meet the needs of millions of users in our core markets and, in recent years, globally. As we have announced, in September we successfully divested our news aggregation service and our infotainment platform Zen. This was part of our strategic plan to exit from all media-related businesses (other than entertainment streaming) and focus on the continued development of our other technology-related businesses and products, including search, advertising, self-driving and cloud computing; as well as our transactional services, including ride-hailing, e-commerce, video/audio services and streaming. The divestment transaction itself enabled us to acquire Delivery Club, which now sits as part of our E-commerce, Mobility and Delivery segment.

As we announced on November 25, 2022, our Board has commenced a strategic process to pursue a restructuring of the Yandex group’s overall ownership and governance with a view to ensuring the group’s sustainable development and success of all of our businesses over the longer term. The Board is considering in particular the potential divestment by our Dutch parent company of ownership and control of a number of our core businesses, including all Russia-based businesses. The Board also aims to enable the international divisions of certain services (self-driving, cloud computing, data labeling and EdTech) to develop independently from the Russia-based businesses. Our goal is to come to shareholders for approval of a restructuring proposal later this year.

None of Yandex N.V. or our group companies, nor any of our current directors or senior management, is a target of sanctions imposed by the United States, European Union, Switzerland or United Kingdom. Nevertheless, we are indirectly impacted by the designation of numerous parties in Russia and the restrictions that this places on international businesses in Russia. In addition, the US, EU and other governments have imposed strict controls on the export of certain technology – including both hardware and software – to Russia or to certain Russian parties. A number of international businesses continue to take a conservative approach and have restricted or eliminated their business operations in Russia, including with regards to supplying any parties in Russia at this time.

Our Class A shares remain subject to a trading halt on Nasdaq, and we received a notification from Nasdaq in March 2023 citing their intention to delist our shares from the market. We are appealing this decision, but are unable to say when or whether our appeal will be successful and whether trading will resume on that market or over the counter. Trading in our shares resumed on the Moscow Exchange on March 29, 2022. However, as a result of legal restrictions in Russia on sales by non-domestic holders, as well as actions taken in the international clearing systems, there is no flow of shares between the US and Russia, and therefore trading in our shares on the Moscow Exchange remains limited. Some non-Russian investors are currently not permitted to trade our shares on that market.

Arkady Volozh, our co-founder, stepped down from his positions as Board Member and Chief Executive Officer, as well as all other positions, in June 2022 with immediate effect.

We have had further changes to our Board of Directors this year. Alexey Komissarov resigned from the Board in March 2023. With 6 members, our Board remains quorate and we expect to fill the vacant seats in due course.

We continue to provide services to our users and partners as usual. We are taking appropriate measures to conserve cash, consider our capital allocation and budget appropriately during this period of uncertainty. We are closely monitoring sanctions and export control developments and the macroeconomic climate in Russia and we are assessing contingency plans to address potential developments. Our Board and management are focused on the wellbeing of our approximately 21,000 employees in Russia and abroad, while doing everything we can to safeguard the interests of our shareholders and other stakeholders.

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Risks Related to Our Current Governance and Ownership Structure

Risks Related to Our Business and Industry

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Additional Risks Related to Regulatory Matters

Risks Related to Tax Matters

Risks Related to Ownership of our Class A Shares

Risks for U.S. Holders

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Detailed Overview of Risk Factors

Risks Related to the Current Global Political, Regulatory and Economic Environment and the Potential Restructuring of our Businesses

Our global businesses and operations may be materially adversely affected by the current geopolitical crisis.

Our principal operations are located in Russia, while we have more limited operations internationally. The current geopolitical crisis, and the responses of governments and multinational businesses to these events, have created critical challenges for our business and operations, both in Russia and globally. These factors, including the specific risks outlined below, may materially adversely affect our financial condition, results of operations, trading price and ability to operate.

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Our core businesses may be materially adversely impacted by negative macroeconomic and geopolitical developments in Russia and in other countries in which we operate.

The current geopolitical crisis and international and Russian actions in response have materially and adversely impacted the macroeconomic climate in Russia, resulting in significant currency rate volatility, the imposition of currency controls, significant fluctuations in interest rates and increased inflation, and the withdrawal of a number of multinational businesses from the Russian market or a reduction in their operations or services in the country, which may lead to a continued contraction in consumer spending. These factors could adversely affect our results of operations in our core market in any given period.

Our advertising revenues may be adversely affected by an inability to gain access to advertising inventory, and by the possible reduction in advertising budgets of domestic businesses, as well as by intensifying competition with local players (including marketplaces). Our e-commerce businesses may be adversely affected by an anticipated reduction of discretionary spending by consumers and further supply restrictions which may adversely affect the number and selection of goods available through Yandex Market and a reduction in associated advertising. Our ride-hailing business may likewise suffer from a weaker macroeconomic environment and adverse supply and demand dynamics. Price increases and a potential reduction in the availability of new cars and spare parts in Russia, as well as a significant increase of financial lease rates for new and existing lease contracts in the wake of key interest rate increases, may adversely affect the operations of our partners (including fleet management companies), which may negatively impact further growth of our ride-hailing business. We anticipate that consumer sentiment and spending patterns may result in reductions in revenue from our other business units, offset to some extent by decreased competition. Any prolonged economic downturn in Russia or the other countries where we operate, whether as a result of sanctions or the broader geopolitical or economic situation, depreciation of the ruble and other national currencies, negative consumer sentiment or other macro factors, could have a material adverse effect on our results of operations.

International sanctions and export restrictions affecting businesses and individuals in Russia, and counter-measures implemented by the Russian authorities, may have a material adverse impact on our business, financial condition and results of operations.

In response to the current geopolitical crisis, numerous governments, including those of the United States, European Union, Switzerland, and United Kingdom, have imposed an extensive range of additional economic sanctions on Russian government officials and certain private individuals and Russian companies, restrictions on the provision of various services to Russian legal entities, and extensive controls on the export of technology to parties in Russia. In addition, many businesses are taking a cautious approach to sanctions and export compliance matters and have adopted internal policies more restrictive than are strictly required by the applicable rules.

Although neither Yandex N.V nor any of its group companies is a target of sanctions imposed by the United States, United Kingdom, European Union, or Switzerland, these restrictions and policies significantly limit the ability of our core businesses to enter into agreements with international parties and may make it more difficult for us to enter into agreements with other counterparties, including our key providers who may refuse to work with us because of the geopolitical situation. In addition, certain European countries have imposed restrictions on our limited operations in those countries, as a result of which we have been required to curtail or suspend our businesses in these jurisdictions.

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In addition, the Russian Government has adopted and proposed a number of measures in response to international sanctions and export controls. We cannot rule out the introduction of additional counter-sanctions measures by Russia. If such restrictions are adopted, they may limit our ability to conduct transactions with foreign counterparties or otherwise interfere with our global operations.

Press statements by Russian government officials have indicated that it is possible that measures could be adopted with the intention of “mirroring” Western sanctions; for example, any freeze of assets abroad of Russian entities could trigger a corresponding freeze of assets owned or controlled by residents of the country which imposed such sanctions. Although no such counter-measures are currently in place, the adopting of any such punitive measures could materially adversely affect our group and the value of our Class A shares.

If sanctions were to be imposed directly on Yandex N.V., our operating subsidiaries, or members of our governing bodies, our business and operations may be materially adversely affected.

None of Yandex nor our group companies is a target of sanctions issued by the United States, United Kingdom, Switzerland or European Union. Our former Executive Directors, Tigran Khudaverdyan and Arkady Volozh, were designated under EU sanctions on March 14, 2022 and on June 3, 2022, respectively. Both immediately resigned from their board and executive positions with Yandex. On February 25, 2023, personal sanctions were imposed on a non-executive director, Alexey Komissarov. He immediately recused himself from all Board discussions, and formally resigned from the Board on March 6, 2023.

If Yandex N.V. or any of our principal operating subsidiaries were to become a target of sanctions, it could adversely impact our operations and could materially adversely affect our shareholders.

If we pursue a restructuring of our group’s ownership and governance and are unable to implement such steps on acceptable terms, the interests of our shareholders could be materially adversely affected.

On November 25, 2022, we announced that our Board of Directors has commenced a strategic process to review options to restructure the group’s ownership and governance in light of the current geopolitical environment, with a view to ensuring the sustainable development and success of the group’s diverse portfolio of businesses over the longer term. This process is ongoing. Our Board is currently exploring a restructuring that would entail:

There can be no assurance that the Board will be successful in implementing paths to executing these steps, including identifying buyers for stakes in the business to be divested. These steps will be subject to continued work and, ultimately, shareholder approval. If we are not successful in implementing such a restructuring, our ability to develop certain operations may be significantly impeded. We could also face difficulties in identifying potential buyers who would be able to acquire a sizeable stake in the business at an acceptable price, and who will share and support our values and culture. Trading in our Class A shares on Nasdaq may not be resumed for some time, or at all, and therefore, if we are not successful in completing a restructuring, the liquidity of our Company’s shareholders may be limited or restricted entirely for an indefinite period of time (see “Our shareholders currently have limited or no liquidity in our shares”). We also expect that any restructuring would likely require certain approvals in accordance with the applicable legislation in the countries in which we operate. If we are unable to obtain such approvals, there is a risk that the restructuring may be complicated and interests of our shareholders may be materially affected.

Our shareholders currently have limited or no liquidity in our shares.

On February 28, 2022, Nasdaq and the New York Stock Exchange halted the trading in securities of a number of companies with material operations in Russia, including our Class A shares. Trading in our shares on Nasdaq remains subject to a trading halt as at the date of this Annual Report. Further, on March 15, 2023, the Listing Qualifications Staff

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of Nasdaq (the “Staff”) notified us that it had determined that our securities would be delisted from the Nasdaq Stock Market as of March 24, 2023, unless we appeal the Staff’s determination. On March 21, 2023, we submitted a request for a hearing to appeal such determination. A hearing will be held in late April 2023, and the delisting of our Class A shares will be stayed pending the issuance of a written decision of the hearings panel. Even if such appeal is successful and our Class A shares are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume. If such appeal is not successful, we may pursue the further appeals available under the Nasdaq Listing Rules.

In the event that our Class A shares are ultimately delisted from Nasdaq, they may be eligible for trading in the over-the-counter market. We can provide no guarantee, however, that one or more brokers will elect to make a market in our shares or will be able to obtain a ticker to facilitate OTC trading, or that investors based in the U.S. will be able to purchase our shares under applicable U.S. sanctions rules.

We have had a secondary listing for our Class A shares on the Moscow Exchange since 2014. Trading in our shares on the Moscow Exchange was suspended on February 28, 2022 and resumed on March 29, 2022. Under legislation adopted in 2022, however, non-Russian shareholders located in “non-friendly” countries are not permitted to sell shares on the Moscow Exchange. Moreover, because the international settlement systems remain closed for trading in rubles and in any securities of Russian businesses, it is currently not possible for trades to settle between shareholders that acquired our shares on Nasdaq and investors on the Moscow Exchange, and the volume of our shares available for trading on the Moscow Exchange is limited. We can provide no assurance as to when or whether all non-Russian shareholders will be permitted to effect trades on the Moscow exchange or when or whether the settlement systems will permit trading in all of our shares.

Laws or regulations may be adopted in our core market that may adversely affect our non-Russian shareholders and the value of the shares they hold in our company, including a requirement that Russia-based businesses re-domicile to Russia.

A number of measures have been adopted or proposed in our core market that could adversely affect non-Russian shareholders. For example, in April 2022 a law was passed that would require Russian legal entities to delist their depositary receipts from stock exchanges outside Russia. Although this law does not affect Yandex N.V., as a Netherlands registered company, we cannot exclude the possibility that other laws may be adopted that would require that Russia-based businesses re-domicile to Russia. If such a law were to be adopted, we may be required to take measures to change our corporate domicile, which would be complex and may have adverse tax consequences for our company and our shareholders. Moreover, the rights of shareholders in Russian companies differ from the rights of shareholders of Dutch public limited companies. Many of our international shareholders may be unable to hold or, under current Russian law, trade in securities of a Russian entity.

Any such legislative requirements or other measures targeting non-Russian shareholders or offshore holding companies of Russian businesses could materially affect rights of our shareholders.

Our business benefits from a strong brand. Failure to maintain and enhance our brand would materially adversely affect our business, financial condition and results of operations.

We believe that the brand identity that we have developed through the strength of our technology, our user focus, our independence from political considerations and, in particular, our ability to deliver relevant answers and recommendations, has significantly contributed to the success of our business. We also believe that maintaining and enhancing the Yandex brand is critical to expanding our base of users, advertisers, advertising network partners, and other business partners.

Maintaining and enhancing our brand, especially in relation to mobile services, will depend largely on our ability to continue to be a technology leader and a provider of high-quality, reliable services, which we may not continue to do successfully.

There has been speculation in recent months in the media based on an incorrect understanding of our approach to search results and of our data privacy policies, which are in line with those of our international peers. For example, we

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reported in January 2023 that we had experienced a cybersecurity incident in which fragments of our program code were discovered in the public domain, which indicated manual attempts to fix bugs in the service or to resolve problems with the algorithms (e.g., manual improvements of filtering criteria to eliminate inappropriate content such as child pornography, and insulting or offensive remarks). Although we have never exercised editorial control over the content we present in our search results, where our users can find anything they are looking for that is legally accessible in the user’s location, these disclosures created a mistaken impression that the search results we present were being inappropriately manipulated.

Such perceptions may cause tensions with the regulators and adversely affect our reputation, our ability to enter into arrangements with global partners and the value of our business.

The current environment and related uncertainty may result in increased turnover of personnel and increased compensation expense.

A key part of our success is our corporate culture and our ability to attract, maintain and motivate our key talent, management and executive staff. The current geopolitical circumstances (including, for example, the partial mobilization in Russia in September 2022) have created additional challenges for our team, both in Russia and internationally. We have taken steps to retain and motivate our team, but there is a potential risk of increased personnel turnover due to the current geopolitical situation, which could have an adverse effect on our operation.

Historically, equity awards formed a significant portion of the regular compensation of a large percentage of our team. The ongoing trading halt on Nasdaq has largely eliminated our ability to rely on equity awards for retention and motivation purposes. As a result, the cash component of our employee compensation significantly increased in 2022 and into 2023. Overall, the cash component of our employee compensation and may continue to be more significant in the medium term, which would weigh on our operational expenses.

In the current environment, there may be a heightened risk of actions by the relevant authorities that may be perceived as reflecting political considerations.

The legal framework in which we operate in our core market is increasingly volatile in light of ongoing geopolitical tensions. This environment could increase the risk of new legislative or regulatory initiatives that could be seen as protecting the country’s national security and/or limiting foreign influence over the sectors in which we operate, including actions aimed at effecting changes of control of companies that are considered to be of strategic importance. The fact that we are a high-profile company may heighten these risks.

Foreign ownership limitations in Russia have been in place in many sectors for a number of years. Applicable laws restrict foreign (non-Russian) ownership or control of companies involved in certain strategically important activities in Russia. In addition, a number of transactions and operations with persons that are registered, owned or controlled by persons (including states, legal entities, and individuals) in so called “non-friendly” countries that impose sanctions and restrictions on Russian legal entities and individuals now require special approval from the Government Commission for Foreign Investment Control, the Central Bank of Russia, or the President of the Russian Federation. Under current Russian law, the Netherlands is considered to be a “non-friendly” country, and our Russian subsidiaries are subject to the foregoing requirements in respect of their dealings with our Dutch parent company and a number of our companies in our group. Such requirements in respect of intra-group operations and relationships with international third-parties may adversely affect our operations.

These limitations, as well as potential additional limitations on foreign ownership or potential new limitations extended to our businesses, could have a material adverse effect on our group and the value of our business.

In addition, we completed a corporate governance restructuring in late 2019, which included the formation of a Public Interest Foundation that holds a priority (“golden”) share in Yandex N.V. and a so-called “special voting interest” in our principal Russian operating subsidiary, Yandex LLC. Although these interests are designed to provide targeted and specific governance rights, some of these rights are not precisely defined. It is possible that such rights might be interpreted broadly and unpredictably or in ways which we have not anticipated.

Risks Related to Our Current Governance and Ownership Structure

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Although we implemented a restructuring of our corporate governance at the end of 2019, we may not be compliant with any legislation limiting foreign ownership or control that might ultimately be adopted. Any such non-compliance could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as on the trading price of our Class A shares.

We cannot assure you that our business will not become subject to new legislation that might ultimately be adopted with the goal of limiting foreign ownership or control of businesses in our sector or of strategically or systemically important Russian businesses generally. If our business becomes subject to, and is found not to be compliant with, any such legislation, we cannot assure you that enforcement actions against Yandex or our business by the Russian authorities will not be imposed. The imposition of such enforcement actions could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as on the value of our Class A shares. In addition, in the event that any such new restrictions are adopted, or if there is a perception that such restrictions might be forthcoming, our Board may determine that additional changes in our corporate governance structure are warranted in order to respond to such concerns and to protect the interests of our stakeholders. See also “Item 4. Information on the Company – Governance Structure”.

For example, on March 1, 2023, amendments to the Federal law “On Information, Information Technologies, and Information Protection” came into force. These amendments relate to the ownership structure of online classifieds services and require that control over such services should be exercised by Russian citizens who do not have dual citizenship. The development of the regulatory framework continues. The current ownership structure of our Classifieds services does not comply with the requirements of the new law, and if the strategic restructuring currently being considered by our Board cannot be completed in the medium term or the terms of the restructuring do not adequately reflect the requirements of the law, we may have to restructure control over this business.

The Public Interest Foundation that was formed in connection with our corporate governance restructuring has important rights in our corporate governance structure. These rights could be exercised in a manner that is different from what we expect or that is not in the interests of our Class A shareholders.

The Public Interest Foundation has limited and targeted rights, through the powers associated with its holding of the Priority Share in Yandex N.V. and a so-called “Special Voting Interest” in Yandex LLC. The board of the Public Interest Foundation, as well as the designated directors on the Yandex N.V. board and any interim General Director of Yandex LLC appointed by the Foundation in the circumstances set out in the charter of Yandex LLC, may take actions, however, that are not in the interests of our stakeholders, including our Class A shareholders, or decline to approve actions that would be in the interests of our Class A shareholders. These actions could include exercising a veto right over the nomination of four members of our Board in such a way as to prevent the nomination of persons whom the other members of our Nominating Committee and Board believe would best serve the interests of our company and our shareholders. Moreover, these directors, together with the two designated directors, could act in a manner that results in Board deadlocks on material matters, such as budget approvals, that restrict our flexibility or ability to operate. Further, if the Public Interest Foundation exercised its right to use the Special Voting Interest in Yandex LLC in a manner that is inconsistent with our expectations, or if it did so repeatedly, it could disrupt our operations and adversely affect the public perception of our business. Any such actions could have an adverse effect on our business, financial condition and results of operations and cash flows.

In addition, the Russian legislative framework under which the Public Interest Foundation was incorporated is relatively new and there has been very limited experience with such legal form in practice. We may therefore face novel issues in connection with the untested mechanics of the Foundation legislation and supporting regulations.

See also “Item 4. Information on the Company – Governance Structure”.

Risks Related to Our Business and Industry

We rely on the continued availability, development and maintenance of the internet infrastructure in the countries in which we operate. Any errors, failures or disruption in the products and services provided by third-party providers of our principal internet connections and the equipment critical to our internet properties and services, or any regulatory limitations on the internet in Russia, could materially adversely affect our brand, business, financial condition, and results of operations.

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Our success depends on the continued availability, development and maintenance of the internet infrastructure globally and particularly in the countries in which we operate. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security for providing reliable internet services. Any disruption in the network access provided by third parties or any failure by them to handle current or higher future volumes of use may significantly harm our business. We have experienced and expect to continue to experience interruptions and delays in service from time to time. Furthermore, we depend on hardware and software suppliers for prompt delivery, installation and service of servers and other equipment to deliver our services. The current geopolitical crisis and resulting export controls may materially adversely affect our access to international software and hardware suppliers.

A law that partly came into force in November 2019 introduced tighter regulation of traffic routing across the Russian internet. This regulation, among other things, may lead to a requirement that Russian internet traffic should be routed through Russian communication centers. This could reduce data transfer speed significantly and even result in interruptions and delays of the online services provided across the Russian internet.

There has recently been increased scrutiny of technology businesses across the globe. Should our operating environment become more challenging because of a change in the regulation or perception of technology companies, our business, financial condition, and results of operations may be materially and adversely affected.

Around the world, technology companies are operating in an increasingly uncertain and challenging environment, in part due to increased scrutiny from policymakers, regulators and the general public. Such scrutiny has included concerns about business practices, market presence and strategic direction. A number of our global peers, including Google and Facebook, have received scrutiny in different jurisdictions over business practices.

Restrictive trade practices in many jurisdictions, including the United States, have also made doing business more difficult for technology companies. In particular, in the current geopolitical environment, access to international technology in Russia has been severely restricted.

Should our business practices, market presence or strategic direction receive adverse scrutiny or experience increased regulation in any material market in which we operate, we may experience a material adverse effect on our business, financial condition and results of operations. For instance, additional regulation applicable specifically to technology platforms and ecosystems is being currently discussed in a number of jurisdictions. Any restrictive legislation in this sphere that may be enacted in Russia or in other countries where we operate may limit our flexibility in providing our services and adversely impact our operations.

We face significant competition, which could negatively affect our business, financial condition and results of operations.

We operate in a market characterized by rapid commercial and technological change, and we face significant competition in many aspects of our business. We currently operate principally in Russia, Belarus, Kazakhstan, Uzbekistan and Israel.

During 2022, we faced some changes in the competitive environment across our key businesses (especially in digital advertising), which was characterized by a reduction in the presence of global players in Russia (by their own decision or as a result of the actions of the regulator) and an increased competition with local players.

For many years we have considered Google to be our primary competitor. In addition to its search solutions, including voice search, Google offers online advertising, information and other search services similar to ours, including services similar to Yandex Direct. In March 2022, Google paused the sale of online advertising in Russia, including search, YouTube and outside publishing partners. Separately the Russian regulator Roskomnadzor blocked Meta services (Facebook and Instagram) in Russia. At the same time Google continues to run its search engine in Russia and we thus continue to compete with them in this field.

We believe that social networking sites, video platforms and online marketplaces are becoming significant competitors for online ad budgets. These sites derive a growing portion of their revenues from online advertising and are experimenting with innovative ways of monetizing user traffic, which could result in increased competition for us.

We also face competition in our non-advertising businesses, for example:

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We operate in a market characterized by rapid commercial and technological change. If our competitors are able to develop their technologies more quickly than we are, we may need to increase R&D investments in order to defend our market shares. We may face increased competition from new players and new technologies, for example new artificial intelligence offerings, such as ChatGPT.

We cannot guarantee you that we will be able to continue to compete effectively with current and future companies that may have greater ability to attract and retain users, greater brand recognition, more personnel and greater financial and other resources. If our competitors are successful in providing similar or better search results or other services compared with those we offer, we could experience a significant decline in user traffic or other business. Any such decline could negatively affect our business, financial condition and results of operations.

We generate a substantial part of our revenues from advertising, which is cyclical and seasonal in nature.

Over the past several years, we have continued to diversify our business and, as a result, the share of our revenues generated from advertising declined from 69% in 2019 to 47% in 2021. In 2022, the share of the Search and Portal business unit, which includes advertising revenue, was 43% of the total revenues. According to the Association for the Development of Interactive Advertising, the volume of spending on online advertising in traditional segments in 2022 was flat compared with 2021, compared with growth of 24% in 2021 and 4% in 2020. After the withdrawal of many international advertisers from the Russian market from February 2022, we expect a slow recovery in advertising spending in 2023. At the same time, any reduction in online advertising expenditures or loss of advertisers due to economic or geopolitical conditions or for other reasons could significantly negatively affect our business, financial condition and results of operations.

Both advertising spending and user traffic also tend to be seasonal, with internet usage, advertising expenditures and traffic historically slowing down during the months when there are extended Russian public holidays and vacations, and increasing significantly in the fourth quarter of each year. For these reasons, comparing our results of operations on a period-to-period basis may not be meaningful, and past results should not be relied upon as an indication of future performance. Furthermore, as our business becomes more diversified, seasonal changes may have different effects on various lines of business.

We rely on partners for a material portion of our revenues and, in particular, for expanding our user base via distribution arrangements. Any failure to obtain or maintain such relationships on reasonable terms could have an adverse effect on our business, financial condition and results of operations.

We consider our ad partner network to be important for the continued growth of our business. Our agreements with our network partners are generally terminable at any time without cause. Our competitors could offer more favorable terms to our current or potential network partners, including guaranteed minimum revenues or other more advantageous revenue-sharing arrangements, in an effort to take market share away from us. If our network partners decide to use a competitor’s advertising services, our revenues would decline. Our ad network partners could also cease or limit providing us with advertising traffic due to the current geopolitical situation, including the introduction new economic sanctions for reputational reasons.

To expand our user base and increase traffic to our sites and mobile applications, we enter into arrangements with leading software companies and device manufacturers for the distribution of our services and technology. In particular, we have agreements, on a co-marketing basis, with certain internet browsers. As new methods for accessing the internet become available, including through new digital platforms and devices, we may need to enter into new or amended distribution agreements which may not be available to us expeditiously or on commercially reasonably terms.

Our most significant channel in 2022 was original equipment manufacturers, which preinstall our applications

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on their devices in Russia and/or on their mobile and desktop browsers. The market shares of smartphone brands fluctuate, which makes it important to continue our arrangements with all current key distribution partners, or enter into comparable arrangements with new distribution partners, particularly for the distribution of our search and other services on mobile devices. In the future, some of the existing partners may leave the Russian market, or existing and potential distribution partners may not offer or renew distribution arrangements on reasonable terms for us, or at all, which could limit our ability to maintain and expand our user base, and could have a material adverse effect on our business, financial condition and results of operations.

Our business units face comparable risks. For example, if we are unable to attract or maintain a critical mass of Taxi partners, consumers, couriers, restaurants, grocery stores, whether as a result of competition or other factors, our ride-hailing and food delivery services could become less appealing to users, and our financial results could be adversely impacted.

Some of our businesses, in particular, Search and Portal and Plus and Entertainment Services, depend on our ability to license, acquire or create compelling content at reasonable costs. Failure to offer compelling content would harm our ability to expand our base of users, advertisers and network partners.

We license a significant amount of content from third parties, such as video content, music, weather reports and TV program schedules. If we are unable to maintain and build relationships with third-party content providers, this would likely result in a loss of user traffic. Our ability to license content from international producers has been and may further be limited in light of the current geopolitical crisis. In addition, we may be required to make substantial payments to third parties from whom we license or acquire such content. An increase in the prices charged to us by third-party content providers would adversely affect our business, financial condition and results of operations. Furthermore, many of our content licenses with third parties are non-exclusive. Accordingly, other websites and streaming platforms, as well as other media such as television, may be able to offer similar or identical content. If other companies make available competitive content, the number of users of our services may not grow as anticipated, or may decline. This increases the importance of our ability to aggregate compelling content in order to differentiate Yandex from other businesses.

If we fail to manage effectively the growth and increasing complexity of our operations, our business, financial condition and results of operations could be adversely affected.

We have experienced, and continue to experience, growth in and diversification of our operations, which has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure.

We operate certain of our services through separate business units in order to facilitate the growth of those services. Management of these separate business units, some of which now operate or have operated as joint ventures with third-party partners, requires additional administrative effort, which may put strain on our management and other resources. If we do not effectively manage our growth and the operation of our business units, the quality of our services could suffer, which could adversely affect our brand, business, financial condition and results of operations.

We will need to continue to increase our investment in technology, infrastructure, facilities and other areas of operations, in particular product development, sales and marketing. We will also need to continue to improve our operational and financial systems and managerial controls and procedures, and maintain close coordination among our technical, accounting, finance, marketing and sales personnel. If the improvements are not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures, which could harm our business, financial condition and results of operations.

Any successful expansion of our international operations will create additional risk for our business.

We have limited experience with operations outside Russia, and in 2022 derived only 5.1% of our revenues from international markets.

Our ability to manage our business and conduct our operations across a broader range of geographies, including a number of emerging markets in Africa and elsewhere, requires considerable management attention and resources and is subject to a number of risks relating to international markets, including the following:

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In addition, compliance with complex and potentially conflicting foreign and Russian laws and regulations that apply to our international operations may increase our cost of doing business and may interfere with our ability to offer, or prevent us from offering, our services in one or more countries. These numerous laws and regulations include import and export requirements, content requirements, trade restrictions, tax laws, economic sanctions, anti-corruption and anti-bribery laws, internal and disclosure control rules, data protection, data retention, privacy and filtering requirements and labor relations laws. Violations of these laws and regulations may result in fines; criminal sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation and brand. Although we have implemented policies and procedures designed to ensure compliance with these laws, we cannot assure you that our employees, contractors or agents will not violate our policies. Any such violations may result in prohibitions on our ability to offer our services in one or more countries, and may also materially adversely affect our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, financial condition and results of operations.

Our corporate culture has contributed to our success, and if we cannot maintain the focus on teamwork and innovation fostered by this environment, our business, financial condition and results of operations would be adversely affected.

We believe that a critical contributor to our success has been our corporate culture, which values and fosters teamwork and innovation. As our business matures and diversifies, and we are required to implement more complex organizational management structures, including those introduced in connection with the corporate governance changes we made in 2019, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. We operate a number of our services through separate business units, in order in part to maintain the “start-up spirit” and provide greater strategic and operational focus for these units. We also operate or have previously operated several of our business units as joint ventures with other parties and may establish new joint ventures in future. In such situations our efforts in maintaining our corporate culture may not be successful, which would adversely affect our business, financial condition and results of operations. In particular, the spin-off or disposal of any business units or establishment of future joint ventures and partnerships in the future may cause the loss of some of our clients or users, or disruption in

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the provision of the services being carved out and may require additional attention from our management.

If our security measures are breached, malicious applications interfere with or exploit security flaws in our services, or our services are subject to attacks that degrade or deny the ability of users to access our products and services, our products and services may be perceived as not being secure, users and customers may curtail or stop using our products and services, and we may incur significant legal and financial exposure.

Third parties have in the past attempted, and may in the future attempt, to use malicious applications to interfere with our services and may disrupt our ability to connect with our users. Such interference often occurs without disclosure to or consent from users, resulting in a negative experience that users may associate with Yandex. Such an attack could also lead to the destruction or theft of information, potentially including confidential or proprietary information relating to our intellectual property, content and users. For example, if a third party were to hack into our network, they could obtain access to our search code or to user data. Because the techniques used to obtain unauthorized access, disable or degrade services, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose users and customers.

We maintain substantial security measures, which are managed by a sizeable and well-trained information security team. As a business we undergo regular security audits and penetration testing procedures, both internal and external, and offer a generous bug bounty program for external security researchers, in order to provide a comprehensive security and privacy protection program attested by numerous internationally recognized certifications. Nevertheless, we cannot guarantee that these measures will not be breached due to employee error, malfeasance, system errors or other unexpected vulnerabilities, fraudulent actions of outside parties, or otherwise.

In recent periods, and most notably since February 2022, we have faced a significantly higher number of cyber attacks, which have been more disruptive than previous attacks we have suffered. In March 2022, we discovered a data leak regarding Yandex Eats customer records. As a result of this leak, there have been several claims to date filed in the Russian courts in respect of compensation for moral damage. In January 2023, a further leak occurred, resulting in the disclosure of a partial archive of the Yandex source code repository. Although Yandex has to date found no evidence that personal information of its users or the performance of its services have been impacted, and although the published fragments of the code were outdated and differ from the version currently used by our services or were never actually used in operations, similar incidents could materially adversely affect our operations or our users.

To the extent we are not able to prevent security or cyber attacks like these, we may be exposed to a risk of loss of company information or user data, further litigation and claims made against us, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability.

In addition, we offer applications and services that our users download to their devices or that they rely on to store information and transmit information to others over the internet. These services are subject to attack by viruses, worms and other malicious software programs, which could jeopardize the security of information stored in a user’s device or in our computer systems and networks. These applications may be difficult to remove or disable, may reinstall themselves and may circumvent other applications’ efforts to block or remove them. If our efforts to combat these malicious applications are unsuccessful, or if our services have actual or perceived vulnerabilities, our reputation may be harmed, our user traffic could decline, and our communications with certain users could be impaired, which could adversely affect our business, financial condition and results of operations.

Our business depends on the accuracy and reliability of our search results and dependability of our online and offline services. A systems failure, technical interference or human error could prevent us from providing accurate search results or ads or reliably delivering our other services, which could lead to a loss of users and advertisers and damage our reputation and materially adversely affect our business, financial condition and results of operations.

Our business depends on our ability to provide accurate and reliable search results and other user services, which may be disrupted. For example, because our search technology ranks a webpage’s relevance based in part on the importance of the websites that link to it, people have attempted to link groups of websites together to manipulate search results. If our efforts to combat these and other types of “index spamming” are unsuccessful, our reputation for delivering relevant results could be harmed. This could result in a decline in user traffic, which may adversely affect our

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business, financial condition and results of operations.

Although we maintain a robust network of security measures, our systems are potentially vulnerable to damage or interruption from terrorist attacks, denial-of-service attacks, computer viruses or other cyber-attacks or attempts to harm our system, power losses, telecommunications failures, floods, fires, extreme weather conditions, earthquakes and similar events. Our data centers are also potentially subject to break-ins, sabotage and intentional acts of vandalism, and other potential disruptions. At the same time, our data centers are located in different geographical areas. Most of Yandex’s services may function in the normal course even when one of the company’s data centers is disconnected or lost. The occurrence of a natural disaster or other unanticipated problems at one or more of our data centers could result in lengthy interruptions in our service, or a pandemic, an outbreak of disease or similar public health concern, such as the recent coronavirus pandemic, or fear of such an event, could result in reduced customer traffic and consumer spending as well as a reduction of the equipment maintenance quality, partial or complete shutdown of equipment, labor shortages, delays in manufacturing and shipment of products, and possible interruptions in the provision of our services.

Such events could reduce our revenues and profits, and our brand could be damaged if people believe our services are unreliable.

From time to time, we have experienced power outages that may have interrupted access to our services and impacted the functioning of our internal systems. Any unscheduled interruption in our services places a burden on our entire organization and would result in an immediate loss of revenue. If we experience frequent or persistent system failures on our websites, our reputation and brand could be permanently harmed. The steps we have taken to increase the reliability and redundancy of our systems are expensive, reduce our operating margin and may be insufficient to reduce the frequency or duration of unscheduled downtime.

Although we test software updates before implementation and there have been no significant downtime periods in recent years, errors made by our employees in maintaining or expanding our systems may damage our brand and may have a materially adverse effect on our business, financial condition and results of operations.

We may not be able to prevent others from unauthorized use of our intellectual property rights, which may adversely affect our competitive position, our business, financial condition and results of operations.

We rely on a combination of patents, trademarks, trade secrets and copyrights, as well as nondisclosure agreements, to protect our intellectual property rights. Our patent department is responsible for developing and implementing our group-wide patent protection strategy in selected jurisdictions, and to date we have filed more than 1,300 patent applications, of which more than 800 have resulted in issued patents. The protection and enforcement of intellectual property rights in Russia and other markets in which we operate, however, may not be as effective as that in the United States or Western Europe. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant infringement of our intellectual property rights could harm our business, our brand and/or our ability to compete, all of which could adversely affect our competitive position, our business, financial condition and results of operations.

We may be subject to intellectual property infringement claims, which are costly to defend, could result in significant damage awards, and could limit our ability to provide certain content or use certain technologies in the future.

A number of internet, technology, media and patent-holding companies own or are actively developing patents covering search, indexing, electronic commerce and other internet-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection in certain jurisdictions. As a result, disputes regarding the ownership of technologies and rights associated with online activities are likely to arise in the future. In addition, the use of open-source software is often subject to compliance with certain license terms, which we may inadvertently breach.

With respect to any intellectual property rights claim, we may have to pay damages or compensation and/or stop using technology found to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available on commercially reasonable terms or at all and may significantly increase our operating expenses. We may be required to develop an alternative non-infringing technology, which may require significant effort, expense and time to develop. If we cannot license or develop technology for any potentially infringing aspects of our business, we may be forced to limit our service offerings and may be unable to compete effectively. We may also incur

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substantial expenses in defending against third-party infringement claims regardless of the merit of such claims.

We may be subject to claims from our current or former employees as well as contractors for copyright, trade secret and patent-related matters, which are costly to defend, and which could adversely affect our business, financial condition and results of operation.

Unlike the video and other content that we license from third parties, the software, databases, algorithms, images, patentable intellectual property, trade secrets and know-how that we use for the operation of our services were generally developed, invented or created by our former or current employees or contractors during the course of their employment with us within the scope of their job functions or under the relevant contractor’s agreement, as the case may be. As a matter of Russian law, we are deemed to have acquired copyright and related rights as well as rights to file patent applications with respect to such products and have the intellectual property rights required for their further use and disposal subject to compliance with certain requirements set out in the Civil Code of Russia. We believe that we have appropriately followed such requirements, but they are defined in a broad and ambiguous manner and their precise application has never been definitively determined by the Russian courts. Therefore, former or current employees or contractors could either challenge the transfer of intellectual property rights over the products developed by them or with their contribution or claim the right to additional compensation for their works for hire and/or patentable results, in addition to their employment compensation. We may not prevail in any such action and any successful claim, although unlikely to be material, could adversely affect our business and results of operations.

We may be held liable for information or content displayed on, retrieved by or linked to our websites and mobile applications, or distributed by our users; or we may be required to block certain content or access to our websites could be restricted; any of which could harm our reputation, business, financial condition and results of operations.

The law and enforcement practice relating to the liability of providers of online services for the activities of their users is currently not settled in Russia and certain other countries in which we operate. Claims may be brought against us for defamation, libel, negligence, copyright, patent or trademark infringement, tort (including personal injury), fraud, other unlawful activity or other theories and claims based on the nature and content of information to which we link or that may be posted online via blogs and message boards, generated by our users or delivered or shared through our services, including if appropriate licenses and/or rights holder’s consents have not been obtained. For example, we have previously been involved in litigation regarding alleged copyright infringement in the United States. We are also regularly required to remove content uploaded by users on grounds of alleged copyright infringement, and from time to time we receive requests from individuals who do not want their names or websites to appear in our search results. In addition, under applicable laws companies and their officers may be held liable for the failure to delete or to stop distributing such information as is required by a court enforcement officer’s act. The liability may include penalties for companies and imprisonment for officers. 

Third parties may also seek to assert claims against us alleging unfair competition, data misappropriation, violations of privacy rights or failure to maintain the confidentiality of user data. Our defense of any such actions could be costly and involve significant time and attention of our management and other resources. If any of these complaints result in liability for us, the judgment or settlement could potentially be costly, encourage similar lawsuits, and harm our reputation and possibly our business.

Additional recent legislation in Russia has introduced a system of information and website blocking measures both to prevent and stop copyright and related rights infringements and to prevent dissemination of illegal information, such as child pornography, content encouraging suicides and drug use, information on minors hurt by illegal actions and extremist information. The regulations generally require a request from a governmental authority to take down the allegedly infringing or illegal information prior to blocking a particular website. However, in some cases, such as dissemination of extremist information, access to such information can be blocked without notification or prior judicial scrutiny. Moreover, under recent legislative amendments a website may be blocked if the information published contains disrespectful and indecent statements about the society, state, Constitution or governmental authorities, or certain political statements. Additionally, the subjects who are accused of disseminating such statements can face administrative fines and criminal penalties. If we fail to identify the above-mentioned types of information and delete them from our websites in timely manner, our websites might be blocked and our business may be materially adversely affected.

For example, Russian legislation allows for permanent blocking of websites for repeated violation of copyright and related rights. A number of large websites have been blocked pursuant to this legislation so far, including, for

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example, a major hosting provider in Russia. We may be subject to unpredictable blocking measures, injunctions or court decisions that may require us to block or remove content and may adversely affect our services and operations. In addition, to ensure compliance with such laws, we may be required to commit greater resources, or to limit functionality of our services, which may adversely affect the appeal of our services to our customers. Although we believe that we are in full compliance with applicable laws, the application of new norms by government authorities might be sometimes inconsistent or unpredictable.

New legislation and regulations may impose additional requirements on us and our operations and lead to material legal liability, which can be difficult to foresee or limit. For instance, the Digital Services Act (DSA) came into force on November 16, 2022. The DSA applies extraterritorially and will apply to all services that are provided to users in the EU, regardless of the location of the companies that provide such services. This means that the DSA will apply to some Yandex services. Most of the DSA rules will come into force in February 2024 although some have already been implemented. Under this legislation, certain online service providers were required to publish by February 17, 2023 and at least once every six months thereafter, information on the average active monthly recipients of the services in the EU, with respect to each online platform or online search engine it operates. Yandex has fulfilled this obligation for services that may fall under DSA regulation to date. In addition, Yandex is not subject to the very large online platform (VLOP) regulations, since no Yandex service meets the VLOP criteria, although this criteria or our fulfilment of it may be subject to change in the future.

In addition, Russian legislation mandates the placement of “social advertising” (i.e., ads relating to the promotion of charities, socially useful activities and governmental functions) by all advertising platforms and distributors in their inventory free of charge, in an amount up to 5% of their commercial advertising inventory (calculated on the basis of the preceding year and nominated in currency or advertising impressions). The legislation also establishes a designated operator of social advertising on the internet, which is authorized to use the 5% free-of-charge quota to place social ads. The Institute for the Development of the Internet (IRI) was appointed as the social advertising operator in 2021. Although the legislation provides some degree of discretion for the advertising platforms and distributors regarding the interaction with the operator, the latter holds substantial authority to require any advertising platform or distributor to place social advertising on the terms determined by the operator. The regulations provide detailed provisions on reporting from the advertising platforms and distributors to the operator regarding their commercial advertising inventory, forecasting obligations related to the use of the 5% quota by the operator and some other provisions.

As the internet evolves, an increasing amount of online content may be held in closed social networks, mobile apps or proprietary document formats, which may limit the effectiveness of our search technology, which could adversely affect our brand, business, financial condition and results of operations.

Social networks are important players in the internet market and have a significant degree of control over the manner and extent to which information on their websites can be accessed through third-party search engines. Information can also be stored in other closed systems, such as mobile apps.

If social or other networks or software providers take steps to prevent their content or documents in their formats from being searchable, such content would not be included in our search results even if the content was directly relevant to a search request. These parties may also seek to require us to pay them royalties in exchange for giving us the ability to search content on their sites, in their networks or documents in their format and provide links thereto in our search results. If these parties also compete with us in the search business, they may give their own search technology a preferential ability to search their content or documents in their proprietary format. Any of these outcomes could adversely affect our brand, business, financial condition and results of operations.

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Our business may be affected by new AI models and products based on them.

We are observing the rapid advancement of a new generation of large language models, such as ChatGPT and GPT-4, that are capable of generating high-quality content, including responses to search queries. A number of companies, such as Microsoft and Google, have already announced plans to integrate these new AI models into their products. We view this risk from two perspectives. First, developing new language models requires substantial computing resources and training expertise. We could fall behind our competition. To avoid this, we are making the training of new models a top priority. We are also investing in more computing resources. Additionally, we are assembling a diverse team to work on this project, including our best ML engineers, analysts, and developers. Second, the redistribution of search queries to our new AI-based product formats may require us to restructure our tools or may change our ability to monetize ad-based products. We are therefore already seeking to develop new monetization mechanisms that are not susceptible to this risk. We may not be successful in meeting these challenges, which may adversely impact our search share and advertising revenues.

We may have difficulty in continuing to scale and adapt our existing technology architecture to accommodate increased traffic and technology advances or new requirements of our users and advertisers, which could adversely affect our business, financial condition and results of operations.

With some of the most highly visited websites in Russia, we deliver a growing number of services, page views and video programs to an increasing number of users. In addition, the services we offer have expanded and changed significantly and are expected to continue to do so in the future to accommodate bandwidth-intensive technologies and means of content delivery, such as interactive multimedia and video. Our future success will depend on our ability to adapt to rapidly changing technologies, to adjust our services to evolving industry standards and to maintain the performance and reliability of our services. Rapid increases in the levels or types of use of our online services could result in delays or interruptions in our services.

As we expand our services, we will need to continue to invest in new technology infrastructure, including data centers. We may have difficulty in continuing to expand our infrastructure to meet increased demand for our services, including difficulties in obtaining suitable facilities or access to sufficient electricity supplies. Moreover, in the current geopolitical environment, we may be unable to acquire the required server capacity or upgrades from international suppliers. A failure to expand our infrastructure could materially and adversely affect our ability to maintain and increase our revenues and profitability and could adversely affect our business, financial condition and results of operations.

Certain technologies could block our ads, which may adversely affect our business, financial condition and results of operations.

Advertising displayed on our platforms may be interfered with by third parties, which may adversely affect our ability to attract advertisers. For example, third parties have in the past, and may in the future, employ technologies to block the display of ads on webpages. The wide and effective use of ad-blocking technologies can reduce the amount of revenue generated by the ads we serve and decrease the confidence of our advertisers and Yandex Advertising Network partners in our advertising technology, which may adversely affect our business, financial condition and results of operations.

If we fail to detect impressions and click fraud or other fraudulent activity or if our partners (including Yandex Advertising Network partners) disagree with our fraud detection techniques, we may face litigation and may lose the confidence of our advertisers or partners which may adversely affect our business, financial condition and results of operations.

We are exposed to the risk of fraudulent and invalid impressions and clicks on the ads we serve from a variety of potential sources. Invalid impressions and clicks are those that we have determined are not intended by the user to view or access the underlying content, including impressions and clicks resulting from fraud executed by automated scripts of computer programs. We monitor our own websites and those of our partners for click fraud and proactively seek to prevent such fraud and filter out fraudulent or other invalid impressions and clicks. To the extent that we are unsuccessful in doing so, we credit our advertisers for impressions or clicks that are later attributed to fraud. If we are unable to stop this activity, these credits to our advertisers or the amounts we pay to our partners for such invalid impressions and clicks may increase, and could exceed what they have actually earned. This could negatively affect our

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profitability, and these invalid impressions and clicks could result in legal claims or harm our brand.

We acquire complementary businesses, teams and technologies from time to time, and may fail to identify additional suitable targets, acquire them on acceptable terms or successfully integrate them, which may limit our ability to implement our growth strategy. Acquisitions of new businesses may also lead to increased legal risks and other negative consequences, which could have an adverse effect on our business, financial condition and results of operations.

We regularly acquire other businesses, technologies and teams. The acquisition and integration of new businesses, technologies and people pose significant risks to our existing operations, including:

The integration of new businesses presents a number of challenges, including differing cultures or management styles, the complexities of operational or technical integration, poor financial records or internal controls on the part of the acquired companies, and an inability to establish control over cash flows. Furthermore, even if we are successful in integrating new businesses, expected cost and operating efficiencies may not materialize, the financial benefits from the acquisition may be less than anticipated, and we could be required to record impairment changes as a result of under-performing assets.

Failure to maintain effective customer service may result in customer complaints and negative publicity and may adversely affect our business, financial condition and results of operations.

Customer complaints or negative publicity about our services or those offered by us (including services offered by our business units) or breaches of customers’ privacy or of our security measures, could diminish consumer confidence in and use of our services. Measures we implement to combat risks of fraud and breaches of privacy and security may be viewed as onerous by our customers or those of our joint ventures and damage relations with them. Alternatively, should breaches of customers’ privacy or of security measures occur, we could be subject to investigations and claims from governmental bodies, as well as from our customers. These measures heighten the need for prompt and accurate customer service to resolve irregularities and disputes. Effective customer service requires significant personnel expense, and such expense, if not managed properly, may impact our profitability or that of one or more of our joint ventures. Any inability by us or our joint ventures to manage or train our or their customer service representatives properly could compromise our or their ability to handle customer complaints effectively. In the event we or one of our joint ventures fails to maintain effective customer service, our reputation may suffer, and we may lose our customers’ confidence, which may in turn adversely affect our business, financial condition and results of operations.

We are continuing the construction of our new headquarters and data centers, which involves significant risks, including those beyond our control. Construction delays and cost increase may result in material expenses and distraction of management attention and may be exacerbated by restrictions and prohibitions on the supply of construction and finishing materials, engineering and other equipment into Russia.

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In 2018 we acquired a property site for a new Moscow headquarters situated at 15 Kosygina Street. Although construction is underway, we may face difficulties in managing the construction process, which may be further exacerbated by the current geopolitical and macroeconomic circumstances, including an inability to obtain supplies or services from international parties. If the construction is not finished by the time our current lease expires, we may need to negotiate a new lease for our current or future premises, and may be unable to secure favorable terms, or may be required to agree to rent denominated in, or linked to, U.S. dollars, which would subject us to foreign exchange risk, or incur other significant expenses associated with the continuation and completion of construction.

We are also continuing the modernization of our existing data centers and the construction of a new data center in Kaluga. Despite the fact that we have purchased the necessary equipment, we cannot exclude logistical risks that may be beyond our control, which may lead to additional costs and an increase in the project implementation time.

We may continue to face risks related to the COVID-19 pandemic and other health epidemics or related crises.

The COVID-19 pandemic resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities globally, including in Russia. On the back of relaxed pandemic-related restrictions starting in the second half of 2020, our businesses and the broader economy have strengthened and continued to do so throughout 2022. However, our businesses may continue to be affected by the economic impact of the coronavirus pandemic and potential further disruptions caused by the health crisis.

The extent to which the COVID-19 crisis impacts our results in any given period will depend on future developments, which are still uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and any future variants, and the actions taken to contain the virus or treat its impact. These developments may also lead to changes in estimates and assumptions that affect the reported amounts of our assets and liabilities, and actual results could differ from those estimates. Any renewed, prolonged or intensified disruption to normal economic activity or to our businesses could have a material adverse impact on our financial condition and results of operations.

Additional Risks Related to Regulatory Matters

New regulations and restrictions adopted in 2022 may adversely affect our operations.

Throughout 2022, a number of decrees by the President of the Russian Federation were issued which have been designed to ensure the financial stability of the country in light of international sanctions imposed upon Russia and the ongoing geopolitical situation generally. Pursuant to these Presidential decrees, there are severe restrictions on the transactions between Russian parties and entities or persons from “non-friendly” states, being those states that are applying restrictive measures and economic sanctions against Russia. Such transactions are now only permitted with the express consent of the Government Commission for Foreign Investment Control. We expect that the requirement to obtain such consent from the Government Commission could impede our ability to transact with other businesses, partners and our customers, in addition to the possibility that such consent could be denied and restrict our ability to transact with international parties altogether. Failure to obtain such permissions may significantly complicate and materially adversely affect our business and operational results.

Because the range of the services we provide is increasing and the legal framework governing the operations in our markets is evolving, we may be required to obtain additional licenses, permits or registrations or comply with other requirements, which may be costly or may limit our flexibility to run our business.

As we increase the range of services we offer and diversify our business we may have to apply for additional licenses. Maintenance of granted licenses and obtaining new licenses may require us to spend additional resources. Licensing requirements may also limit our flexibility in running our business. Failure to maintain required licenses may significantly limit our ability to provide new services in respect of which these licenses are required.

As the legal framework in Russia continues to evolve, we may be required to take additional actions in order to comply with new legislation. Although we believe that we are in full compliance with applicable laws, ambiguities in legislation and the wide discretion granted to regulatory authorities may result in us being subject to additional regulatory requirements. Compliance with expanded or new regulatory requirements, or new interpretations or applications of existing requirements, may also require us to spend additional resources and limit our flexibility in

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providing our services.

In 2022, we continued to develop our FinTech businesses, which are subject to significant additional regulatory requirements with which we have not previously been familiar. Such operations are subject to supervision and potential investigation by the relevant financial regulators in Russia. We cannot exclude the possibility that legislation concerning various fintech products will become more stringent, including in its scope services that are currently not regarded as banking services and, thus, remain unregulated.

We are subject to regulation regarding the processing and retention of personal and other data, which may impose additional obligations on us, limit our flexibility, or harm our reputation with users.

The collection and handling of user data by any entity or person in Russia (as in many other countries) may be subject to certain requirements and restrictions. If these requirements and restrictions are amended, interpreted or applied in a manner not consistent with current practice, we could face fines or orders requiring that we change our operating practices, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Our group companies are subject to routine inspections by the competent authorities. If any inspections result in the determination that companies in our group fail to comply with the applicable data protection legislation, we could experience financial and reputational losses and could be restricted from providing certain types of services until we comply with the requirements.

Furthermore, we use cookies and other widespread technologies that assist us in improving the user experience and personalization of our products and services that ultimately benefit both our users and advertisers through behavioral targeting, which makes our advertising more relevant. There is no clarity as to whether our practices are compliant with the requirements of applicable data protection legislation in Russia and abroad, and such laws could be interpreted and applied in a manner that is not consistent with our current data protection practices.

Additionally, “organizers of information distribution” (i.e., parties that ensure the operation of information systems or computer software which are intended or used to receive, transmit, deliver and/or process electronic messages of internet users) are required to notify the relevant Russian authority about the commencement of their operations and must retain a broad range of data relating to and generated by their users for a period of time, which must be provided to the authorities at their request. Some of our subsidiaries operating in Russia have notified the relevant Russian authority that they act as an organizer of information distribution with respect to some of the services they provide. Organizers of information distribution that use encryption when delivering or processing electronic messages are required to provide the security authorities with information necessary for decoding the delivered or processed messages. Compliance with these requirements may require significant expenditures by us, including additional data centers, servers and other infrastructure or software development. Data retention may also harm our reputation with users. If we fail to comply with the above requirements, the Russian authorities can block access to our services in Russia.

Companies are also required to store all personal data of Russian users in databases located inside Russia. Ongoing compliance with the requirements provided in this legislation may be practically difficult, require significant efforts and resources, could lead to legal liability in other jurisdictions and limit the functionality of our services. Compliance with these requirements may also limit our ability to compete with other companies located in other jurisdictions that do not require mandatory local storage of personal data related to their users and that may elect not to comply with such requirements in Russia.

Under the Law “On Identification and/or Authentication of Natural Persons with the Use of Biometric Personal Data” dated December 29, 2022, significant organizational and technical requirements and restrictions apply to businesses that process biometric personal data through their information systems for identification and/or authentication purposes.

The majority of the regulations implementing this new law have not yet been adopted. However, this law could significantly affect Yandex’s ability to use biometric data in the process of providing its services. Another draft law relating to liability for personal data breaches has been discussed recently but has not yet been officially published. If such a law is enacted, we can anticipate that the enforcement of the legislation could provide for high fines or other types of significant liability in the event of personal data breaches. In the event that this risk materializes, it may affect

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Yandex’s services.

Due to the nature of the services we offer and the fact that we have a presence in a number of countries, we may also be subject to data protection laws in other jurisdictions, especially laws regulating the cross-border transfer of personal data, which may require significant compliance efforts and could result in liability for violations in other jurisdictions. For example, the General Data Protection Regulation (the GDPR) came into force in May 2018 in the European Union. Although we have only modest operations in the EU and therefore our exposure under the GDPR is generally limited, we believe that we are taking all necessary steps to comply with the GDPR. However, if we fail to interpret all the requirements of the GDPR in accordance with the official interpretation, we may be held liable for non-compliance. As our business grows, we may also encounter increased pressure from foreign state authorities with respect to the production of information related to users in circumvention of the international legal framework regulating the provision of such information. Any non-compliance with such requests may lead to liability and other adverse consequences. Further, current law imposes restrictions on the distribution of satellite images of certain areas in Russia and the other countries in which we operate and imposes requirements with respect to the information provided by the traffic monitoring service we offer. If we were found to be in violation of any such restrictions, we may be forced to suspend such services or may potentially be subject to fines or other penalties.

The competent authorities could determine that we hold a dominant position in one or more of our markets and could impose limitations on our operational flexibility that may adversely affect our business, financial condition and results of operations.

Applicable antimonopoly legislation in the markets in which we operate imposes restrictions on companies that occupy a dominant position in a given market. The competent authorities in Russia or the other countries in which we operate might from time to time investigate the internet or online advertising industries, the ride-hailing business or other sectors in which we operate, and may conclude that, given our market share, we hold a dominant position in one or more of these markets. Additionally, from time to time we receive information requests from the Russian Federal Antimonopoly Service (FAS) related to certain of our services. If the FAS deems that we hold a dominant position in one or more of the markets in which we operate, this could result in limitations on our future acquisitions and a requirement that we pre-approve with the authorities certain changes to our standard agreements with advertisers and Yandex Advertising Network partners, as well as any specially negotiated agreements with business partners. In addition, if we were to decline to conclude a contract with a third party or terminate an existing agreement without sufficient substantiation this could, in certain circumstances, be regarded as an abuse of a dominant market position.

Any proven abuse of a dominant market position could lead to administrative penalties and the imposition of fines of up to 15% of our prior year annual revenues in the relevant market. These limitations may reduce our operational and commercial flexibility and responsiveness, which may adversely affect our business, financial condition and results of operations.

See also “Risks Related to Our Business and Industry”.

Risks Related to Tax Matters

Changes in the tax systems in the countries in which we operate, or unpredictable or unforeseen application of existing rules, may materially adversely affect our business, financial condition and results of operations.

Russian tax, currency and customs laws and regulations are subject to varying interpretations and changes, which may be frequently revised and reviewed by the authorities. As a result, our interpretation of such tax legislation may be challenged by the relevant authorities. Russian tax legislation largely follows the OECD approach but may be implemented in a way which is not in line with international practice or our interpretation. Moreover, under the current conditions of weak economic growth and increased geopolitical risks, the authorities are taking a more assertive position in their interpretation of the tax legislation and, as a result, it is possible that transactions and activities that have not been challenged in the past may now be questioned by the authorities. High-profile companies such as ours can be particularly vulnerable to such assertive positions of the authorities. Although we believe that our interpretation of relevant legislation is appropriate and is in accordance with existing court practice, if the authorities were successful in enforcing differing interpretations, our tax liability may be greater than the estimated amount that we have expensed to date and paid or accrued on our balance sheet. We believe our tax position is consistent with the tax laws in the jurisdictions in which we conduct our business, however, the determination of our worldwide provision for tax liabilities, including

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digital tax, requires significant judgment and there are many transactions and calculations where the ultimate tax determination is uncertain and we are subject to regular review and audit by both domestic and foreign tax authorities. Generally, Russian taxpayers are subject to inspection of their activities for a period of three calendar years immediately preceding the year in which an audit is carried out. Tax years 2020, 2021 and 2022 are currently open for tax audit of our principal Russian subsidiaries.

Although the quality of Russian tax legislation has generally improved since the introduction of the first and second parts of the Russian Tax Code, the possibility exists that, in light of the current macroeconomic environment and potential budget deficits, the Russian government may impose additional taxes and penalties in the future, including potential “windfall” taxes, which could adversely affect our business, financial condition and results of operations. In addition, we have in the past benefited from certain tax benefits available to IT companies in Russia. In light of the current macroeconomic circumstances, it is possible that the authorities may challenge or limit the applicability of such benefits, including in prior periods, and may abolish such benefits in the future.

There have also been significant developments and proposed changes in recent periods to international tax laws that increase the complexity, burden and cost of tax compliance. The Global Tax Reform plan (Pillar One and Pillar Two) was adopted in 2021 by 137 countries. EU countries committed to implement the necessary changes in 2024, although the implementation plans of the tax authorities across all other countries adopting the reforms are not clear. Although we do not expect this reform to have a significant impact on our business, further developments and unexpected implementation mechanics could adversely affect our effective tax rate or result in higher cash tax liabilities.

International expansion of our business may create new tax challenges in the changing tax environment. The European Union has recently added Russia to its ‘black list’ of non-cooperative jurisdictions. Although we do not anticipate immediate tax effects of this decision, we expect that this move will lead to increased scrutiny from the European tax authorities of our compliance with applicable tax measures and could result in an increased tax burden in the future.

In 2022, the Russian Federation has terminated the double tax treaty which had been in place with the Netherlands and announced further plans to revise other treaties to which it is currently a party. Although no further action was announced in 2022, the revision of any of the Russia’s treaties, particularly with respect to tax and financial issues, could impair our ability to invest abroad and repatriate profits.

In 2022 and into 2023, a number of our employees have worked remotely from locations around the world. Although we believe that we pay all required employment taxes in all jurisdictions where we have our offices and hubs and that international remote-working should not lead to company taxation in these jurisdictions, tax authorities in other countries may take very different views on how those working abroad should be taxed, which could increase our tax liability and/or require us to increase our compensation or benefits.

We may be required to record a significant deferred tax liability if we are unable to reinvest our earnings in Russia.

Our principal Russian operating subsidiary has significant accumulated earnings that have not been distributed to our Dutch parent company. Our current policy is to retain all of our earnings at the level of our principal subsidiary for investment in Russia.

We currently deem any earnings to be permanently reinvested by our principal Russian operating subsidiary outside of the Netherlands and, accordingly, we have not recorded a deferred tax liability on these unremitted earnings. If circumstances change and we are unable to reinvest in that subsidiary’s current operations or acquire suitable businesses in Russia, U.S. GAAP would require us to record a deferred tax liability representing the dividend withholding taxes that we would be required to pay if this subsidiary were to pay these unremitted accumulated earnings to our Dutch parent company as a dividend, even if such dividends were not actually declared and paid. We expect the amount of unremitted earnings to grow as our principal Russian operating subsidiary continues to generate net income. If we were required to record a deferred tax liability on an amount subsequently made available for distribution it may have a material adverse effect on our results of operations and may require us to consider changes to the corporate structure of our group.

In addition, since February 2022 the Russian government has imposed a number of restrictions that may limit our ability to upstream funds from our Russian subsidiaries to our Dutch parent or may impose penalties or additional

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taxes in connection with any such transfers.

Some of our counterparties provide limited transparency in their operations, which could subject us to greater scrutiny and potential claims from government authorities.

We do business with a number of companies, especially small companies that may not always operate in a fully transparent manner and that may engage in unpredictable or otherwise questionable practices with respect to tax obligations or compliance with other legal requirements. We have been approached by government authorities from time to time regarding potential tax claims or other compliance matters in connection with such transactions. As we are a larger and more transparent company with greater resources than such counterparties, governmental authorities may seek to collect taxes and/or penalties from us in relation to such transactions on the basis that we could have had knowledge of or aided such practices even when we did not.

Risks Related to Ownership of our Class A Shares

The price of our Class A shares has been and may continue to be volatile.

On the back of geopolitical tensions and macroeconomic events in Russia since the end of February 2022, the value of traded securities of companies with significant operations in Russia has been adversely affected, including our Class A shares. Trading in our Class A shares on Nasdaq has been subject to a trading halt since February 2022, and in March 2023 the Listing Qualifications Staff of Nasdaq notified us that it had determined that our securities would be delisted from the Nasdaq Stock Market as of March 24, 2023, unless we appeal such determination. On March 21, 2023, Yandex N.V. submitted a request for a hearing to appeal such determination. A hearing will be held in late April 2023, and the delisting of Yandex N.V. Class A shares will be stayed pending the issuance of a written decision of the hearings panel. Until then the trading halt that was implemented on February 28, 2022, remains in effect. Even if such appeal is successful and our Class A shares are not formally delisted, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume on Nasdaq or over-the-counter. If such appeal is not successful, we may pursue the further appeals available under the Nasdaq Listing Rules. Although trading in our shares resumed on the Moscow Exchange in late March 2022 following a suspension, only a limited number of our shares are available for trading on that market at this time, and non-Russian investors from “non-friendly” countries are not permitted to trade. See also “Our shareholders currently have limited or no liquidity in our shares.”

Generally, the market for technology and other growth companies has experienced severe price and volume fluctuations that have often been disproportionate to the operating performance of those companies. These broad macroeconomic, geopolitical, market and industry factors may impact the market price of our Class A shares regardless of our actual operating performance.

If and when (if at all) our Class A shares resume trading on Nasdaq in the ordinary course, or commence trading over-the-counter, the trading price may be volatile and subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include:

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​

In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

The concentration of voting power with our principal shareholders, together with the Priority Share held by the Public Interest Foundation, limits your ability to influence corporate matters, while a loss of voting control by our principal shareholders could affect the direction of our company.

Our Class B shares have ten votes per share and our Class A shares have one vote per share. As of March 31, 2023, a family trust established by our founder, our directors (and their affiliates) and our principal non-institutional shareholders together own 95.54% of our outstanding Class B shares and 2.28% of our outstanding Class A shares, representing in the aggregate 51.04% of the voting power of our outstanding shares. Mr. Volozh, our founder, was personally sanctioned in the EU on June 3, 2022, and he immediately stepped down from his board and executive positions. Mr. Volozh is the settlor of a trust for the benefit of his family, which holds Class B shares representing a 45.1% voting and an 8.5% economic interest in Yandex N.V. He is not a controlling shareholder of Yandex. Mr. Volozh

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has irrevocably undertaken not to instruct the trustee as to how to vote such shares going forward. Pursuant to the terms of the trust, the trustee will vote such shares on all matters proposed to the shareholders in accordance with the recommendations of the independent members of the Board of Directors.

Additionally, the Priority Share provides the Public Interest Foundation with certain rights, including an effective veto on acquisitions related to our Company or the sale of our material businesses.

Certain of our directors and shareholders and their affiliates may have interests that are different from, or in addition to, the interests of other Yandex shareholders.

Some of our directors are affiliated with investment funds or financial institutions that have investments in other businesses or entities that currently or may in the future compete with us or with whom we may enter into transactions. Such affiliations may require the directors to recuse themselves from consideration of certain transactions or may otherwise create real, potential or perceived conflicts of interest.

Our Board of Directors and the holder of our priority share have the right to approve accumulations of stakes in our company or the sale of our principal Russian operating subsidiary, which may prevent or delay change-of-control transactions.

Our Board of Directors has the right to approve the accumulation by a party, group of related parties or parties acting in concert of the legal or beneficial ownership of shares representing 10% or more, in number or voting power, of our outstanding Class A and Class B shares (taken together). If our board grants its approval of such share accumulation, the matter is then submitted to Public Interest Foundation, as holder of our priority share, which has a further right of approval of such accumulation of shares. In addition, any decision by our Board of Directors to transfer all or substantially all of our assets to one or more third parties, including the sale of our principal Russian operating subsidiary, is subject to the prior approval of Public Interest Foundation, as priority shareholder.

Any holding, transfer or acquisition by a party, group of related parties or parties acting in concert of the legal or beneficial ownership of Class B shares representing 10% or more, in number or by voting power, of our outstanding Class A and Class B shares (taken together), without the prior approval of our Board of Directors, first, and then the priority shareholder, will be null and void. The acquisition of shares in excess of the thresholds permitted by our articles of association will be subject to certain notification requirements set forth in our articles of association. Failure to comply with those terms would render the transfer of such shares null and void. In addition, the holders of such shares would not be entitled to the dividend or voting rights attached to their excess shares. The rights of our Board of Directors and our priority shareholder to approve accumulations of stakes in our company may prevent or delay change-of-control transactions.

Anti-takeover provisions in our articles of association may prevent or delay change-of-control transactions.

In addition to the rights of our board and of the priority shareholder to approve the accumulation of stakes of 10% or more, as described above, our multiple class share structure may discourage others from initiating any potential merger, takeover or other change-of-control transaction that our public shareholders may view as beneficial. Our articles of association also contain additional provisions that may have the effect of making a takeover of our company more difficult or less attractive, including:

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The Dutch public offer rules, which impose substantive and procedural requirements in connection with the attempted takeover of a Dutch public company, only apply in the case of Dutch target companies that have shares listed on a regulated market within the European Union. We have not listed our shares, and do not expect to list our shares, on a regulated market within the European Union, and therefore these rules do not apply to any public offer for our Class A shares.

We rely on NASDAQ Stock Market rules that permit us to comply with applicable Dutch corporate governance practices, rather than the corresponding domestic U.S. corporate governance practices, and therefore your rights as a shareholder differ from the rights you would have as a shareholder of a domestic U.S. issuer.

As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we are permitted in certain cases to follow Dutch corporate governance practices instead of the corresponding requirements of the NASDAQ Marketplace Rules. We follow Dutch corporate governance practices with regard to the quorum requirements applicable to meetings of shareholders and the provision of proxy statements for general meetings of shareholders. In accordance with Dutch law and generally accepted business practices, our articles of association do not provide quorum requirements generally applicable to general meetings of shareholders. Although we do provide shareholders with an agenda and other relevant documents for the general meeting of shareholders, Dutch law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in the Netherlands. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ’s corporate governance rules. Due to the current geopolitical situation, trading in our Class A shares on Nasdaq remains subject to a trading halt. Depending on how the situation develops, Yandex’s obligations to comply with corporate governance requirements may change.

We do not comply with all of the provisions of the Dutch Corporate Governance Code. This may affect your rights as a shareholder.

As a Dutch company we are subject to the Dutch Corporate Governance Code, or DCGC. The DCGC contains both principles and best practice provisions for management boards, supervisory boards, shareholders and general meetings of shareholders, financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the NASDAQ Global Select Market. The principles and best practice provisions apply to the board (in relation to role and composition, conflicts of interest and independence requirements, board committees and remuneration), shareholders and the general meeting of shareholders (for example, regarding anti-takeover protection and obligations of the company to provide information to its shareholders) and financial reporting (such as external auditor and internal audit requirements). The DCGC requires that companies either “comply or explain” any non-compliance and, in light of our compliance with NASDAQ requirements and as permitted by the DCGC, we have elected not to comply with all of the provisions of the DCGC. This may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Risks for U.S. Holders

We cannot assure you that we will not be classified as a passive foreign investment company for any taxable year, which may result in adverse U.S. federal income tax consequence to U.S. holders.

Based on certain management estimates with respect to our gross income and the average value of our gross assets and on the nature of our business, we believe that we were not a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for the 2022 tax year, and do not expect to be a PFIC in the foreseeable future. However, because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets in such year, and because this is a factual determination made annually after the end of each taxable year and there are uncertainties in the application of the rules, there can be no assurance that we will not be considered a PFIC for the current taxable year or any future taxable year. In particular, the value of our assets may be determined in large part by reference to the market price of our Class A shares, which has fluctuated, and may continue to fluctuate,

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significantly. If we were to be treated as a PFIC for any taxable year during which a U.S. holder held our Class A shares, certain adverse U.S. federal income tax consequences could apply to the U.S. holder. See “Taxation—Taxation in the United States—Passive foreign investment company considerations.”

Any U.S. or other foreign judgments you may obtain against us may be difficult to enforce against us in Russia or the Netherlands.

We have only very limited operations in the United States, most of our assets are located outside of the United States, our company is incorporated in the Netherlands, and most of our directors and senior management are located outside the United States. As a result, it may be difficult to serve process on us or persons within the United States. Although arbitration awards are generally enforceable in Russia and the Netherlands, and Russian courts may elect to enforce foreign court judgments as a matter of international reciprocity and judicial comity, you should note that judgments obtained in the United States or in other foreign courts, including those with respect to U.S. federal securities law claims, may not be enforceable in Russia or the Netherlands. There is no mutual recognition treaty between the United States and the Russian Federation or the Netherlands, and no Russian federal law or Dutch law provides for the recognition and enforcement of foreign court judgments. Therefore, it may be difficult to enforce any U.S. or other foreign court judgment obtained against our company, any of our operating subsidiaries or any of our directors in Russia or the Netherlands.

The rights and responsibilities of our shareholders are governed by Dutch law and differ in some important respects from the rights and responsibilities of shareholders under U.S. law.

Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The responsibilities of members of our Board of Directors under Dutch law are different than under the laws of some U.S. jurisdictions. In the performance of its duties, our Board of Directors is required by Dutch law to consider the interests of Yandex, its shareholders, its employees and other stakeholders and not only those of our shareholders. Also, as a Dutch company, we are not required to solicit proxies or prepare proxy statements for general meetings of shareholders.

In addition, the rights of our shareholders are governed by Dutch law and our articles of association and differ from the rights of shareholders under U.S. law. For example, Dutch law does not grant appraisal rights to a company’s shareholders who wish to challenge the consideration to be paid upon a merger or consolidation of the company.

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Exchange continues, however the international settlement systems remain closed for trading in rubles and in securities of Russian businesses. The liquidity of our shares on the Moscow Exchange remains limited to the number of shares held in the Russian clearing system.

For a discussion of our principal acquisitions in 2022, see “Operating and Financial Review and Prospects — Key Recent Acquisitions”.

Business Overview

Below, we provide an overview of our operations in 2022. The ongoing geopolitical crisis continues to raise critical challenges for our company and business. See also Introduction and Explanatory Note” and “Risk Factors — Risks Related to the Current Global Political, Regulatory and Economic Environment, and — Risks Related to Our Business and Industry.”

Our Business

Yandex is a technology company that builds intelligent products and services powered by our machine learning and other technologies, with the goal of helping consumers and businesses better navigate the online and offline world. Since 1997, we have delivered world-class, locally relevant search and information services. We have also developed market-leading on-demand transportation, delivery and navigation services and products, and have expanded into e-commerce, entertainment and cloud computing markets to address the needs of customers in Russia and number of international markets. We also operate a subscription loyalty program, Yandex Plus, linking many of the services in our ecosystem. As of the end of December 2022, Yandex had over 30 offices in 11 countries.

Although we continue to derive a substantial part of our revenues from online advertising: our core segment Search and Portal accounts for only 43% of the total group revenues in 2022 compared with 46% in 2021. We enable advertisers to deliver targeted, cost-effective ads, including performance-based, brand and video advertising formats across different platforms, that are relevant to our users’ needs, interests and locations. We serve ads on our own search results and other Yandex webpages, as well as on thousands of third-party websites that make up our Yandex Advertising Network.

Among non-advertising businesses the largest by share in total group revenue are Mobility, E-commerce and Plus and Entertainment Services, which together account for 49% of our revenue in 2022 compared to 46% in 2021.

Our principal businesses are organized in the following segments (as of December 31, 2022):

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In September 2022, Yandex completed the sale of the news aggregation platform and Zen infotainment service, together with the acquisition of 100% of the food delivery service Delivery Club. The transaction marked a strategic decision by the group to exit media businesses (other than entertainment streaming).

For a detailed description of our operating segments for financial reporting purposes, see Item 5, “Operating and Financial Review and Prospects”.

We introduced a number of changes to our segmental reporting from the start of 2023, including: (i) the transfer of Yandex 360 and Alice voice assistance from the Search and Portal segment to the Yandex Cloud and Devices and TV businesses, respectively (both included in the Other Business Units and Initiatives category) and (ii) the transfer of RouteQ from the Other Business Units and Initiatives category to the Delivery business in the E-Commerce, Mobility and Delivery segment.

Search and Portal

We offer a broad range of world-class, locally relevant search and information services that are free to our users and that enable them to find relevant information quickly and easily.

Yandex Search

Our search engine offers almost instantaneous access to the vast range of information available online, subject only to local legal restrictions with respect to the blocking of specified websites entirely in Russia. We utilize linguistics, mathematics, machine learning and AI to develop proprietary algorithms that efficiently extract, compile, systematize and present relevant information to our users. Our organic search results are ranked by computer algorithms based exclusively on relevance (aside from infrequent manual attempts to fix bugs in the service or to resolve problems with the algorithms; for example, manual improvements of filtering criteria to eliminate inappropriate content such as child pornography and insulting or offensive remarks), and we clearly segregate organic results from paid results to avoid confusing our users. We do not exercise editorial control over the content of our search results.

According to Yandex Radar, our total search share reached 61.9% of all search traffic in Russia in 2022, up from 59.2% in 2020 and 59.8% in 2021, which was driven by share growth on both desktop and mobile devices. In 2022, our search share on desktop and mobile reached 71.0% and 57.9%, respectively. We continued to gain share in mobile search, reaching 61.4% on Android and improving our share to 47.6% on iOS in 2022 (from 59.2% and 42.8% in 2021, respectively). In February 2023, our search share averaged 73.1% on desktop and 59.1% on mobile, with mobile search share of 62.5% on Android and 49.1% on iOS. Also, we further improved mobile monetization in 2022. The percentage of our total search traffic generated from mobile devices averaged approximately 68% in Q4 2022 compared with 64% in Q4 2021, while the percentage of our search revenues generated from mobile devices increased to approximately 60% in Q4 2022 from approximately 57% in Q4 2021.

In 2022, Yandex introduced Y2, a new version of our search engine. The key search improvements included the ability to search by objects, a new aggregated search history organized by topics, video translation, including the translation of real-time streams, and the launch of designated children’s accounts. Also, as a result of the integration of the CS YATI neural network transformer, Y2 search engine better responds to the questions of users, including developers and machine learning specialists. The neural network considers 1.5 times more parameters compared to YATI, which was launched two years ago.

In June 2022, Yandex published YaLM 100B, a GPT-like bilingual neural network for generating and processing text, in open source. We will continue leveraging our technological expertise in developing in-house language models and in-house AI training capabilities to further advance our AI models.

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Following our strategic exit from media businesses (other than entertainment streaming) we have sold our news aggregation platform and Zen infotainment service to VK. As a result of this transaction our previous main page yandex.ru, with News and Zen, was renamed to dzen.ru and is now controlled and further developed by VK. We have introduced our new main page, ya.ru, which became the key entry point into Search (the core service), Mail and other non-media services.

Yandex Search App

Enhanced with Alice, the first conversational voice assistant on the Russian market, the Yandex Search App integrates Yandex’s must-have services into one app, including Search, Maps, Weather and many others, available on Android and iOS platforms.

Yandex Browser

Our Yandex Browser is our browser for computers, Android and iOS smartphones and tablets with built-in “Protect” technology, which checks all downloaded files for viruses, warns users about dangerous websites and online stores (whereby Yandex Browser prevented users from accessing suspicious websites approximately 70 million times throughout 2022), encrypts users’ passwords with strong cryptography, and ensures safe payments.

In 2022, Yandex Browser introduced a unique technology of translation of real-time video streaming on YouTube. Five neural networks are principally responsible for the translation of video-streams, which recognize audio and turn it into text, determine the gender of the speaker, place punctuation marks and extract semantic fragments from the text for further translation and voiceover. Currently the video translation on YouTube is available in five languages. We also integrated our video translation technology with the educational platform Coursera.

The combined share of our desktop and mobile visits processed through Yandex Browser in Russia reached 31.2% in February 2023, according to Yandex Radar.

Geolocation Services

Our Geolocation Services integrate Yandex’s advanced technologies (including mapping, cartography, and navigation) to provide a broad range of services across Russia, other CIS countries and Turkey. We focus on the development of logistics and routing solutions for individual users and businesses. Our Geolocation Services include Yandex Maps and Yandex Navigator. We monetize our Geolocation Services through online advertising, licensing and transaction services.

Yandex Maps provides high-quality, detailed maps of Russia, Turkey, and other countries where we operate our ride-hailing service. The monthly audience of the service amounted to 30 million monthly average users in the mobile app, 23 million on the website and 49 million in mobile browsers in December 2022 across Russia. Yandex Maps offer users panoramic views, navigation for all forms of transport including scooters, public transportation routes, driving directions with voice controls and turn-by-turn navigation. We continue to develop Yandex Maps to integrate new features, such as optimization of routes with several stops, marking the availability of the facilities and locations for people with limited mobility, offering booking services at different venues directly from the app, among others. In 2022, we also launched detailed 3D building-models and began offering users relevant dining and entertainment spots as well as other locations based on the individual’s interests.

We use our technology and licenses to create and edit maps from raw data, including satellite images, GPS coordinates and live user feedback. Yandex Maps is also available via application programming interfaces, or APIs, which allow developers to embed and use our interactive maps in third-party websites and applications, as well as to add extra layers of information; for example, to create a map showing the specific location of a certain restaurant or a hotel.

We also offer Yandex Navigator, which integrates our AI assistant Alice. Yandex Navigator provides turn-by-turn navigation, incorporates a voice input function, speed limit warnings, parking information and information about accidents or road works. It is one of Yandex’s most popular mobile apps in terms of usage, with 32 million monthly average users including CIS and Turkey in December 2022.

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Our map-based apps allow offline businesses to place ads in native formats (adapted for different scenarios on the map), offering advanced ad targeting capabilities. We monetize Yandex Maps through contextual and location-based advertising, while Yandex Navigator is monetized through display advertising. Such advertising can help smaller businesses stand out among competitors, and large brands stimulate sales in stores that might be experiencing lower sales. Also, we are developing a transactional model in Yandex Maps with services such as taxi orders and fuel payments available through the appropriate apps.

Voice assistant Alice

Alice is the first conversational intelligent assistant launched in Russia and is currently the most popular and widely recognized one in that market. Alice helps its users in many different scenarios to manage daily tasks, such as setting an alarm and scheduling reminders for important events, ordering a taxi, using radio-nanny mode and controlling an individual’s ‘smart’ home. It is also widely used for entertainment, such as turning on Yandex Music and radio stations, and composing generative tales together with children and others. Cutting edge acoustics and language models help Alice understand the speech and semantics of a user query at a near-human level, differentiate users by their unique voice or age group and adjust its own tone of voice if needed (e.g. whisper).

Alice is not limited to predefined scenarios for everyday life and can indulge in a conversation about almost anything. This ‘chit-chat’ conversational mode is recognized by millions of users and builds a unique emotional connection with the voice assistant. We enhance user experience by enabling Alice to demonstrate different emotions using her voice and visually on devices’ screens.

As of December 2022, there were over 53 million monthly Alice users across various touch points such as the Yandex Search app and Yandex Browser, our smart devices and navigational apps.

Other Products and Services

Our Search and Portal segment includes a number of other products and services, the key ones of which are the following:

Our Monetization and Advertiser Services

We offer a variety of ad formats to our advertisers, including performance-based, brand and video advertising formats.

Performance-based ads are principally targeted to a particular user query on our search engine result pages, and on the search result pages of our partners, as well as to the content of a particular website or mobile app being viewed, or to user behavior or characteristics. Such ads are clearly marked as paid advertising and are separate from our organic search results and non-advertising content.

Most of our revenues are generated from performance-based advertising, on a pay-per-action basis and a pay-per-click basis (in which the share of a cost-per-action (CPA) optimization is growing, where an action can be a

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purchase, a click, a call etc.). A further portion of revenues is generated from brand advertising and video advertising, based on the number of impressions delivered. We actively monitor the ads we serve, both automatically and manually, to help ensure the relevance of the ads as well as compliance with applicable laws.

Yandex Direct

Yandex Direct is our auction-based advertising placement platform, which uses auction theory and relies on our distributed infrastructure to process millions of auctions every day. Yandex Direct lets advertisers cost-effectively deliver relevant ads targeted at particular search queries or content on websites and mobile applications of Yandex or third-parties in the Yandex Advertising Network.

Performance-based ads on our desktop search engine results page (SERP) appear in one of two general categories: top of the page, appearing above the organic search results; and bottom of the page, which appears either below the organic search results or the right-hand block located to the right of the organic search results. Advertisers bid for the amount of traffic they want to purchase, instead of traditional bidding for a specific ad placement block. Yandex Direct continues to use a Vickrey-Clarke-Groves (VCG) auction to serve ads on our SERP.

During 2022, we continued to focus on the further development of automated strategies, improvement of advertising products for SMB clients and development of advertising products for e-commerce players. We believe these initiatives helped us to maintain solid advertising revenue growth and translated into market share gains amid changes in the competitive landscape throughout 2022; we have seen some international companies leaving the market and have also witnessed a growth in competition with local players such as marketplaces, classifieds and others.

We launched our Fixed Cost Per Action (CPA) model for Yandex Direct in the second quarter of 2020, which allows any business, regardless of size or industry, to pay a specific price for targeted user actions, like placing an order on the website or filling out a request, and in which ad bidding is optimized for this specific targeted action. This model is aimed at better customization (providing more options for settings), simplification of the usage of advertising strategies and higher ad efficiency for our clients. This includes application of the neural network on graphic processor units to improve targeting, clicks and conversions prediction. In 2022, we enhanced our strategies with offline data on clients’ conversions uploaded through the Conversion Center and expanded them across a wider range of our advertising instruments (among others, including Campaign Master, our instrument for beginners to set-up and run ad campaigns on Yandex Direct). These advancements further improve the transparency and efficiency of CPA strategies, while positioning Yandex to expand its advertising client base and increase its share of wallet in the market. Our share of conversion-oriented strategies grew throughout the year and reached 49% of total Search and Portal ad revenue and 68% of Yandex Advertising Network revenue as of the end of Q4 2022.

The SMB segment remained an important focus area and growth driver for Yandex’s ad business in 2022. We continued to develop special easy-to-use advertising products for small and medium-sized businesses, including our Yandex Business Subscription. This product allows clients to maximize efficiency from advertisements for a fixed amount of money with minimal engagement from their side, providing access not only to Yandex Direct, but also to partner properties to generate more effective leads.

In order to seize opportunities in the E-commerce segment, in 2022, we continued to develop powerful advertising formats and instruments for our clients to enhance their GMV growth. We saw positive results in Yandex Products Search, which we launched in the first quarter of 2022. It consists of organic search results as well as a monetized Product Gallery just under the search bar, both of which feature product cards from different sellers. The Yandex Product Search tab has already delivered solid GMV to online stores and we have already seen particular interest from our SMB users.

As of December 2022, every fifth e-commerce client has used the Product campaign, an automated advertising instrument to promote goods and online stores, which we launched in beta testing in Q1 2022 and released from beta in November 2022. Another example of our ad product development is Carousel, the set of clickable product cards embedded within a video ad, which can lead the customer to a web page for a certain product. During the first months of beta testing, Carousel demonstrated strong demand from clients and delivered solid dynamics in CTR (click-through-rate) and CR (conversion rate).

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All of these efforts contributed towards having double the number of Yandex Direct clients in the E-commerce segment at the end of the year, compared to the end of the previous year.

Yandex Advertising Network

Our Yandex Advertising Network partners include search websites and apps, for which we provide search capabilities, as well as contextual network partners, where we serve ads on websites and apps, based on user behavior or characteristics or website content.

We help third-party website owners monetize their content while extending the reach of our advertisers. Through the Yandex Advertising Network, our partners can deliver performance-based, brand and video ads on their search results pages or websites. Our advertising algorithms use CatBoost and our proprietary neural network technologies, which optimize the clickthrough and conversion rate on our network through improved click and conversion prediction. We screen applicants for the Yandex Advertising Network and favor resources with high-quality content and stable audiences to offer advertisers high-quality traffic.

Yandex’s video advertising network allows users to place full-screen videos, video ads on pages of websites and ads within the video content available on a wide range of advertising resources, including desktop and mobile websites, mobile apps and Smart TV applications. Yandex’s technologies enable users to provide advertising to the targeted audience and offer analysis of its efficiency through different tools and instruments, such as Brand Lift or video roll analysis.

Programmatic advertising

We have developed a range of programmatic advertising products, which utilize real-time bidding, or RTB, technologies to provide effective solutions to our publisher and advertiser partners. Our RTB ad exchange connects our performance-based demand-side platform (DSP) Yandex Direct and third-party DSPs with multiple SSPs. Our RTB ad exchange leverages the wealth of targeting data generated by our own Data Management Platform, including Crypta, and search and browsing history. In addition, through ADFOX, an online ad management platform for media publishers, we provide a supply-side platform to our publisher partners. ADFOX is able to mediate in real-time between ads from Yandex Direct, ads from integrated third-party DSPs and the publisher’s own direct sales.

Mobile Advertising

We offer our advertisers the ability to display ads on mobile versions of Yandex services, including Search and our Advertising Network partner websites, as well as in mobile applications, including our Yandex Search App. In 2022 we integrated Yandex Advertising Network with six additional app stores to help publishers expand their audience and increase their advertising revenue.

Analytics tools

Yandex Metrica is a web analytics tool used by hundreds of thousands of websites worldwide. Using a comprehensive set of tools, Metrica users can better understand their clients: from user acquisition to retention. Leveraging the recently open-sourced Metrica tag and proprietary Webvisor technology, businesses objectively measure and improve the performance of their web assets. Metrica is integrated with Yandex Direct allowing for in-depth analytics of paid traffic.

AppMetrica offers a mobile SDK, an analytical dashboard, and a versatile data platform with streaming capabilities. This set of tools enables clients to obtain insights to improve user acquisition, optimize monetization, and even report crashes.

Yandex Radar is an open access internet analysis tool that provides general market information. This includes market shares of search engines and browsers, as well as more technical data such as the share of different operating systems and device types. The accuracy of Radar insights is enabled by anonymized data from Metrica, AppMetrica, and other Yandex data sources.

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E-commerce, Mobility and Delivery

Our Mobility business, which includes our ride-hailing business in Russia and other countries across CIS and EMEA, Yandex Drive, our car-sharing business for both B2C and B2B and Scooters, is operated through MLU B.V. (following the demerger which was completed in December 2021, Yandex owns 71%, with Uber holding a 29% interest in MLU B.V.).

Our platform enables access to a wide range of personal mobility services through our Yandex Go super app, which we launched in August 2020. In December 2022, total MAU of the Yandex Go super app exceeded 40 million.

Ride-Hailing

In December 2022, our ride-hailing services were available in Russia and 25 other countries. Geographies outside of Russia generated 30% of our monthly rides in December 2022. The scale of our network coupled with our proprietary technology and marketplace efficiency enable us to accurately forecast demand and incentivize drivers to be available to accept rides, providing highly reliable ride-hailing services for individual users and businesses.

Our platform aggregated 1.4 million active drivers in December 2022 across all geographies, while earnings of our partners totaled 664 billion rubles for the full 2022 year. We currently build relationships with drivers for our ride-hailing services both directly and through a wide partner network (Fleet Management Companies or FMCs). We also support the simplified self-employment regime that has been introduced by the tax authorities in Russia, which allows us to engage more drivers directly in the market.

We offer our FMC partners access to efficient fleet management software to manage their driver base and fleet, optimizing their administrative and technical workflows. In 2022, we also focused on ensuring sufficient car supply for FMCs to ensure sustainability of our ride-hailing platform in a challenging car production and distribution environment.

On the demand side, we launched new options to reduce the price of trips for users without having a negative effect on driver earnings through alternative pick-up and drop off points and “shared trip’ tariff options.

Yandex Drive and Scooters

Alternative methods of transportation include Yandex Drive, our free-floating car-sharing service, launched in 2018, and Scooters, launched in 2022.

Yandex Drive offers on-demand access to cars for users to drive themselves in Moscow, St. Petersburg and Sochi, and provides users various options to reserve the vehicles for varying periods of time through a standalone mobile app, as well as through Yandex Go. Users can then drop off the designated cars in any permitted parking place across the cities we serve, as well as at airports and shopping malls. The cars can be also rented on a subscription basis (launched in 2020) for a period of one month to one-and-a-half years through the app (with all maintenance and insurance costs included). Yandex Drive has worked with corporate clients since 2019 including Yandex services and external B2B partners. As of the end of 2022, Yandex Drive operated approximately 13,000 vehicles.

Scooters is our electric scooter rental service. It is currently available in Russia and Israel and provides access to 23,064 scooters as of the end of 2022.

Beyond the Mobility business we also developed Yandex Fuel, our contactless payment service at gas stations built into Yandex Navigator, Yandex Maps, Yandex Pro, an app for drivers and couriers, Yandex Drive and a standalone Yandex Fuel app. Yandex Fuel is also available to corporate clients. As of December 2022, more than 8,500 fueling stations were connected to the service throughout Russia. In 2022, users of Yandex Fuel purchased more than 1.42 billion liters of fuel with a gross merchandise value of 54.2 billion rubles. In 2021, Yandex Fuel launched a new feature allowing users to tip staff at gas stations through Maps, Navigator or Fuel apps.

E-commerce business

Our E-commerce business includes the following businesses in Russia and CIS: Yandex Market, our multi-category e-commerce marketplace, Yandex Lavka Russia, our hyperlocal convenience store delivery service, and the grocery delivery services of Yandex Eats and Delivery Club (since September 8, 2022, when the acquisition was completed).

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Yandex Market

Yandex Market was launched in 2000 as a price comparison service and began its transformation into an e-commerce platform in late 2018. Today, we offer millions of goods for millions of buyers, working in partnership with tens of thousands of merchants. The marketplace operates under both 1P and 3P (third-party) models, the latter being priced on cost per action (CPA) model and where we recognize only 3P commission revenue, while in the 1P model we recognize gross revenue, which is the value of all 1P goods sold.

Our marketplace business model enables us to provide the full suite of e-commerce services to merchants, including access to consumers, fulfillment, logistics, advertising and marketing, payments, support and analytics. To meet different sellers’ needs we introduced different partnership models such as: FBY (fulfilment by Yandex), FBS (fulfillment by seller), DBS (delivery by seller) and fast delivery model within 1-2 hours.

Yandex Market is the core part of our E-commerce vertical, which also includes Yandex Lavka Russia, our hyperlocal convenience store delivery service, and the grocery delivery services of Yandex Eats and Delivery Club. Our combined e-commerce GMV almost doubled during 2022 and reached 308 billion rubles. In 2022, the share of our third-party business (3P) increased to 82% of the marketplace’s gross merchandise value (GMV) compared to 76% in 2021.

The total number of SKUs has more than doubled during the last year and exceeded 60 million as of February 2023 (compared to 22.6 million SKUs in the beginning of 2022). Among the key factors contributing to these results were the simplification of our merchants onboarding processes in general and improved support for merchants, active enrollment of local brands and development of unique assortment as well as the launch of a reselling platform.

The number of active sellers (a seller who made at least one sale in the month prior to the reporting date) continued to grow rapidly during 2022 and almost doubled year-on-year to 43,700, while the number of total unique sellers listed on our platform reached 65,000.

The improvements in product offering, quality and convenience of our marketplace platform and customer experience have resulted in a 1.4 times year-on-year increase in active buyers up to 14 million by the end of 2022 (an active buyer is a buyer who made at least one purchase in the 12 months prior to the reporting date).

At the end of 2022, Yandex Market operated more than 300,000 square meters of warehouse space located in Moscow, Rostov-on-Don, St. Petersburg, Samara and Ekaterinburg. In addition, our logistics infrastructure included 16 sorting centers, more than 10,000 pick-up points (including more than 4,000 Yandex branded points, the number of which increased by 2.8 times during 2022) and 2,900 branded lockers. The share of orders managed by our own delivery platform exceeded 99% (effectively leaving only remote regions to external services). We continued to work on improving the quality of delivery, an important metric for customer satisfaction. The share of orders delivered on-time through our own platform exceeded 95%, with approximately 98% of orders shipped from our warehouses being on time.

The continuing integration of Yandex Market with other services within our platform (such as Yandex Lavka, FoodTech services, Yandex Delivery, Yandex Plus, FinTech service Split, and our super-app Yandex Go) creates numerous benefits for our customers and partners.

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Yandex Lavka

Yandex Lavka operated 467 dark stores (small warehouses) as of the end of 2022 in Russia (Lavka Russia in Moscow and St. Petersburg and dark stores for Yandex Market in the regions) and Israel. The assortment includes over 2,500 SKUs with a focus on fresh and ready-to-eat categories. Throughout 2022, we have focused significantly on improving operational efficiency and profitability. Lavka Russia posted positive high single digit unit economics every quarter in 2022, which we believe is one of the best results globally in hyperlocal grocery delivery based on the available peers’ disclosure.

FoodTech services Yandex Eats and Delivery Club

Yandex Food and Grocery delivery of Yandex Eats and Delivery Club provide express delivery from restaurants and retail stores in 30 minutes. We develop Grocery vertical of Yandex Eats and Delivery Club as a part of our E-commerce business. Food delivery from restaurants performs as a part of our other online-to-offline businesses. Yandex Eats operated in Russia, Belarus, Kazakhstan and Armenia, while Delivery Club was presented in Russia as of the end of 2022.

On September 8, 2022, Yandex’s Russian operating subsidiary completed the acquisition of 100% of the food delivery service Delivery Club. The integration process was successfully completed by the year end. Couriers of Delivery Club were transferred to the Yandex Pro supply platform, and partnering restaurants and retail stores were connected with our Go technological platform.

At the end of the year, the two brands, Yandex Eats and Delivery Club, were equally available for users with Yandex Eats, Yandex Go and Delivery Club apps. We continue to develop our Grocery and Food Delivery verticals within both brands. As of the end of 2022 we have already benefited from the synergy effect on the back of order density growth with the reduction of click-to-eat (CTE) time and partnering couriers’ earnings per hour growth together with delivery cost per order optimization.

Delivery

Yandex Delivery is our last-mile delivery solution for individual consumers and businesses, which we launched during the Covid-19 pandemic as a means to serve the increased demand for delivery services. The service leverages Yandex’s routing and marketplace efficiency platform to provide on-demand B2C and B2B delivery services. This service operated in 24 countries as of the end of 2022.

Started from express delivery in 2020, we launched new products in 2022 such as same-day-delivery (SDD) and next-day-delivery (NDD), as well as intercity deliveries in Russia, which all offer a material growth potential. New products allow us to lower delivery fees and increase the availability of last-mile delivery services. The new formats accounted for more than 20% of total deliveries in December 2022. We believe that last-mile delivery is essential for the further development of Yandex e-commerce and food delivery services, as well as for the development of the e-commerce market overall.

Plus and Entertainment Services

Plus and Entertainment Services include our subscription service Yandex Plus, our entertainment services (Yandex Music, Kinopoisk and Yandex Afisha), and our production center Plus Studio previously referred to as Yandex Studio. Based on Yandex’s recommendation technologies and professional content, Plus and Entertainment Services offer its users various entertainment options. We monetize Plus and Entertainment Services through subscription revenue, licensing revenue, transaction revenue, online advertising, and cross-service revenue related to our key transactional services. Our Plus and Entertainment Services are available across different platforms, including Yandex

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Station and Yandex TV.

Yandex Plus

Yandex Plus is our subscription service to Yandex Music and Kinopoisk, and includes cashback loyalty points in a number of our other services and apps. Subscribers earn cashback loyalty points when they pay for our services and can use these rewards across the Yandex platform. Yandex Plus is available in Russia, Kazakhstan, Belarus, Uzbekistan, Israel and several other countries.

The subscriber base grew from 11.6 million in December 2021 to 19.3 million in December 2022 and reached over 21.4 million in February 2023. The share of paying subscribers exceeded 84% as of the end of 2022.

For most of 2022, we mainly offered two types of Yandex Plus subscription: Plus (for 199 rubles monthly per user) and Plus Multi (for 299 rubles monthly per household (up to 4 users or/and 10 devices)). Since November 2022, we have reduced our offering to only the Multi subscription, which could be used by the user’s family.

In 2022, we launched “Plus City”, a casual mobile game on iOS and Android. The game quickly gained popularity: it reached 1^st place on the App Store after the launch and has now surpassed 1 million installs. In addition, the game became an efficient user acquisition tool as well as marketing instrument to promote Yandex Plus as well as other Yandex services.

On average Plus subscribers demonstrate 33% higher frequency and up to 86% higher spending compared to non-Plus users across our key transactional services as well as better retention as of the end of 2022. Plus subscribers continued to generate a substantial part of GMV for our E-commerce and Food Delivery services: on average more than 55% of GMV for Market, Eats and Lavka. The value of Yandex Plus is also proven outside of Yandex platform: in late 2022, we announced a joint subscription with such partners as S7 Airlines and X5 Retail Group.

Yandex Music

Yandex Music is a streaming platform that provides access to a catalog of approximately 79 million music tracks and more than 1 million podcast and audiobook episodes. The service matches music for every taste using its recommendation system, creating unique personalized playlists and endless music streams for each user. Yandex Music continues to lead among music streaming services in terms of the number of subscribers (both total and paid subscribers), according to a GfK report for Q4 2022. In 2022, Yandex Music launched Neuromusic, an endless melody generated by algorithms in real time, making it unique for each user.

Yandex Music also provides various audio content apart from music; audiobook streaming began in 2021. Also, Yandex Music has a dedicated section for children; it has its own special tab and includes the favorite children’s titles, some of which have been distributed exclusively through Yandex.

In the meantime, the average time that a Yandex Plus subscriber spends in Yandex Music monthly reached 30 hours at the beginning of 2023 compared to approximately 27 hours at the beginning of 2022.

Kinopoisk

Kinopoisk is our subscription-based video streaming service offering an access to an extensive database of movies, TV-shows, celebrity content and entertainment news, providing users with movie ratings, critic and user reviews, personalized recommendations, local movie showtimes, ticketing, and many other entertainment-related services. Kinopoisk allows users to watch content on a subscription basis (through the Yandex Plus subscription) or purchase selected titles. The Kinopoisk library contains more than 81 thousand movies and TV shows, including licensed and original content. The streaming service is available via Kinopoisk apps on smart TVs, smartphones, tablets, digital media players, video game consoles and via internet browser on computers.

In 2022, Kinopoisk maintained its leading position on the video-on-demand market based on the total number of subscribers, as well as paid subscribers, according to a GfK study.

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In February 2023, the number of monthly Yandex Plus subscribers who watch content on Kinopoisk reached about 9 million, with 274 million hours viewed per month.

Yandex Afisha

Yandex Afisha (“playbill”), the event sales platform in Russia, allows users to buy tickets to cinemas, theaters, concerts, exhibitions, and sports events online. It incorporates personalized recommendations and operates in over 190 cities across Russia and Kazakhstan as of year-end 2022. Yandex Afisha also manages the ticketing system, which sells tickets for more than 4,000 event venues as of December 2022.

Plus Studio

Plus Studio is our own production center, which creates video content, co-invests in different projects with other production studios and provides marketing support to movie releases. Throughout 2022, we continued to focus on original content: our Plus Studio announced 9 new projects (including “Unprincipled in the Village”, “End of the World”, and “Monastery”) and revealed plans to build franchises around the well-known series “Silver Spoon”, “Trigger”, “Major Grom” and others. We believe that own content production is strategically important as video consumption is rapidly shifting to online and having the original content in a portfolio as a key differentiating factor is increasing.

Outside the filmmaking industry, Plus Studio collaborates with Yandex Afisha which launched its line-up of original events, including its first musical. The musical has become the best-selling play of the month in Russia by the end of December 2022.

Classifieds

Yandex’s Classifieds business unit includes Auto.ru, Yandex Realty, Yandex Rent and Yandex Travel.

Auto.ru

Auto.ru is our classifieds platform for the sale of used and new cars. We develop and provide digital products for users, large car dealers, and medium and small sellers. Every month, more than 30 million people visit Auto.ru projects: the Auro.ru website, the related mobile app and our branded media outlet.

More than 450,000 car classifieds are available on our platform every month. All individuals can use free-to-use options of the platform for safe and effective transactions. Users can also use paid services to get additional benefits, including for example, speed up sales or find detailed data about car history. In 2022, Auto.ru has launched a new service: C2C (consumer-to-consumer) exchange of used cars.

We monetize Auto.ru through vehicle history reports, loan commissions, value added services (VAS), listing fees and valid calls from clients for dealers, spare part sellers and certain individuals as well as through advertising.

Yandex Realty

Yandex Realty is our real estate classifieds platform for private individuals, developers and realtors. The service provides listings for both sales and rentals of apartments, houses, and commercial property. Yandex Realty primarily generates revenues from listings of new apartments, charging realtors for verified calls from clients as well as through advertising.

Yandex Rent

Yandex Rent is a long-term apartment rental platform, officially launched in 2021 and available in four regions in Russia, which helps to manage pre-contract rental processes and subsequent administration of the payments. By the end of January 2023, the number of apartments on the platform had more than doubled and reached 9,000 compared to January 2022, with 88% of deals signed online. A mobile app for Yandex Rent was launched in January 2023.

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Yandex Travel

Yandex Travel is our travel aggregator service, which allows users to book hotels, search for flight tickets and other transport services across Russia and worldwide. The support service helps to solve any questions of users on a 24-7 basis. Also, users can earn Yandex Plus points for reservations, which can be spent on future reservations or on other Yandex services. Over the past two years, the Yandex Travel average monthly audience has grown 3.7 times: about 11 million people used the service every month in 2022. In 2022, the GBV (Gross Booking Value) of the service increased by 1.7 times compared to 2021, and the fastest growing product was hotel reservations, which increased 181% year-on-year.

We transferred Yandex Travel from Search and Portal to the Classifieds segment in 2022.

Other Business Units and Initiatives

Our Other Business Units and Initiatives category includes new initiatives and smaller businesses that are being tested and developed.

Yandex Cloud

Yandex Cloud is a fully-fledged cloud platform that provides B2B customers (SMBs and enterprises) and individual developers with scalable infrastructure, storage, machine learning and development tools to build and enhance cutting-edge digital services and applications. Our cloud platform is based on our in-house technologies that we exploit in other Yandex services, such as Search, Maps, and Metrica. At the same time, we are constantly developing and improving our cloud services, offering our customers new efficient solutions, such as SpeechKit speech synthesis and recognition service, machine translation service, computer vision service, among others.

The number of active users was 24,400 at the end of December 2022. As of April 2023, Yandex Cloud platform offers more than 50 services, including services in the field of data analytics, security, serverless computing and machine learning.

Throughout 2022, Yandex Cloud affirmed its high level of reliability in respect of personal data storage and processing, renewing and extending its certificates as a regular part of Yandex Cloud compliance program.

As a part of the announced plans to restructure Yandex N.V.’s businesses, we are restructuring the international division of our cloud computing business to enable it to be developed independently from the Russian businesses. The cloud computing business in Russia and CIS will continue to operate under the Yandex brand along with the group’s other core businesses. See more detail below under the heading “Proposed Corporate Restructuring Overview”.

Self-Driving Group

In early 2017, we started working on our driverless technologies with the aim of creating a fully autonomous system that can operate various types of vehicles and be applied to various transportation scenarios (including, among others, ride-hailing, logistics, e-commerce, food and grocery delivery) in a wide range of conditions. In May 2017, we unveiled the first prototype of our Self-Driving Сar, which leverages Yandex’s world-class technologies, and launched public road testing by the end of that year.

In 2018, we obtained the relevant permission from the Israeli Ministry of Transportation and Road Safety and began regular tests of our self-driving cars on public roads in Tel Aviv, Israel. Yandex is also operating an autonomous ride-hailing service with no one behind the steering wheel in Innopolis, Russia. By the end of December 2022, the total number of robotaxi trips in Innopolis reached 47,000. On March 17, 2022, a law was passed that would allow Yandex to launch a commercial self-driving taxi service in Moscow, as well as start testing without a safety engineer in the car in Innopolis.

At the end of 2022, our self-driving fleet consisted of 170 cars, which have accumulated over 23 million autonomous kilometers on public roads in Russia, United States and Israel. Since March 2022, testing of our self-driving cars in the United States has been suspended.

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Also, in the spring of 2019 we started developing our own proprietary LIDAR sensors and nine months later we began testing the first driverless vehicles equipped with our lidars on city streets. In 2021, we rolled out our lidars across the AV fleet.

In the autumn of 2019, we introduced our autonomous Delivery Robot, which leverages our self-driving technology. In 2020, rovers started commercial operations in three locations in Russia. We released the third generation of our delivery robots, which are larger and run on a replaceable battery which increases the utilization and productivity of each robot a year later.

As a part of the announced plans to restructure Yandex N.V.’s businesses, we are restructuring the international division of our self-driving business to enable it to be developed independently from the Russian businesses. The self-driving business in Russia and CIS will continue to operate under the Yandex brand along with the group’s other core businesses. See more detail below under the heading “Proposed Corporate Restructuring Overview”.

Devices and TV

Smart Speakers and Smart Home

Yandex Station is our brand of Yandex smart speakers with an integrated voice assistant, Alice. Currently, the business has a product line of four devices. As of March 2023, our smart speakers are sold in six countries, including Russia. Since the launch of our first smart device in late 2018, we have sold more than 5 million units. The number of active smart speakers as of December 2022 was 4.3 million.

The Alice smart home ecosystem unites devices powered by Yandex as well as a number of different brands, helping simplify daily routines and save time, with a simple voice command. The number of Yandex smart home users increased from 0.8 million in 2021 to 1.4 million by the end of 2022. The number of smart home devices managed by Alice on a weekly basis increased from 1 million in 2021 to 2.3 million in 2022.

Smart TV and Video Streaming Devices

Since launching our first smart speaker (the 1^st generation Yandex Station) in 2018, we have been working on voice control applications for video content consumption. In 2020, we released the advanced hybrid smart speaker Station Max with 4K video support. Since 2020, the company has been working on Yandex TV OS, an operating system to enable different types of devices with an enhanced user experience to simplify video streaming on a TV screen (both our Kinopoisk service as well as external streaming services). The first devices using this OS were partners of Yandex, local Smart TV manufacturers who have been using Yandex TV OS inside their products since Q2 2020. In addition to Russia, smart TVs with the Yandex TV OS operating system are being distributed in three countries in the CIS region.

In November 2022, Yandex released the Yandex Smart TV with Alice, the first Yandex-branded Smart TV with Yandex TV OS and voice control through paired smart speakers.

The total number of TVs on Yandex TV OS sold in 2022 exceeded 2 million.

Practicum

In 2019, we launched Practicum, an online EdTech platform offering IT reskilling programs for specialists who already have a profession and work experience. As of April 2023, over 8,500 people have graduated from Practicum in Russia and the CIS, with success rate reaching 69% (reflecting the average share of graduates from each intake of students between 2020 and 2022 who have landed a job in a chosen field).

As a part of the announced plans to restructure Yandex N.V.’s businesses, we are restructuring the international division of our EdTech business to enable it to be developed independently from the Russian businesses. We plan to leverage our team’s IT experience and teaching experience to develop an online coding bootcamp in selected international markets. The EdTech business in Russia and CIS will continue to operate under the Yandex brand along with the group’s other core businesses. See more detail below under the heading “Proposed Corporate Restructuring Overview”.

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RouteQ

Our RouteQ (formerly known as Yandex Routing) service is a cloud platform for optimizing last mile logistics in retail, fast moving consumer goods, and courier services. It automatically forms optimized delivery routes and improves courier monitoring and communication between all parties involved in the delivery process. The platform powered 289 million deliveries (orders) in 2022 (up 56% year-on-year) by around 400 corporate clients (up 31% year-on-year). Since 2023, RouteQ has become a part of our Yandex Delivery business.

Our Technology

All of our products and services are built on a foundation of machine learning, artificial intelligence and other technologies that we have developed in-house over 25 years and which we believe cannot readily be replicated. This robust technology base and our culture of innovation have enabled us to efficiently roll out new services to capture an increasingly diversified range of online and offline revenue streams, generally at attractive margins and/or a more efficient cost structure compared with our peers and have driven a substantial expansion of our total addressable markets.

Advertisers

Our advertisers include individuals and small, medium, and large businesses throughout the countries in which we operate, as well as large multinationals. Small and medium-sized enterprises drive up most of our advertising revenue. No single advertiser accounted for more than 0.5% of our total revenues in 2022.

On the back of the ongoing and developing geopolitical situation, many of our international clients suspended or terminated their advertising and marketing activities in Russia during 2022. As a result, their contribution to our advertising revenues decreased to 3.4% in 2022 from approximately 8% in 2021.

Sales and Advertiser Support

We have an extensive sales and support infrastructure, with sales offices in a number of cities in Russia, in Minsk, Belarus, in Tel Aviv, Israel among others. In Russia, we have 16 regional sales offices.

The substantial majority of our advertisers use our automated Yandex Direct service to establish accounts, create ads and manage their advertising campaigns. Our largest advertising clients are served by a dedicated sales team. These advertisers have access to our strategic support services, including a dedicated accounts team, to help them set up and manage their campaigns. Our sales team specialists are able to help advertisers with tasks such as selecting relevant keywords, creating effective ads and audience targeting, and measuring and improving advertisers’ return on investment.

The Yandex Advertising Network follows a similar model. Most of the websites in the network submit their applications through Yandex Direct’s automated partner interface. Our direct sales force focuses on building relationships with our largest partners to help them get the most out of their relationship with us. We also have relationships with different advertising sales agencies placing online advertising.

Marketing

We engage in significant marketing efforts directed first and foremost at internet users, as well as advertising agencies, advertisers and webmasters. Our marketing efforts are focused above all on delivering an optimal user experience with every Yandex product and service. We believe that satisfied users are the best and most credible advocates for our services. To improve user satisfaction and loyalty and to continue to use our products and services as marketing tools, we constantly experiment with and improve the design, technology and interface of these products and services. Although we believe that word of mouth is the best advertising strategy, we also view advertising campaigns online and in traditional media as an important element of our efforts to promote our brand. We also invest into our separate business units, including E-commerce, Mobility and Delivery, Plus and Entertainment services, Classifieds, and Other Business Units and Initiatives including SDG and Yandex Cloud to grow customer awareness, increase our user base, and increase usage.

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Competition

We operate in a market characterized by rapid commercial and technological change, and we face significant competition in many aspects of our business. We currently operate principally in Russia, Belarus, Kazakhstan, Uzbekistan and Israel.

During 2022, we faced some changes in the competitive environment across our key businesses (especially in digital advertising), which was characterized by a reduction in the presence of global players in Russia (by their own decision or as a result of the actions of the regulator) and an increased competition with local players.

For many years we have considered Google to be our primary competitor. In addition to its search solutions, including voice search, Google offers online advertising, information and other search services similar to ours (such as maps and navigation), including services similar to Yandex Direct. In March 2022, Google suspended the sale of online advertising in Russia, including in search, YouTube and to outside publishing partners. Separately the Russian regulator Roskomnadzor blocked certain Meta services (notably Facebook and Instagram) in Russia. At the same time Google continues to run its search engine in Russia and we thus continue to compete with them in this field.

The following table presents a comparison of Russian search market share, according to Yandex Radar (a search traffic and browser usage analytics tool based on Yandex Metrica data), based on search traffic generated:

We believe that social networking sites, video platforms, online marketplaces and classifieds are becoming significant competitors for online ad budgets. These sites derive a growing portion of their revenues from online advertising and are experimenting with innovative ways of monetizing user traffic, which could create increased competition for us.

We also face competition across our non-advertising businesses.

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Science and Education

Yandex has been developing and implementing educational programs since 2007. The Company’s educational products have been used by millions of people of all ages – from first graders to graduate students, from young professionals to those who have decided to change their career paths. Our team of specialists come from a variety of academic backgrounds, including mathematics, data analysis, programming and linguistics.

Our first educational project, the Yandex School of Data Analysis (YSDA), a free master’s-level program for undergraduates and graduate students, has been running since 2007. The school trains specialists in machine learning, data science, big data infrastructure and data analysis. The school’s graduates create a global alumni network advancing machine learning and distributed systems development in academia and the private IT sector. Over 140 students graduated from the Yandex School of Data Analysis during the 2021-2022 academic year.

We are also expanding opportunities for academic learning both through partnerships and our own educational programs at the leading universities. Every year, about 1,500 students enroll in our joint degree programs, with over 350 of them having graduated in 2022 alone.

In 2016 we launched the Lyceum of Yandex Academy, an initiative focusing on teaching the basics of computer programming to school students. The enrollment is now available in over 160 cities in Russia and Kazakhstan. Over 10,000 teenagers are currently learning Python at the Lyceum, with over 2,000 students having graduated from the program in 2022.

The YSDA and Lyceum are integral parts of Yandex Academy, an umbrella educational project that aims to provide free IT training to anyone wishing to pursue studies and careers in tech. As of April 2023, over 2,500 IT specialists pursuing careers in major tech companies or research institutions are Yandex Academy alumni.

We also invest in supporting educators in developing skills that are necessary to create productive learning environments. Launched in 2018, Yandex Textbook is now a major digital platform in Russia assisting students and educators with tackling school curriculum. It is currently used by over 209,000 teachers and 4.4 million Grade 1-9 students.

Additional educational projects include the following:

Employees and Workplace Culture

We place a high value on technological innovation and compete aggressively for talent. We strive to hire the

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best computer scientists and engineers, as well as talented sales, marketing, financial and administrative staff. We seek to create a dynamic, fulfilling work environment with the best features of a “start-up” atmosphere, encouraging equal participation, creativity, the exchange of ideas and teamwork.

Our total headcount increased from 18,004 at December 31, 2021 to 20,850 at December 31, 2022, primarily driven by the accelerated pace of hiring in Search and Portal (mainly in product development and sales) and Mobility, as well as by the fast growth of Cloud, Delivery, Plus and Entertainment Services and other businesses. As of December 31, 2022, we had 10,708 employees related to the product development cost category, 9,204 employees related to sales, general and administration, and 938 employees related to cost of revenues.

Intellectual Property

We rely principally on a combination of trademark, copyright, related rights, patent and trade secret laws in Russia and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We enter into confidentiality and patent assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to our proprietary technology.

Our patent department is responsible for developing and implementing our group-wide IP protection strategy in selected jurisdictions. We have filed more than 1,300 patent applications to date, of which more than 800 have resulted in issued patents in Russia, the USA, China, Taiwan, and other jurisdictions. We also have internal procedures for invention disclosures, patent filings, patent acquisitions, freedom-to-operate analyses and patentability searches. 

In respect of the “Yandex” brand, we have three registered well known trademarks in Russia: “Яndex”, “Yandex”, and “Яндекс” for certain services (classes 35, 38 and 42 under the International Classification of Goods and Services) on the basis of intensive use. We also own a Russian well-known trademark “auto.ru” for class 38 under the International Classification of Goods and Services, protecting a key brand of our classifieds business. Under Russian law, the protection granted to well known trademarks is extended to non homogeneous goods and services if customers associate specific use of the designation by third parties with the rights holder and the rights holder’s legitimate interests are infringed. Yandex is also a registered trademark in the United States, the European Union, China and other countries under the Madrid Agreement and Protocol. We have other registered trademarks in Russia and abroad. We continue to file applications to register new trademarks and widen the country coverage of our existing trademarks. Most of the software used by our services or distributed by Yandex to our users is either developed by our employees or by independent contractors who transfer all rights to Yandex.

We do not own the content generated or posted by users on our websites. As with all websites that host user-generated content, we are potentially liable for any intellectual property infringement committed by the creator of that content. If we receive a complaint from a party that user-generated content on our websites infringes that party’s copyright or related rights, we examine the content in question. If the complaint is substantiated, we remove the content and notify the party that has posted the content (if their contact details are available). If the user evidences that the content does not violate third parties’ intellectual property rights, it is possible to recover the deleted content. In the event of any court decision in the matter, we comply with the decision.

Facilities

Our principal operating subsidiary currently leases a total of approximately 64,700 square meters in a single location in central Moscow that serves as our group’s headquarters. We also lease additional office space of about 104,800 square meters in business centers in Moscow, of which approximately 48,600 square meters relates to the contract for office space in Moscow City business center; 31,200 square meters relates to office space in Avrora business center; 18,600 square meters relates to office space in Lotte Plaza business center; and almost 6,400 square meters relates to office space in Amaltea Skolkovo business center. Together with our operating subsidiaries, we also lease or own office space in a number of other cities in Russia. We also lease offices in Schiphol, the Netherlands; Lucerne, Switzerland; Prague, Czech; Minsk, Belarus; Almaty, Kazakhstan; Tashkent, Uzbekistan; Tel Aviv, Israel; Shanghai, China; Belgrade, Serbia, Istanbul, Turkey, and other locations. We operate data centers in Moscow and other locations. We continuously evaluate the capacity and locations of our data centers to determine the most cost-effective manner of delivering reliable services to our users.

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In December 2018, we acquired a property site at 15 Kosygina Street, Moscow, Russia for our new Moscow headquarters. We are in the process of building our new campus on this site.

Proposed Corporate Restructuring Overview

As we announced on November 25, 2022, our Board has commenced a strategic process to pursue a restructuring of Yandex group’s overall ownership and governance with a view to ensuring the group’s sustainable development and success over the longer term. The Board is considering in particular the potential divestment by our Dutch parent company of ownership and control of a number of our core businesses, including all Russia-based businesses. The Board also aims to enable the international divisions of certain services to develop independently from the Russia businesses, specifically self-driving, cloud computing, data labeling and EdTech; while these businesses in Russia and CIS would continue to operate under the Yandex brand along with the group’s other core businesses.

Self-Driving Technologies & Delivery Robots

One of the leading developers of self-driving technologies, the business has successfully piloted self-driving projects in Europe, the Middle East and North America. Its key products include an autonomous fleet and delivery robots that use proprietary hardware and software solutions. By the end of 2022, self-driving vehicles had driven over 23 million autonomous kilometers on public roads and given over 50,000 passenger rides. Delivery robots had completed over 200,000 deliveries from shops and restaurants. Following the proposed restructuring, an international team of engineers will focus on developing autonomous technologies in selected international markets for different transportation scenarios such as ride-hailing, logistics, e-commerce, and food/grocery delivery in a variety of conditions.

Cloud Platform & Computing Services

Following the proposed restructuring, our autonomous cloud platform will seek to serve international markets and provide scalable infrastructure, storage, machine learning capabilities and ready-to-use business development tools: computing and information security enhancements, tools for building proprietary digital solutions, data visualization, and data analysis solutions. In February 2023, the platform launched operations in Israel.

Data labeling

Our data labeling / AI training platform leverages millions of contributions to produce high-quality, unbiased data-labeling and sourcing tasks to train AI models and support AI lifecycles. In doing this, it gives thousands of people an opportunity to make extra money and gain basic data engineering skills by performing small tasks, while helping to accelerate AI adoption plans by its corporate clients. In 2022, it had 240,000 monthly active contributors from over 100 counties speaking over 40 languages. The platform meets the most rigorous information security and data privacy standards and is GDPR-compliant and certified to ISO 27001 and 27701. It offers open source projects, open datasets and supports a global community of AI practitioners through collaborations with top universities and research institutions based in the EU and the US.

EdTech

Our world-class EdTech service brings over 15 years of experience preparing specialists for STEM roles, providing them with in-demand tech skills: data analysis, data science and software engineering. Programs are available worldwide, including in North and South America, Southeast Asia and the Middle East, are taught in 5 languages and are localization-ready. The bootcamp has over 60 partner employers worldwide. The programs are available to all and encourage people belonging to various underrepresented and vulnerable groups to embark on a career in IT.

Governance Structure

Overview

In December 2019, our shareholders approved targeted changes to Yandex’s corporate governance structure, which we refer to as the restructuring. Our Board proposed this restructuring in response to the evolving legal and

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regulatory environment in Russia, and designed these changes to balance the concerns of public authorities in our core market with the interests of our shareholders, employees and users.

Pursuant to this restructuring, a number of changes were made, including the establishment of the Public Interest Foundation and new Board Committees. The Board of Directors was also expanded to appoint two “designated directors”. In 2022, we continued to work in this new corporate governance structure and to interact with its many complex elements.

In 2022 some Board members left the Board, including those who had to step down due to personal sanctions imposed by the EU and a number of other countries. In order to comply with applicable sanctions regimes, in 2022 the Company adopted a new version of the Economic Sanctions Compliance Policy and implemented necessary controlling procedures. The founder of the Company, Arkady Volozh, also stepped down from all his Board and executive positions and has not executed any managerial and controlling functions since June 3, 2022. Mr. Volozh is the settlor of a trust for the benefit of his family, which holds Class B shares representing a 45.1% voting and an 8.5% economic interest in Yandex N.V. He is not a controlling shareholder of Yandex. Moreover, Mr. Volozh has decided and informed the Board that he will not instruct the trustee as to how to vote such shares going forward. Pursuant to the terms of the trust, the trustee will vote such shares on all matters proposed to the shareholders in accordance with the recommendations of the independent Board of Directors.

Public Interest Foundation

The Public Interest Foundation has certain limited and targeted governance rights in our group. The Public Interest Foundation was incorporated in the Oktyabrskiy special administrative region in Kaliningrad, in the Russian Federation, under a newly adopted legislative framework. The Public Interest Foundation has no shareholders, owners or beneficiaries, and is governed by the Foundation’s Board of Directors comprising 11 directors, including members appointed by five leading Russian universities and three non-governmental institutions, all of which have long histories of cooperation with Yandex. The Public Interest Foundation Board also includes three representatives of Yandex management. The statutory purpose of the Public Interest Foundation, as set out in its charter, is to preserve the continuity and promote the success of Yandex. The Public Interest Foundation is not permitted by its charter to engage in any commercial activities; its operating costs will be covered by Yandex.

Priority Share

The Public Interest Foundation holds our Priority Share, which gives the Public Interest Foundation the following rights:

Special Voting Interest in Yandex LLC

As an additional protection for the overall structure, the Public Interest Foundation holds a Special Voting Interest in Yandex LLC, which provides limited and defined powers that will be exercisable only in the case of what we describe as a Special Corporate Situation or a Special Situation related to a matter of national security.

Special Corporate Situations

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A Special Corporate Situation is deemed to arise only in the following specific circumstances:

If the Foundation Board decides (acting by a specified majority) that any of the above triggers for a Special Corporate Situation has occurred, it must send a notice to Yandex, providing details of such matter. Following receipt of such notice, we may cure such matter within a defined period. If we do not cure such matter, the Public Interest Foundation will have the ability (acting by specified majority) to replace the General Director of Yandex LLC without the vote of Yandex N.V. The Public Interest Foundation will appoint an interim General Director from a pre-approved list. As soon as the situation is resolved, Yandex N.V. will remove the interim General Director and appoint a permanent General Director.

Special Situations related to a matter of national security

A Special Situation is a matter constituting an extraordinary one-off event related to matters of the national security of the Russian Federation requiring quick remedy.

If the Foundation Board decides (acting by a specified supermajority) that a Special Situation has occurred, it must send a notice to Yandex providing the details of such matter. Following receipt of such notice, we may cure such matter within a defined period. If we do not cure such matter, the Public Interest Foundation will have the ability (acting by specified majority) to replace the General Director of Yandex LLC without the vote of Yandex N.V. An interim General Director appointed under these circumstances will hold office for a limited period of time, after which Yandex N.V. will again have the right to appoint a permanent General Director.

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Conversion Provisions of the Class B Shares

In addition, as part of the restructuring, the automatic conversion feature of the Class B Shares was amended. Previously, such shares would immediately convert into Class A Shares upon the death of the holder. To avoid this “cliff-edge” scenario, in which the voting control of our company could suddenly shift, following this amendment Class B Shares held by a family trust will not automatically convert for a period of two years after the death of the holder. Mr. Volozh has established such a trust. Mr. Volozh and his family trust have also agreed not to sell or transfer any Class B shares prior to December 31, 2023. As mentioned above (see “Overview”). On June 3, 2022, Mr. Volozh was personally sanctioned in the EU, and immediately stepped down rom his positions as Executive Director and Chief Executive Officer of Yandex N.V. and from his board and executive positions with its international subsidiaries. Mr. Volozh has decided and informed the Board that he will not instruct the trustee as to how to vote such shares going forward. Pursuant to the terms of the trust, the trustee will vote such shares on all matters proposed to the shareholders in accordance with the recommendations of the independent Board of Directors.

A description of other standing Board committees can be found below under the heading “Item 6. Directors, Senior Management and Employees — Corporate Governance”.

Public Interest Committee

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The Public Interest Committee has a right of approval over certain specified matters and consists of three members: the Yandex CEO (now vacant) and both of the designated directors. Currently there is only one designated director in the Board – Mr. Yakovitsky as Mr. Komissarov stepped down from his Board positions on March 6, 2023 due to Mr. Komissarov’s personal designation under EU sanctions. As of now the Committee is not able to function as required by the Charter of the Committee. In this case its functions go to the Public Interest Foundation.

The Public Interest Committee will not review ordinary business or commercial matters; its right of approval will be limited to a defined list of the following specific matters deemed to be of public interest:

Our Board cannot act in respect of any of these specified matters prior to receiving a recommendation from the Public Interest Committee. If the Public Interest Committee does not approve the matter referred to it, the Board will follow the decision of the Public Interest Committee, unless the Board rejects such decision by either a supermajority of eight votes (subject to adjustment for Board vacancies), which must include the affirmative votes of the two designated directors; or a supermajority of eight votes (subject to adjustment for Board vacancies) (not including the affirmative votes of the two designated directors), provided that the Public Interest Foundation Board has given its approval. The Public Interest Committee will act only as a check on our Board’s actions; it cannot proactively make any decisions on behalf of the Board or require the Board to take any action.

Government Regulation

We operate in a rapidly evolving environment of increasing regulatory complexity, reflecting a trend towards increasing scrutiny of large technology companies by policymakers, regulators and the general public in jurisdictions across the globe, including in Russia. As explained in more detail below, there are also a significant number of additional laws and regulations currently being debated and considered for adoption in Russia and other countries where we operate which, in the event of adoption, might require us to take significant steps to modify our operating, governance or ownership structure. Due to changing interpretations of laws and regulations, we could also be subject to laws and regulations to which we are not currently subject and which could materially affect our operations. In the current geopolitical environment, there could also be an increased risk of new legislative or regulatory initiatives that could be seen as protecting the country’s national security and/or limiting foreign influence over the sectors in which we operate, including actions aimed at effecting changes of control of companies that are considered to be of strategic importance. We have not summarized laws and regulations that we do not believe we are currently subject. See also “Risk Factors – In the current environment, there may be a heightened risk of actions by the relevant authorities that may be perceived as reflecting political considerations.”

Regulation of Sensitive Businesses in Russia

In recent years, the Russian government has adopted a series of laws aimed at regulating the technology and internet sectors generally, as described in detail below. In addition, a number of laws have been adopted that impose restrictions on foreign ownership and control of businesses in sensitive sectors of the Russian economy, including strategically important enterprises and mass media, and we are aware of various discussions about potentially imposing similar restrictions on businesses such as ours. Most significantly, legislation was proposed in the Russian State Duma in the summer of 2019 that would have limited non-Russian ownership of “significant” internet companies to no more than 20%. Another recent draft law proposed restrictions to audiovisual services limiting their non-Russian ownership to no more than 20%. In case such a proposal were to be admitted to law and would be applied to Yandex, we will be forced to

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reevaluate and consequently modify the corporate structure of the KinoPoisk service, which is a part of Yandex Media Services. Yet another recent law imposes restrictions to classifieds services limiting their non-Russian control up to 50%. In case the law would come into force (March 1, 2023, as it planned) and would be applied to Yandex, we will be forced to reevaluate and consequently modify the corporate structure of the Classifieds services.

Advertising Regulation

The principal Russian law governing advertising, including online advertising, is the Federal Law No. 38-FZ “On Advertising,” dated March 13, 2006 (as amended) (known as the “Russian Advertising Law”). The Russian Advertising Law prohibits advertisements for certain regulated products and services without the required certification, licensing or approval. For example, advertisements for products such as pharmaceuticals and medical equipment, food supplements and infant food, financial instruments or securities and financial services as well as incentive sweepstakes and advertisements aimed at minors and some other products and services must comply with specific requirements and must in certain cases be accompanied by certain required disclaimers. Additionally, Russian law contains certain prohibitions regarding the advertising of alcohol, tobacco and medical services. In addition, the distribution of advertisements through email requires explicit actions (either consent or similar affirmative action) of recipients. In some cases, violation of these Russian laws can lead to civil action by third parties who suffer damages, or administrative penalties imposed by the FAS. Further amendments to legislation regulating advertising may impact our ability to provide some of our services or limit the type of advertising we may offer.

In 2021, there were adopted and came into force two sets of amendments to the Russian Advertising Law: (a) new rules for mandatory placement of the “social advertising” (i.e., ads related to the promotion of charities, socially useful activities and governmental functions) by all advertising platforms and distributors in their inventory free of charge, in an amount up to 5% of their commercial advertising inventory (calculated on the basis of the preceding year and nominated in currency or advertising impressions); and (b) establishment of the system for the accounting and storage of the online advertising data (operated by Roskomnadzor) and marking of the online advertising in the Russia segment of the Internet. These sets of amendments were (and still are) widely debated as establishing more burdensome and complex regulation for the whole online advertising industry and resulting in increased cost of compliance with Russian Advertising Law. The legislation covering the system of accounting and storage for the online advertising data came into full force in September 2022, where respective bylaws providing all the details of such system were developed and came into force also in September 2022 (with a minor part coming into force in March 2023). This legislation imposes obligation on all the participants of the online advertising placement chain (advertisers, advertising platforms, publishers) to provide the state accounting and storage system with all information related to each online advertising unit, to mark all the online advertising units with the unique identificator (“token”) and to use mandatory label “Advertising” on each online advertising. Respective information should be provided to the state accounting and control system through special entities – “Operators of the advertising data”. Yandex, like some other major Russian IT companies (VK, Ozon, etc.), has established its own operator of the advertising data to ensure compliance with the new legislation and facilitate such compliance for Yandex’s clients, agencies and advertising partners. The bylaws relating to this legislation expose sufficient number of risks and costs that Yandex faces and will face in an effort to comply with the requirements of such bylaws, including those risks that could arise from further amendments thereto. Main risks and costs applicable to Yandex are undefined level of exposure of confidential information of Yandex and our clients/partners to state authorities; substantial monetary and organizational costs of both Yandex and all our clients/partners to comply with the new legislation, including increasing costs of data processing, restructuration of data and money flows, data storage and processing costs, including cost of operating our own operator of advertising data; potential market disruption due to the inability of the some segments of the online advertising market (especially SMB-segment) to comply with the new legislation.

We seek to comply with all advertising laws and regulations. At the same time, the application of the advertising laws, in particular in relation to products or services requiring certification, licensing or approval, can be ambiguous and inconsistent. The application of these laws in an unanticipated manner, or the failure of our compliance efforts, may expose us to substantial liability as distributors of advertising and may restrict our ability to provide some of our services. Other laws or interpretations of laws, including those of foreign jurisdictions, may also restrict advertising and negatively impact our business. For example, some French courts have interpreted French trademark laws in ways that would limit the ability of competitors to advertise in connection with generic keywords. Adoption of similar interpretations by Russian or other national courts may adversely affect our business. Also, the Supreme Court of the Russian Federation has issued clarification which states that some cases of the use of trademarks as keywords could be treated as an unfair competition. In addition, Russian law does not specifically regulate behavioral targeting in relation to

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advertising, which is a standard tool widely used in online business. Any future interpretation of Russian law affecting the regulation of behavioral targeting could have a negative impact on our business.

Intellectual Property Regulation

In principle, the acquisition, protection and enforcement of intellectual property rights in Russia are addressed in line with international standards. In particular, literary, artistic and scientific works are subject to copyright protection without any registration and enjoy legal protection simply by virtue of being created in an objective form perceivable by third parties.

Mandatory registration with Rospatent is required for “hard IP” such as trademarks and patents (available in Russia for inventions, utility models and industrial designs) in order for the rights holder to acquire exclusive rights. Trademarks registered abroad under the Madrid Agreement and/or Madrid Protocol have the same legal protection in Russia as locally registered trademarks. 

Under Russian law, we have exclusive rights to trade secrets (know-how) only if we have complied with a legal requirement to introduce reasonable measures to maintain confidentiality of our trade secrets. Such measures may be burdensome and difficult to implement. As we rely extensively in our operations on the protection afforded to trade secrets, we have implemented a set of measures required by Russian law in order to protect these trade secrets (know-how). However, there is a risk that our measures will be deemed insufficient and, as a result, we will fail to acquire rights to these trade secrets under Russian law.

One of the known problems and risks in Russian business practice relates to acquiring exclusive rights to works for hire and patentable results from employees. As a rule, the exclusive rights to works for hire and patentable results are assigned to the employer if the intellectual property is made during the course of employment. However, there are often uncertainties and disputes around the scope of such assignments. In case of employment disputes, Russian courts are often inclined to follow an overly formalistic approach and may take a pro-employee position in the event of uncertainty in a dispute of this nature.

Nonetheless, under Russian law, subject to the risks outlined above, we are deemed to have acquired copyrights and rights to file patent applications with respect to works for hire and patentable results created by our employees during the course of their employment with us and within the scope of their job duties, and have the exclusive rights to their further use and disposal subject to compliance with the requirements of the Civil Code of Russia.

Liability of Online Service Providers

Laws relating to the liability of online service providers for the activities of their users and other third parties are still being developed in Russia and certain other countries in which we operate. Recent laws adopted in Russia, such as the law on the regulation of social networks; the law regulating the placement of publicly available personal data on the internet; the law on criminal liability for libel on the internet; the law introducing significant fines for non-deletion of information by an information resource; the law prohibiting censorship of information resources, as well as a number of other laws, may substantially affect business operations.

Russian law contains provisions aimed at establishing a framework for limitation of liability of online service providers for the information communicated by third parties over such providers’ networks. Substantial ambiguity remains in Russian law around the scope and protection of such limitation of liability. In particular, there is little clarity on the limitation of liability with respect to the types of online service providers other than providers transmitting information and hosting providers (such as those caching data or providing information location tools). Since the law has not been given detailed binding interpretation, our exposure to liability will depend significantly on the interpretation of these provisions by the courts and officials.

The Russian Civil Code also imposes strict liability for infringement of intellectual property rights if such infringement is committed in connection with business activities. It might be unclear how these provisions apply to online service providers.

Russian law establishes a system for the blocking of websites that make available specific categories of illegal

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information. Illegal content that can lead to the blocking of websites in Russia, includes the following:

The procedure for deleting such information is complex and strictly enforced and the failure to follow such procedures may lead to the blocking of the applicable website by all Russian internet service providers and telecommunication service operators. Yandex follows these laws, however, compliance with these regulations by western technology companies has been inconsistent or non-existent.

In many cases, only a subsequent post-blocking notification to the relevant website owner or hosting provider is required. The categories of illegal information to which access can be restricted may be interpreted broadly or be expanded by government authorities depending on circumstances. We may find ourselves subject to such blocking if government authorities interpret information provided by our services as violating these rules and we may be unable to prevent this blocking of our services.

This legislation, as well any similar additional regulations (in Russia or abroad), and the interpretation of such legislation and regulations, may impose new requirements on us and our operations and lead to material legal liability, which can be difficult to foresee or limit. See “Risk Factors—We may be held liable for information or content displayed on, retrieved by or linked to our websites and mobile applications, or distributed by our users; or we may be required to block certain content or access to our websites could be restricted; any of which could harm our reputation, business, financial condition and results of operations”.

In February 2020, draft legislation aimed at regulating big data in Russia was introduced and remains under consideration. The wording of the legislation is very broad and ambiguous, but would create a basis for further regulation in this sphere. In particular, it states that the Government should implement control over big data processing. Currently big data processing is not specifically covered by Russian law. This legislation, if adopted, may have a far-reaching impact on our business, which is difficult to estimate at the present time.

In 2021, the Law “On the Activities of Foreign Persons on the Internet” was adopted. The purpose of the law is to oblige foreign companies to open a legal entity or representative office in the Russian Federation to ensure their compliance with Russian legislation. If foreign platforms (Google, YouTube, TikTok) fail to comply with the law, they may be subject to enforcement measures, including blocking of access, prohibition of placement of advertisement or being promoted through advertisement, ban on money transfers from users and etc. These measures could affect Yandex’s activities as well, since these measures would prohibit Yandex from promoting and advertising its services on these foreign platforms or advertising these international platforms in Russia, including on Yandex platforms (subject to the changes in the current geopolitical situation, which resulted in such international platforms ceasing their business activity in Russia).

In 2021 and 2022, Russia adopted a number of laws applicable to internet governance, including tighter regulation of social networks, restrictions on the placement of publicly available personal data on the internet, prohibitions for information resources to practice censorship in the form of restrictions for distribution of socially significant information by the users of such information resources, a complex state-operated accounting and storage system for the online advertising, a mandatory system for the measurement of the audience of internet services and content by a specially designated uniform measurements organization and other matters. Significant amendments have been made to the provisions of the Criminal Code of the Russian Federation on users’ liability for libel (defamation) on the internet and to the provisions of the Code of Administrative Offenses of the Russian Federation imposing liability for violating the procedure for the deletion of prohibited information from the internet. The law also establishes

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administrative fines up to 20% of a company’s annual turnover for non-deletion of information by an information resource, if such deletion is required by law. This regulation may have a substantial impact on operation of our services.

In December 2022, amendments to Russian legislation were adopted which are designed to prohibit the promotion of LGBTQ and gender transition among all citizens in Russia and to implement a ban on the demonstration of LGBTQ relations and gender transition among Russian teenagers. Violation of this new legislation or failure to remove information relating to LGBTQ or gender reassignment issues may be punished by fines and blocking of online services. In addition, a bill has been filed in the State Duma proposing to introduce a prohibition on the dissemination among children of information that promotes the voluntary refusal to have children. If this bill is passed, the content containing information about the “childfree” lifestyle will be recognized as 18+ content with appropriate legislative restrictions.

Applicability of the Russian Law on Strategic Enterprises

Under Russian law, a variety of activities related to encryption require a special permit (license) granted by the Federal Security Service (the “FSS”) subject to the applicant’s continued compliance with a number of licensing requirements, including the requirement to use only certified encryption means and equipment and to ensure timely extension of such certification when its terms expire.

We have obtained an encryption license for our Yandex Cloud service in order to expand this business. Therefore, the restrictions imposed by the strategic enterprises law have become applicable to Yandex as a whole. In particular, a third-party non-Russian investor would be required to obtain prior approval from the competent Russian authority in some cases if it seeks to acquire more than 25% of the voting power in Yandex or seeks to enter into an agreement that would establish direct or indirect control over Yandex. Such investors would also be required to notify the competent Russian authority if it acquires more than 5% of the voting power in Yandex (which would represent more than 33.3 million Class A shares). In addition, foreign states and international organizations, or entities controlled by them are prohibited from entering into agreements to establish direct or indirect control over Yandex.

See also “Risk Factors— In the current environment, there may be a heightened risk of actions by the relevant authorities that may be perceived as reflecting political considerations.”

Mass Media Regulation

Russian law requires certain parties that disseminate news and similar mass communications and information to be registered with the appropriate Russian governmental body, Roskomnadzor, and to comply with restrictions regarding the distributed content. The law currently permits electronic network publications (including websites) to register as mass media. As registration under this amendment is voluntary, we elected not to register our online properties as mass media. See “Risk Factors — Because the range of the services we provide is increasing and the legal framework governing the operations in our markets is evolving, we may be required to obtain additional licenses, permits or registrations or comply with other requirements, which may be costly or may limit our flexibility to run our business.”

Since 2016, Russian law imposes a limit of no more than 20% on non-Russian ownership and control, direct or indirect, of Russian mass media. Accordingly, if our core business were to be required to register as a mass media, or if such law were otherwise amended to cover our business, it would have a material impact on the ownership structure of our business and could materially adversely affect the value of our Class A shares. See also “Risk Factors— In the current environment, there may be a heightened risk of actions by the relevant authorities that may be perceived as reflecting political considerations.”

In addition, in March 2019 a new law came into force that imposes liability for the dissemination of “fake news” in mass media or telecommunication networks if such news items are potentially of social importance. The liability includes fines up to 1.5 million rubles (depending mainly on the consequences of such violation). It is difficult to predict how these norms will be interpreted in practice. This regulation can be applied to some of our services and, therefore, we could be held liable for the information published by third parties.

More recently, the amendments to Russian legislation on mass media and information, which came into force in 2022, have introduced the mandatory system for the measurement of the audience of internet services and content by a specially designated uniform measurements organization, which would provide the state authorities with measurement

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reports on the internet audience (similar to the mandatory measurement of the TV audience). Such legislation imposes obligations on popular internet resources in Russia (including those provided by Yandex) to either integrate required data collection and reporting instruments or to ensure independent collection of the data and information required for the measurement of the internet audience, and to transfer such data to the designated measurements organization. Mediascope, a leading Russian media research company, was appointed as designated measurements organization in February 2022. We may be held liable for information or content displayed on, retrieved by or linked to our websites and mobile applications, or distributed by our users; or we may be required to block certain content or access to our websites could be restricted; any of which could harm our reputation, business, financial condition and results of operations.

Internet Regulation

Certain laws that came into force in November 2019 introduced tighter regulation of traffic routing in the Russian internet. While it is not entirely clear yet how this regulation will be applied in practice, its implementation, among other things, may lead to a requirement that Russian internet traffic should be routed through Russian communication centers. This could significantly reduce data transfer speeds significantly and even result in interruptions and delays of online services in Russia.

Additional regulation applicable specifically to technological platforms and ecosystems is being currently under consideration in a number of jurisdictions. Although there is no goal to limit the development of IT businesses, any restrictive legislation in this sphere to be enacted in Russia or in other countries where we operate may limit our flexibility in providing our services and adversely impact our operations.

Privacy and Personal Data Protection Regulation

We are subject to Russian and foreign laws regarding privacy and the protection of our users’ personal data. We publish on our websites our privacy policies and practices concerning the use, processing, storage and disclosure of user data. Any failure by us to comply with our privacy policies as well as Russian or other applicable laws and regulations relating to privacy and the protection of user data may result in proceedings against us by governmental authorities, individuals or other third parties, which may adversely impact our business.

The adoption and interpretation of data protection laws, and their application to internet operations, are often unclear, difficult to predict and in a constant state of development. Although we believe that we comply with all current requirements, these laws could in the future be interpreted and applied in a manner that is inconsistent with current practice. For instance, in May 2014 the Court of Justice of the European Union established that an operator of a search engine can be obligated to remove from the list of search results links to webpages containing inaccurate or outdated information related to an individual. Russian personal data laws have been amended, granting a similar right to Russian citizens, who may apply for the removal of search results that link to inaccurate or irrelevant information about them. Beyond Russia, in May 2018, the General Data Protection Regulation, or GDPR, came into force in the European Union. We believe that we have taken all necessary steps to comply with the applicable requirements of the GDPR, although our exposure to users in the EU is relatively limited. Nevertheless, some provisions of the GDPR are formulated broadly and their interpretation by the competent authorities might be unpredictable. Therefore, we may fail to interpret all the requirements in accordance with the official interpretation and may be held liable for non-compliance.

In 2022, amendments to the law on personal data were adopted, introducing a procedure of notification on a personal data breach to the supervisory authority (Roskomnadzor). A bill is being prepared that would establish a turnover-based fine (up to 3% of annual revenue) for repeated leaks of personal data. If this version of the draft law is adopted, the possible amount of fine will be significant for Yandex. In March 2023, the procedure for prior notification of Roskomnadzor on the cross-border transfer of personal data was introduced. These amendments allow Roskomnadzor to impose a ban on the cross-border transfer of personal data to a specific foreign organization or the country as a whole.

In December 2022, a law on the processing of biometric personal data was adopted. The law introduces more detailed regulation of biometric data and establishes that such data can only be processed in a Unified Biometric System (UBS). The UBS is created and controlled by a state-controlled company. As an exception for limited scenarios, the law provides for the possibility of creating commercial biometric systems (CBS). The owners of such CBS systems will be subject to restrictions such as foreign control restrictions. This law may have a significant impact on the ability to use biometric data in a number of Yandex services.

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Russian data protection laws provide that an individual must freely consent to the processing of their personal data. Such consent must be concrete, substantive, informed, definite and conscious, and may be provided in any form evidencing the fact that consent has been provided, unless otherwise established by federal law, which requires that it be made in writing, signed by digital electronic signature or evidenced in a similar manner prescribed by laws and regulations.

We, like our peers, seek this consent from our users by asking them to click on a button or select a check-box in appropriate circumstances prior to commencement of the account registration process, indicating the user’s consent to our collection, use, storage and processing of personal data. Furthermore, many of our services do not require the creation of an account prior to their use and we collect only limited information in these circumstances. In particular, we place cookies and use other widespread technologies that assist us in improving user experience of our products and services and ultimately benefit both our users and advertisers through behavioral targeting of advertising. No clear legislative guidelines have been provided addressing whether our practices are compliant with the requirements of the data protection legislation in Russia and abroad. There is a risk that such laws may be interpreted and applied in a manner that is not consistent with our current data protection practices. Complying with various regulations in this area may cause us to incur additional costs or to change our business practices. Further, any failure by us to protect our users’ privacy and data may result in a decrease of user confidence in our services, and may ultimately result in a loss of users, which would adversely affect our business.

Once collected, all personal data of Russian users must be stored in databases located inside Russia. Although we have data centers located in Russia, this requirement could limit our flexibility in managing our operations globally. Failure to comply with applicable data protection legislation may lead to the restriction of access to our services.

Russian legislation also regulates “organizers of information distribution”. Organizers of information distribution, such as Yandex, must retain a broad range of data relating to and generated by users for a period of time and provide such data to security and investigation authorities at their request. Organizers of information distribution that use encryption when delivering or processing electronic messages have to provide the security authorities with information necessary for decoding the delivered or processed messages. If Yandex were to fail to comply with the above requirements, the Russian authorities can prescribe the blocking of access to the services of such organizer of information distribution.

Licenses for the Provision of Particular Services

In 2021, we completed the acquisition of a 100% ownership interest in Commercial Bank ACROPOL, JSC, which we have renamed as JSC Yandex Bank. The provision of banking operations is heavily regulated, and we have no prior familiarity with this business. Banking regulation includes numerous federal laws and regulations which continually undergo significant changes. Compliance with these requirements is closely reviewed by the regulators.

Entities that provide certain telecommunication services for a fee are required under Russian law to obtain a “telematics” license from Roskomnadzor. In order to increase our range of services and diversify our business, we have obtained the required licenses (including telematic licenses) necessary for the provision of certain of our services in Russia. However, we generally do not charge a fee for the online services we provide to our users and therefore believe that we are not required to hold a telematics license for provision of these services. We do, however, generate revenue from ads directed to our users. As a result, it is possible that a Russian court or government agency may construe our online advertising revenues as a fee and determine that we are required to hold an additional telematics license for such services, which would require us to apply for and comply with the terms of any such license.

Additionally, we may in certain cases offer user services for a fee, which could require us to comply with the licensing requirements described above.

Antimonopoly Regulation

Russian law grants to the Federal Antimonopoly Service, or the FAS, wide powers and authorities to maintain competition in the market, including approval or monitoring of mergers and acquisitions, establishment of rules of conduct for market players occupying dominant positions, prosecution of any abuse of a dominant position, and prevention of cartels and other anti-competitive agreements or practices. The regulator may impose significant

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administrative fines (up to 15% of the annual revenue derived in the market where the violation occurred) on market players that abuse their dominant position or otherwise restrict competition, and is entitled to challenge contracts, agreements or transactions that are in violation of the antimonopoly regulation. We could be considered to possess a substantial (and even dominant) market share in the online advertising market, ride-hailing market and/or other markets in which we operate. We understand that the regulator from time to time focuses on internet services and, for instance, could in the future recognize online advertising as a separate market, identify dominant players and impose conduct limitations and other restrictions.

In addition, the “fifth antimonopoly package” developed by the FAS is currently under consideration, which would introduce amendments to the existing antimonopoly legislation with regard to digital markets. The new legislation aims to facilitate the review of cases in this sphere. In particular, the document specifies new triggers for determining the dominant position of digital transactional platforms. Therefore, this legislation, if adopted, may have a far-reaching impact on our business, which is difficult to estimate at the present time.

Taxation Regulation

Taxation of legal entities and individuals in Russia is regulated primarily by the Tax Code of the Russian Federation. The scope and application of the Tax Code is elaborated by numerous regulations and clarifications from the Ministry of Finance of Russia and by the Federal Tax Service, which enforces the tax laws. Russian tax law and procedures are still not fully developed and local divisions of the Federal Tax Service have considerable autonomy in tax law interpretation and could potentially interpret tax rules inconsistently. Also, there is extensive court practice on the construction of the Code’s provisions, which can sometimes be unpredictable or even contradictory. Both the substantive provisions of the Russian tax law and the interpretation and application of those provisions by the Russian tax authorities and by Russian courts may be subject to rapid and unpredictable change. See “Risk Factors — Changes in the tax systems in the countries in which we operate, or unpredictable or unforeseen application of existing rules, may materially adversely affect our business, financial condition and results of operations.”

Consumer Protection Legislation

Recent amendments to Russian consumer protection legislation impose duties on aggregators of information about goods and services. These norms are applicable to some of our and Yandex Market’s services and the failure to comply with such norms could lead to liability.

In addition, amendments to the Russian law on protection of consumers set out requirements for pre-installation of local Russian applications on mobile devices, laptop and desktop computers, and smart TV sets applicable as of April 1, 2021. The list of apps for pre-installation includes search, browser, maps, social networks, cloud storage and some others. The requirement is set to be expanded, as of July 1, 2021, to include the possibility to choose default search in browsers. The exact implementation of the pre-installation requirements is still under discussion and may not have significant near-term impact on our operations.

Also, the law “On unacceptable contract terms that infringe on the rights of consumers” adopted in 2022 provides for a wide list of contract terms that are prohibited in contracts with consumers was well as with merchants, and also for aggregators of information about goods and services. There is civil and administrative liability in the event of non-compliance with the requirements. The wording used in the law is vague and generalized, which can lead to legal uncertainty and could negatively affect the company’s services that interact with consumers (and may result in liability for violation of such law).

Securities Regulation

Our Class A ordinary shares are currently listed on the NASDAQ Global Select Market (although currently subject to a trading halt) and have been admitted to trading on the Moscow Exchange since June 2014. We are required to comply with specific Russian regulation concerning information disclosure, insider trading and certain other requirements as may be applied to foreign issuers in Russia.

Regulation of Self-Driving cars

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Our Self-Driving Group is subject to extensive and evolving regulation with respect to this new technology and operating model. In particular, current and emerging regulations govern the ability to test autonomous vehicles on public roads, which is an important stage in the introduction of autonomous technology to the transportation infrastructure and the development of driverless taxi services.

Autonomous vehicles are allowed on public roads in Russia in a test mode under Decree of the Government of the Russian Federation of November 26, 2018 No. 1415. Such testing is subject to the following restrictions: presence of a driver behind the wheel; limitations to certain territories, currently including Moscow, Saint-Petersburg and the Republic of Tatarstan; and a prohibition on the commercial testing of self-driving cars. Such restrictions complicate the development of autonomous driving systems which impacts our still-developing Self-Driving Group.

A law on experimental legal regimes in the field of digital innovations was recently enacted in the Russian Federation. This law aims to ease the legal regulation applicable to developers of digital innovations in seeking formal approval for innovative solution applications, including self-driving cars. There are also discussions underway regarding the bill of amendment to the current legal regulation which impedes such formal approval of digital innovations, which would formally introduce a regime for experimental technologies.

Regulations of Other Business Units; Other Jurisdictions

A number of our business units, including in particular MLU (Taxi), operate in sectors that are subject to extensive governmental scrutiny and rapidly evolving regulatory requirements, both in Russia and in other jurisdictions in which we operate or may begin operating. We continuously monitor such regulatory developments and actively participate where appropriate in the development of the regulatory frameworks for these emerging businesses and operating models.  The new federal law “On taxi” was adopted in December 2022 in Russia. This law is a comprehensive regulation of the sphere of taxi transportation, it grants self-employed the right to provide transportation services, as well as clarifies the status of the taxi aggregator and establishes a limited list of cases of their liability.

In addition, because many of our services are accessible worldwide and are becoming increasingly available to other users globally, certain foreign jurisdictions, including those in which we have not established a local office, employees or infrastructure, may require us to comply with their local laws.

Other Regulations

As mentioned above, in 2022, a number of decrees of the President of the Russian Federation were issued aimed at ensuring the financial stability of the country. Under these decrees, a number of transactions with persons from so called “unfriendly” states applying restrictive measures (including sanctions) to the Russian Federation, its legal entities and individuals, became possible only with the permission of the Government Commission for Foreign Investment Control, Bank of Russia, or the President of the Russian Federation.

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Overview

Yandex is a technology company that builds intelligent products and services powered by our proprietary machine learning and other technologies, with the goal of helping consumers and businesses better navigate the online and offline world. The ongoing geopolitical tensions, their impact on the Russian and global economy, and related pressures on the broader social and business environment, created unprecedented challenges for our business in 2022. Throughout the year we have been primarily focused on the stability of our operations and financial position, safeguarding the interests of our stakeholders and ensuring the well-being of our employees.

In addition to maintaining our existing business portfolio, we continue to launch new products and services based on our own technologies and successfully develop many new and innovative business models. Over the last several years we have expanded our operations beyond our core advertising business, and ride-hailing business into car-sharing, e-commerce, foodtech, video and audio streaming, delivery and logistics business, cloud technologies, fintech and others.

Yandex Search is one of the world’s largest searching systems with a 62.6% share in the Russian search market at the end of 2022. We focus on continual improvements in the quality of Search, which is the largest Yandex service by audience and the basis of the Group’s key cash generating business - advertising.

For the Search and portal business our principal constituencies are:

•Users. We provide our users with advanced search capabilities and an extensive range of online services that enable them to find relevant, objective information quickly and easily, as well as communicate, connect, arrange transportation, access entertainment and shop over the internet.

•Advertisers. Our online advertising platform allows advertisers to reach a large audience of users in their markets and deliver cost effective online advertising. With Yandex Direct, our auction based advertising platform, advertisers can promote their products and services through relevant ads targeted to a particular user query, the content of a website or the application or webpage being viewed, or user behavior or characteristics.

•Yandex Advertising Network partners. We have relationships with a large number of third-party websites, which we refer to as the Yandex Advertising Network. In addition to serving ads on our own website and the application, we also serve ads on our network partners’ websites and share the fees generated by these ads with our partners, providing an important revenue stream for them.

Search and Portal revenues increased by 38% in 2022 on the back of strong trends in the Yandex Advertising Network (led primarily by partner apps as well as websites) and solid growth in our Search ad revenues. This dynamic was driven by ongoing investments in the development of our ad technologies and products (with a particular focus on the e-commerce sector, SMB clients and improving our iOS share). Our online advertising revenues consist of fees charged to advertisers for serving online ads on our websites and apps and those of our partners in the Yandex Advertising Network. Although the majority of our revenue is generated by direct sales to our advertisers, a significant portion of our advertising is sold through media agencies.

We benefit from a large and diverse base of advertisers. Our advertisers include individuals and small, medium and large enterprises across Russia and the other countries in which we operate. No individual advertiser accounted for more than 0.6% of our total revenues in 2020, 2021 or 2022. On a geographical basis, we generated more than 91% of our total revenues in each of 2020, 2021 and 2022 from advertisers and other customers with billing addresses in Russia, including the Russian offices of large multinational corporations.

In 2022, our E-commerce, Mobility and Delivery segment revenues increased by 57% which was mainly driven by E-commerce services and Mobility. This growth was supported by a combination of factors, including (i) the improvement of 3P take rates, (ii) the normalization of the 1P/3P revenue mix in Yandex Market, (iii) assortment diversification, (iv) expansion of our proprietary BNPL (buy now pay later) product (Split), (v) deeper integration with Yandex’s other services, (vi) continuous growth of demand for our ride-hailing services, and (vii) a solid inflow of active users.

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The growth in GMV¹ of the Mobility businesses, which includes ride-hailing in Russia and other countries across CIS and EMEA, Yandex Drive, our car-sharing business and scooters, reached 30% in 2022 compared to 2021. This growth was driven by an increase in the number of rides on the back of growth of our rider base and order frequency as well as growing contribution from international markets. The growth in GMV² of our E-commerce businesses accelerated to 92% in 2022, in part as a result of the improving quality of service, delivery efficiency, expansion of assortment (including through increasing presence of the local brands, development of private labels and resell platform), as well as our use of efficient pricing strategies and marketing campaigns before the high season periods. Other O2O businesses showed growth of GMV³ by 52% in 2022 with Yandex Delivery and Yandex Food Delivery (including Delivery Club consolidated from September 8, 2022) being the largest contributors.

Plus and Entertainment Services revenues grew 73% in 2022 compared to 2021. The increase was primarily driven by the growth of subscription revenue on the back of the expanding base of paid subscribers and changes in our tariff mix, together with solid trends in other revenue streams, including advertising and Afisha.

We believe the most significant factors that allowed our businesses to show relative stability despite the continually challenging external environment affecting our business throughout 2022 include the following:

•our ability to maintain a sustainable growth of business as a result of capitalizing on additional opportunities in the market at a time when many foreign businesses and suppliers have withdrawn from the Russian market;

•the quality of our and our partners’ services, including the relevance, objectivity and quality of our search results; the availability, accuracy, comfort and safety of our Ride-hailing and Drive services; the assortment of goods offered on our marketplace, the reliability of third-party sellers, delivery speed and convenience of our E-commerce and FoodTech businesses, and the quality of our other services on the domestic market as well as in new geographies;

•our proven track record on the domestic market allows us to work efficiently in geographies with a small average check and low smartphone penetration, demonstrated a solid growth in our ride-hailing and Delivery businesses in select international markets;

•we continue to focus on the quality of our existing services and the well-being of our partners;

•our intention to provide clients with simple, high-quality and efficient advertising products and instruments in our E-commerce segment by actively using the advantages of Search and Portal, which allow businesses to promote goods to a wider audience beyond our marketplace and explore opportunities across Yandex Ad Network and Search; this has become possible due to the recent integration of our Yandex Market advertising platform with Yandex Direct;

•the demand for our subscription Yandex Plus and entertainment services connected by one-account, together with our increased focus on original content both online and offline, which helps us to differentiate our services from other market participants while also generating an additional revenue stream through licenses for our original content;

•our ability to effectively monetize traffic generated by our websites and apps and those of our Yandex Advertising Network partners (with a specific focus on the e-commerce sector and our SMB clients), including through improvements to our advertising products and technologies (simplification, automation and increased efficiency of ad campaigns via our instruments), while maintaining an attractive return on investments for our advertisers; and

¹ GMV (or gross merchandise value) of Mobility is defined as the total amount paid by customers for ride-hailing, car-sharing and scooters rent services booked through our platform, including VAT.

² GMV of E-commerce is defined as the value of all merchandise sold through our Yandex Market marketplace and Yandex Lavka as well as the value of products sold through Yandex Eats and Delivery Club grocery service (delivered and paid for), including VAT.

³ GMV of other O2O (online-to-offline) services includes the total amount paid by customers and partner businesses for Yandex Delivery and Yandex Fuel services, the value of orders, delivered through the Yandex Eats and Delivery Club Food Delivery services, Lavka Israel, and several other smaller O2O experiments, including VAT.

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•our ability to effectively monetize our mobile search function, where the number of search queries is growing quicker than on desktops.

Operating Segments

We manage and report on our businesses in the following operating segments:

•Search and Portal, which includes Search, Geo, Yandex 360, Weather, Alice voice assistant and a number of other services offered in Russia, Belarus and Kazakhstan, and also included Yandex News until its disposal in September 2022;

•E-commerce, Mobility and Delivery, which includes transactional online-to-offline businesses, which consist of (i) the mobility businesses, including ride-hailing in Russia and other countries across CIS and EMEA, Yandex Drive, our car-sharing business for both B2C and B2B and Scooters; (ii) the E-commerce businesses in Russia and CIS, including Yandex Market, our multi-category e-commerce marketplace, Yandex Lavka Russia, our hyperlocal convenience store delivery service, and the grocery delivery services of Yandex Eats and Delivery Club (acquired in September 2022); and (iii) other O2O businesses, including Yandex Delivery, our last-mile logistics solution for individuals, enterprises and small and medium business, Yandex Eats and Delivery Club Food Delivery, the ready-to-eat delivery service from restaurants, Lavka Israel, a hyperlocal convenience store delivery service, Yandex Fuel, our contactless payment service available at select gas stations, as well as several smaller experiments;

•Plus and Entertainment Services, including our subscription service Yandex Plus, Yandex Music, Kinopoisk, Yandex Afisha and production center Yandex Studio;

•Classifieds, which includes Auto.ru, Yandex Realty, Yandex Rent and Yandex Travel; and

•Other Business Units and Initiatives, including Yandex SDG, Yandex Cloud, Yandex Education, Devices, FinTech, RouteQ, number of other experiments, unallocated corporate expenses, as well as Zen until its disposal in September 2022.

We introduced a number of changes to our segmental reporting from the start of 2023, including (i) the transfer of Yandex 360 and Alice from the Search and Portal segment to the Cloud and Devices & TV businesses, respectively (both included in the Other Business Units and Initiatives segment), and (ii) the transfer of RouteQ from the Other Business Units and Initiatives segment to the Delivery business in the E-Commerce, Mobility and Delivery segment.

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According to the Russian Federal State Statistics Service, Rosstat, the consumer price index in Russia increased to 4.9% in 2020 and to 8.4% in 2021 and to 11.9% in 2022. However, the Central Bank of Russia forecasts that inflation in 2023 could drop to 5.0-7.0%. Higher rates of inflation may lead to an increase in our operating expenses and capital expenditures. 

We follow carefully the new export control restrictions introduced by several countries, including the United States, the United Kingdom, Switzerland and the European Union, and are working closely with our vendors. None of the Yandex group companies operates in the sectors that have been specifically targeted.

Given the high level of uncertainty around future geopolitical developments and the macro environment, our visibility over the short- and medium-term is limited and we remain unable to provide any forward-looking expectations at this stage.

In addition to the impact of the current geopolitical and macroeconomic environment, other key trends influencing our results of operations in the ordinary course include the following:

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We have diversified our operations in recent years from a principally advertising-based business into a comprehensive digital platform for consumers and businesses. The change in revenue mix (towards higher share of Ride-Hailing, E-commerce, Plus and Entertainment Services and other new opportunities with different margin profiles and

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stages of investments) remains an important driver of the group’s consolidated operating margin. Search and Portal revenues have decreased from 56.7% of total revenues in 2020 to 45.7% in 2021 and to 43.1% in 2022.

In the ordinary course of business our revenues were impacted by some seasonal factors, including seasonal fluctuations in internet usage, the influence of public holidays and vacations and general seasonal demand fluctuations. As the current geopolitical situation continues to worsen, the uncertainty of seasonal trends and how they will impact our businesses throughout 2023 remains particularly unclear.

Key Recent Acquisitions

Yandex.Market (2020)

In July, 2020, we completed the acquisition of our partner’s interest in Yandex Market (approximately 50%) for RUB 42,000 million and in exchange sold to our partner a 25% plus RUB 1 interest in Yandex Money for approximately RUB 2,420 million. We paid net cash consideration of RUB 39,580 million. The acquisition is accounted for as a step-acquisition under business combination rules.

Acquisition of Axelcroft Group (2021)

On February 2, 2021, we entered into a share purchase agreement with Fasten CY Limited and completed the acquisition of 100% of the shares of Axelcroft Limited and its subsidiaries (“Axelcroft Group”), representing certain components of the ride-hailing and cargo business of the Vezet Group for total cash consideration of RUB 12,916 million. The transaction was intended to strengthen our position in the market and enhance customer care across the Russian regions. The transaction was accounted for as a business combination.

Acropol Bank (2021)

On July 16, 2021, we completed the acquisition of a 100% ownership interest in Commercial Bank ACROPOL, JSC (“Acropol”). As a result of the acquisition, we received all of Acropol’s licenses, including a universal banking license. Cash consideration transferred totaled RUB 986 million.

Transaction with Uber (2021)

On August 30, 2021, we entered into a framework agreement with Uber Technologies, Inc., and certain of its affiliates (“Uber”), to restructure our joint ventures, MLU B.V. (“MLU”) and Yandex Self Driving Group B.V. (“SDG”). Pursuant to this agreement, for total consideration of $1,000 million in cash, we acquired from Uber its entire equity interest in SDG and an additional 4.5% interest in MLU, both of which were completed in September 2021, as well as Uber’s entire indirect interest in Yandex Eats, Yandex Lavka and Yandex Delivery, each of which was demerged from MLU and acquired in December 2021. The transaction provided us and our employees a total of approximately 71% ownership in the newly restructured MLU which currently focuses on mobility businesses, including ride-hailing and car-sharing services. The transaction was accounted for as an equity transaction.

News and Zen divestment and acquisition of Delivery Club (2022)

On August 22, 2022, we entered into a binding agreement to sell our news aggregation platform and Zen, our infotainment service (together, “News and Zen”) as well as to acquire 100% of the shares of Delivery Club LLC (“Delivery Club”), one of the leading food and grocery delivery services in Russia. On September 8, 2022, we completed the acquisition of 100% of Delivery Club and on September 12, 2022, we completed the sale of News and Zen. The transaction marked a strategic decision to exit from media businesses (other than entertainment streaming). The transaction was accounted for as a business combination.

A further description of the acquisitions and their accounting implications can be found in Note 3 – “Business combinations and investment transactions” of our consolidated financial statements included elsewhere in this Annual Report.

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Our consolidated income/(loss) from operations as a percentage of total revenues decreased from 7.2% in 2020 to a loss of 3.7% in 2021, and to an income of 2.5% in 2022. The lower margin in 2021 was primarily due to increasing investments in new attractive opportunities (including investments in Yandex Market and further development of Yandex Plus) as well as the changing mix of businesses (i.e., an increase as a percentage of our total revenues related to segments with margins lower than those of our core advertising business). The growth of margin in 2022 was mainly driven by the continuing improvement of our Search and Portal, E-commerce, Mobility and Delivery, and Devices segments’ profitability on the back of the increased operational efficiency and stricter cost control.

The table below presents information about the revenues of our reportable segments:

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The table below presents information about the adjusted EBITDA of our reportable segments:

Eliminations represent the elimination of transactions between the reportable segments, including advertising agreements, brand royalties, use of data centers, sales of devices and others.

For the reconciliation between total adjusted EBITDA and net income/(loss) before income tax expense see Note 16 — “Information about segments & geographic areas” of our consolidated financial statements included elsewhere in this Annual Report.

Service revenues. Service revenues consist of online advertising revenues, revenues from our ride-hailing and logistics services, food delivery services, Plus and Entertainment services, car-sharing services, third party sales through the Yandex Market marketplace platform and other services. Service revenues increased by RUB 129,440 million, or 43.1%, from 2021 to 2022 and by RUB 102,062 million, or 51.5%, from 2020 to 2021. The growth was mainly attributable to the following:

Revenues related to sales of goods primarily represent revenues from goods sold through our marketplace platform, e-grocery revenue (specifically, Yandex Lavka, where we use a first-party (1P) business model and act as a direct retailer) and from our devices business. Revenues related to sales of goods increased by RUB 36,090 million, or

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64.5%, from 2021 to 2022 and by RUB 35,765 million, or 177.5%, from 2020 to 2021. The growth is primarily due to our FoodTech businesses, driven by our hyperlocal grocery delivery service, Yandex Lavka, as well as increasing sales of devices and raising sales through our marketplace platform.

Operating Costs and Expenses

We classify our operating costs and expenses as follows: cost of revenues, product development, sales, general and administrative expenses, depreciation and amortization.

Costs of revenues consists of cost of devices and other goods sold, traffic acquisition costs (TAC), cost of corporate ride-hailing and logistics services, logistics costs, content acquisition costs and outsource services, personnel expenses, content assets amortization and other cost of revenues.

TAC are the amounts paid to our partners in the Yandex Advertising Network for serving our online ads on their websites and to our partners who distribute our products or otherwise direct search queries to our websites. These amounts are primarily based on revenue-sharing arrangements. Some of our distribution partners are compensated on the basis of the number of installations of Yandex Browser or search apps. We pay fees to our distribution partners on a non-refundable basis following the period in which the distribution fees are earned. We do not have a standard term or termination provision that applies to agreements with our distribution partners.

The following table presents the primary components of our cost of revenues in absolute terms and as a percentage of revenues for the periods presented:

Traffic acquisition costs increased by RUB 9,023 million from 2021 to 2022 and increased by RUB 5,723 million from 2020 to 2021, as a result of solid growth in Yandex Advertising Network revenue for the period and costs related to our distribution partners, as well as due to the recovery of advertisers’ activity in 2021 compared to 2020. As a percentage of total revenues, traffic acquisition costs decreased from 9.1% in 2020 to 7.2% in 2021 and to 6.6% in 2022, as a result of growth of non-advertising revenue as a percentage of total revenue and the corresponding decline in the share of online revenue related costs.

Other cost of service revenues increased by RUB 27,506 million or 28% from 2021 to 2022 and by RUB 50,124 million or 104% from 2020 to 2021. The increase was primarily due to the increase in the cost of corporate ride-hailing and logistics services by RUB 14,026 million and by RUB 10,675 million in 2022 and 2021, increases in content acquisition costs and outsource services by RUB 9,701 million and by RUB 12,120 million in 2022 and 2021 respectively related to our Plus and Entertainment services (in line with the growth of subscription revenue); a decrease in logistics costs by RUB 335 million from 2021 to 2022 and an increase in logistics costs by RUB 18,404 million from 2020 to 2021 due to growth of Yandex Food Delivery and Yandex Lavka and the consolidation of Yandex Market. Finally, further factors driving the increases in cost of service revenues include increases in personnel expenses (including share-based compensation) of RUB 3,308 million and of RUB 4,184 million in 2022 and 2021 as a result of our growing staff headcount and higher salaries in 2022 and 2021. Relevant personnel headcount increased from 715 as of December 31, 2020, to 856 as of December 31, 2021, and to 938 as of December 31, 2022. In addition, in March 2022 we incurred one-off personnel expenses as a result of payment of an additional month’s salary to support our employees in the face of macroeconomic instability.

Cost of goods sold increased by RUB 22,738 million from 2021 to 2022 and by RUB 32,371 million from 2020

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to 2021 in line with the growth of revenue related to sales of goods.

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Product development. Product development expenses consist primarily of personnel costs incurred for the research and development of our search engine and other technology platforms (such as Yandex Go, marketplace platform, self-driving vehicles business, classifieds platform and others). We also include rent and utilities attributable to office space occupied by development staff in product development expenses. We expense product development costs as they are incurred.

The following table presents our product development expenses in absolute terms and as a percentage of revenues for the periods presented:

Product development expenses increased by RUB 23,817 million, or 49.1%, from 2021 to 2022, and by RUB 12,122 million, or 33.4%, from 2020 to 2021. These increases were primarily due to increases in headcount and salaries in 2022 and 2021. Development personnel headcount increased from 6,459 as of December 31, 2020, to 9,192 as of December 31, 2021, and to 10,708 as of December 31, 2022. In addition, we incurred one-off personnel expenses as a result of payment of an additional month’s salary to support our employees as mentioned above. As a percentage of revenues, product development expenses decreased by 3 percentage points from 2020 to 2021, reflecting faster revenue growth, and remained relatively flat from 2021 to 2022.

Sales, general and administrative expenses include: expenses for personnel engaged in sales, promotion of products to the market, or performing general or administrative functions, including share-based compensation expenses; rental of office space and related utilities in an amount proportional to the number of employees performing these functions; training and hiring expenses; advertising and marketing expenses, including the costs of organizing promotions; telecommunication services; travel expenses; legal and audit services; banking commission; and other expenses related to the Group’s operating activities.

The following table presents our sales, general and administrative expenses in absolute terms and as a percentage of revenues for the periods presented:

Sales, general and administrative expenses increased by RUB 49,168 million, or 40%, from 2021 to 2022 and by RUB 60,011 million, or 95.4%, from 2020 to 2021. The increase in 2022 compared to 2021 was primarily due to an increase in personnel expenses (including share-based compensation) of RUB 21,356 million which supported the acceleration in GMV growth in respect of Yandex Market and the revenue growth of Search Portal, Ride-hailing, FoodTech, Plus and Entertainment services and Yandex Delivery. Relevant personnel headcount increased from 4,690 as of December 31, 2020, to 7,956 as of December 31, 2021, and to 9,204 as of December 31, 2022.

Additional factors contributing to the overall increase from 2021 to 2022 were increases in tax expenses other than income tax of RUB 7,812 million; bank and payment systems commissions of RUB 4,846 million, reflecting an increase in the number of orders made through Yandex Market, FoodTech and Yandex Delivery and in the number of rides in the Ride-hailing segment; office rent and utilities expenses of RUB 3,034 million; and intangible assets impairment related to E-commerce, Mobility and Delivery business of RUB 2,740 million.

The increase in sales, general and administrative expenses in 2021 compared to 2020 was primarily due to an increase in advertising and marketing expenses of RUB 27,964 million as well as in personnel expenses (including share-

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based compensation) of RUB 17,078 million. These increases are partly related to the consolidation of Yandex Market in the amount of  RUB 7,744 million and RUB 2,921 million respectively. Another contributing factor is the support of the acceleration of GMV growth of Yandex Market and revenue growth of Search Portal, Ride-hailing, FoodTech, Plus and Entertainment Services and Yandex Delivery. The dynamics in the second and third quarters of 2021 were also affected by the low operating costs base in prior year periods due to COVID-19-related cost optimization measures that were implemented in 2020.

Additional factors contributing to the overall increase from 2020 to 2021 were increases in bank and payment system commissions of RUB 5,517 million, reflecting an increase in the number of rides in the Ride-hailing business and in the number of orders in FoodTech and Yandex Delivery businesses, as well the consolidation of Yandex Market; and other professional and outsourced services of RUB 3,257 million.

Depreciation and amortization. Depreciation and amortization expense relates to the depreciation of our property and equipment, mainly servers and networking equipment, leasehold improvements, data center equipment and office furniture, and the amortization of our intangible assets.

The following table presents our depreciation and amortization expense in absolute terms and as a percentage of revenues for the periods presented:

Depreciation and amortization expense increased by RUB 6,763 million, or 28.0%, from 2021 to 2022 and by RUB 6,424 million, or 36.3%, from 2020 to 2021. The increases from 2021 to 2022 and from 2020 to 2021 were primarily due to: the increase of amortization expense related to technologies and licenses in the amount of RUB 1,242 million and RUB 710 million, respectively; acquisition-related intangible assets amortization expense (amortization of acquired software, customer relationships, supplier relationships and others) in the amount of RUB 440 million and RUB 1,414 million, respectively; depreciation expense related to server and network equipment and infrastructure systems in the amount of RUB 2,329 million, and RUB 2,919 million, respectively (primarily the result of our investments in servers and data center equipment); depreciation expense related to finance leases in the amount of RUB 915 million and RUB 474 million, respectively; and depreciation expense related to office furniture and equipment in the amount of RUB 771 million and RUB 442 million, respectively.

Any depreciation of the Russian ruble may result in a material increase in our capital expenditures and respective depreciation and amortization.

Share-based compensation. In our consolidated statements of operations, share-based compensation expense is recorded in the same functional area as the expense for the recipient’s cash compensation. As a result, share-based compensation expense is allocated among our cost of revenues, product development expenses and sales, general and administrative expenses.

The following table presents our aggregate share-based compensation expense in absolute terms and as a percentage of revenues for the periods presented:

Share-based compensation expense increased by RUB 3,209 million, or 15.4%, from 2021 to 2022. The growth was primarily related to settlement of equity-linked awards in respect of our various Business Units, including options and synthetic options, in cash, which led to additional cost recognized in 2022. In light of the ongoing trading halt in our

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Class A shares on Nasdaq, during 2022 participants received cash compensation based on the appreciation in value of the Business Unit equity from the grant date to the exercise date instead of settlement in our Class A shares. 

Share-based compensation expense increased by RUB 5,101 million, or 32.4%, from 2020 to 2021. The growth was primarily related to new equity-based grants made in 2020-2021 (including restricted share units (“RSUs”) granted in respect of SDG, synthetic equity awards for certain business units and PSUs granted in November 2020 and February 2021) as well as the change in the share price of Yandex N.V. and appreciation of the U.S. dollar against the ruble which was offset by the high base effect (related to the replacement of cash bonuses by equity compensation for some senior employees in the second quarter of 2020, in the course of our COVID-19 related cost optimization initiatives) and due to the exchange of Yandex Market and MLU equity awards for new Yandex N.V. RSUs in the third and fourth quarters of 2020.

See Note 15 — “Share-based compensation” of our consolidated financial statements included elsewhere in this Annual Report.

Revenues and adjusted EBITDA by reportable segments

Revenues by reportable segment. Our revenues attributable to the Search and Portal segment increased by RUB 61,954 million or 38.1%, from 2021 to 2022, and by RUB 38,869 million, or 31.4%, from 2020 to 2021. The growth in this segment’s revenues is mainly driven by online advertising revenues increasing on the back of ongoing improvements to ad technologies and products, which translated into market share gains amid changes in the competitive landscape. Search and Portal revenues accounted for approximately 43.1% of total revenues in 2022, compared with 45.7% in 2021 and 56.7% in 2020.

Our revenues attributable to the E-commerce, Mobility and Delivery segment increased by RUB 94,328 million, or 56.7% from 2021 to 2022 and by RUB 83,663 million, or 101.0%, from 2020 to 2021. E-commerce, Mobility and Delivery revenues accounted for approximately 50.0% of total revenues in 2022, compared with 46.7% in 2021 and 37.9% in 2020. The increase is primarily driven by E-commerce services (where Yandex Market was the largest contributor to growth, followed by Yandex Lavka) and Mobility.

E-commerce revenues (which represented 38.8% of the total segment revenues in 2022) increased by RUB 40,667 million, or 67.2% from 2021 to 2022 and by RUB 36,946 million, or 156.4%, from 2020 to 2021. The increase was driven by the normalization of the 1P/3P revenue mix in Yandex Market and improvement of 3P take rates, as well as the growth of GMV on the back of the overall e-commerce market growth. 1P revenues increased by RUB 22,417 million, or 48.0%, in 2022 which was supported by the growth of Yandex Lavka (Yandex Lavka year-on-year growth was primarily driven by further increase in items per order, positively affecting the average check) and Yandex Market 1P sales (as a result of a growth of GMV and the business as a whole). Commission and other E-Commerce revenues grew by RUB 18,250 million, or 131.6% in 2022 due to 3P GMV growth and an improved effective take rate in Yandex Market.

Mobility revenues increased by RUB 36,566 million, or 42.8% from 2021 to 2022 and by RUB 36,097 million, or 73.3% from 2020 to 2021. The increase was driven by solid growth in the number of rides and GMV in ride-hailing as well as the higher share of our corporate taxi business, which we recognize on a gross basis. We consider the number of rides to be a key performance indicator for our Ride-hailing segment. We define rides as the number of rides completed by the service users (riders) in a given period. Management uses this metric to assess the scale and frequency of usage of our platform and believes that it is the most useful metric for investors to measure the scale and usage of our platform. The number of rides for the years ended December 31, 2020, 2021 and 2022 were 1.6 billion, 2.4 billion and 3.1 billion, respectively.

Other O2O services revenues attributable to E-commerce, Mobility and Delivery segment increased by RUB 20,613 million from 2021 to 2022 which delivered solid 89% year-on-year growth primarily driven by the growth of Yandex Delivery and Yandex Food Delivery, as well as the acquisition of Delivery Club.

Our revenues attributable to the Plus and Entertainment services segment increased by RUB 13,374 million, or 72.7% from 2021 to 2022, and by RUB 10,601 million, or 135.8%, from 2020 to 2021. Plus and Entertainment services revenues accounted for approximately 6.1% of total revenues in 2022, compared with 5.2% in 2021 and 3.6% in 2020. The increase was supported by the further expansion of the Yandex Plus subscriber base, an increasing share of paying

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subscribers and an increasing revenue per subscriber, increases in original and exclusive content license revenue, as well as growth of our advertising and transactional revenues (ticket sales).

Our revenues attributable to the Classifieds segment increased by RUB 3,070 million, or 33.3%, from 2021 to 2022 and by RUB 2,916 million, or 46.3%, from 2020 to 2021. Classifieds revenues accounted for approximately 2.4% of total revenues in 2022, compared with 2.6% in 2021 and 2.7% in 2020. The decrease of the share of this segment’s revenues in total group revenue in 2022 compared to 2021 is primarily due to the impact of the significant downturn affecting the new car market.

Our revenues attributable to the Other Business Units and Initiatives segment increased by RUB 20,816 million, or 85.2%, from 2021 to 2022 and by RUB 13,168 million, or 116.9%, from 2020 to 2021. Other BUs and Initiatives revenues primarily related to Devices and Cloud in 2022, Devices and Zen in 2021 and 2020 and increased to approximately 8.7% of total revenues in 2022, compared with 6.9% in 2021 and 5.2% in 2020.

Adjusted EBITDA by reportable segments. Our adjusted EBITDA attributable to the Search and Portal segment increased by RUB 36,142 million, or 44.8%, from 2021 to 2022 and by RUB 19,640 million, or 32.1%, from 2020 to 2021. The increase in 2022 was mainly a result of the positive operating leverage effect driven by solid trends in advertising revenue and supported by savings related to advertising and marketing expenses as well as positive impact of the segregation of corporate overheads. All these factors helped to offset an adverse impact from the growth of personnel costs on the back of the changes in our compensation scheme, and the resulting inclusion in adjusted EBITDA of stock-based compensation expenses related to RSU equity awards of our employees settled in cash. The primary factor contributing to the overall increase in 2021 was revenue growth due to the solid performance of the core search business (supported by product development and improved search share) as well as strong trends in the Yandex Ad Network on the back of improved economic recovery from COVID-19 pandemic partly offset by our investments in increasing the effectiveness of our advertising products (including our conversion strategies and simplified solutions for SMB clients) and in product and performance marketing to support the growth of our iOS market share.

Our adjusted EBITDA losses attributable to the E-commerce, Mobility and Delivery segment narrowed by RUB 11,109 million, from 2021 to 2022 and expanded by RUB 28,651 million, from 2020 to 2021. The improvement of adjusted EBITDA in 2022 was driven primarily by better operational efficiency across most of the key businesses included in the segment, as well as a group-wide focus on cash generation and stricter cost control, which included a hiring freeze, optimization of marketing expenses and other overheads. The decrease of adjusted EBITDA in 2021 was primarily due to investments in the growth of scale of E-Commerce businesses since the date of Market consolidation within Yandex, including expansion of logistics infrastructure and operations as well as targeted marketing campaigns to expand customer base and strengthen brand recognition.

Our adjusted EBITDA attributable to the Plus and Entertainment segment decreased by RUB 1,385 million, from 2021 to 2022 and decreased by RUB 2,729 million, from 2020 to 2021. Subscription revenue growth was largely offset by the investments in marketing and the growth of personnel expenses to support the expansion of the business.

Our adjusted EBITDA attributable to the Classifieds segment decreased by RUB 753 million, or 40.4%, from 2021 to 2022 and increased by RUB 957 million, or 105.5% from 2020 to 2021. The primary factor contributing to the overall decrease of adjusted EBITDA in 2022 was the growth of advertising and marketing expenses, investments in our new businesses, such as Yandex Rent, as well as personnel costs to support the services development. The primary factor contributing to the overall increase of adjusted EBITDA in 2021 was the increase in revenues from auto dealers’ listings (from the low pandemic-affected base of 2020), partly offset by investments in the development and marketing of new products and services in order to expand our end-to-end value proposition for both customers and consumers, as well as overall enhancement of the Classifieds segment’s offering.

Our adjusted EBITDA attributable to the Other Business Units and Initiatives segment decreased by RUB 12,635 million, from 2021 to 2022, and decreased by RUB 6,484 million, from 2020 to 2021. The decreases in 2022 were primarily due to segregation of unallocated corporate expenses from reportable segments’ adjusted EBITDA to Other Business Units and Initiatives category in 2022 and higher investments in our experimental growing businesses, such as Yandex SDG and FinTech, while our key businesses have demonstrated improvements in performance compared 2021: Devices and Cloud in Russia & CIS both became profitable in 2022. The decreases in 2021 were primarily due to our launch of new experiments, such as FinTech, as well as continued investments in Yandex SDG and other initiatives and experiments.

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Interest Income

Interest income remained relatively stable at RUB 4,723 million in 2022 and RUB 4,615 million in 2021. Interest income increased from RUB 3,869 million in 2020 to RUB 4,615 million in 2021 mainly due to the increase in applicable interest rates.

Interest Expense

Interest expense decreased to RUB 3,396 million in 2022 from RUB 3,711 million in 2021. This dynamic reflects a decrease in amortization of debt discount and interest expenses related to our convertible debt and increase in interest on the loan that was used to finance the convertible debt restructuring as well as an increase in financial lease interest expenses.

Interest expense increased to RUB 3,711 million in 2021 from RUB 2,373 million in 2020. The increase was primarily due to amortization of debt discount and interest expenses related to our convertible debt in the amount of RUB 521 million and financial lease interest expenses in the amount of RUB 578 million.

Gain on restructuring of convertible debt

In June 2022, we completed the purchase of 93.2% in aggregate principal amount of our $1.25 billion 0.75% Convertible Notes due 2025. We have to date purchased more than 99% in aggregate principal amount of the Notes originally issued. As a result of the restructuring, a gain in the amount of RUB 9,305 million and a related income tax expense in the amount of RUB 751 million were recognized. See Note 13 — “Debt” of our consolidated financial statements included elsewhere in this Annual Report.

Effect of the News and Zen deconsolidation

In September 2022, we completed the sale of our news aggregation platform and Zen, our infotainment service, together with the acquisition of 100% of the food delivery service Delivery Club. The transaction marked a strategic decision to exit from media businesses (other than entertainment streaming). As a result of the News and Zen deconsolidation, a gain in the amount of RUB 38,051 million was recognized. See Note 3 – “Business combinations and investment transactions” of our consolidated financial statements included elsewhere in this Annual Report.

Effect of Yandex Market consolidation

On July 23, 2020, we completed the acquisition of our joint venture partner’s interest in Yandex Market (approximately 50%) for RUB 42,000 million. The acquisition was accounted for as a step-acquisition under the business combination rules. Accordingly, we remeasured our previously held equity interest in Yandex Market to fair value, in the amount of RUB 41,838 million, and recorded a gain of RUB 19,230 million. As a result, we became the controlling shareholder in Yandex Market and its financial results have been consolidated in our consolidated financial statements from July 24, 2020.

Income/(loss) from equity method investments

Loss from equity method investments in the amount of RUB 929 million in 2022 is mainly represented by the investments in venture capital funds. Income from equity method investments in the amount of RUB 6,367 million in 2021 is represented the RUB 3,354 million gain on the revaluation of investment in ClickHouse Inc. and RUB 3,014 million in investments in venture capital. Net loss from equity method investments in the amount of RUB 2,175 million in 2020 mainly related to an investment in Yandex Market B.V. See Note 4 — “Consolidated financial statements details” of our consolidated financial statements included elsewhere in this Annual Report.

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Because the functional currency of our operating subsidiaries in Russia is the Russian ruble, changes in the ruble value of these subsidiaries’ monetary assets and liabilities that are denominated in other currencies (primarily the U.S. dollar) due to exchange rate fluctuations are recognized as foreign exchange gains or losses in our consolidated statements of operations. In 2022, we recognized foreign exchange loss in our Russian subsidiaries in the amount of RUB 2,720 million due to the strengthening of the Russian ruble against the U.S. dollar. By contrast, we recognized foreign exchange gain of RUB 12,113 million in our non-Russian subsidiaries where functional currency primarily is the U.S. Dollar, because those companies have monetary assets and liabilities denominated in other currencies.

There were no significant fluctuations in exchange rates in 2021, so we recognized an insignificant foreign exchange gain compared to previous period in the amount of RUB 235 million.

In 2020, we recognized foreign exchange gain in our Russian subsidiaries in the amount of RUB 4,856 million due to depreciation of the Russian ruble against the U.S. dollar. On the contrary, we recognized foreign exchange losses of RUB 2,104 million in our foreign companies where functional currency primarily is the U.S. Dollar, because those companies have monetary assets and liabilities denominated in other currencies.

The item labelled as “Contribution to a not-for-profit organization” in 2021 represents our RUB 1.5 billion contribution to the Russian Fund for the Development of Information Technologies to support Russian technology companies in promoting their products and services.

Our income tax expense increased by RUB 15,304 million from 2021 to 2022 and decreased by RUB 5,763 million from 2020 to 2021 primarily reflecting changes in taxable income. Our effective tax rate increased by 135.2 percentage points from 2021 to 2022 and decreased by 139.0 percentage points from 2020 to 2021. The effective tax rate differs from the statutory rate mainly as a result of the effects of deferred tax asset valuation allowances, share-based compensation expense, tax effects of the News and Zen deconsolidation and related acquisition of Delivery Club, the effect of change in tax rates, items not deductible for tax purposes, differences in foreign tax rates of certain our subsidiaries, gains/(losses) on equity method investments, contribution to a not-for-profit organization, withholding tax on distributed profits from subsidiaries, tax provisions recognized as well as gain on Yandex Market consolidation and loss on the disposal of Yandex Money.

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See “Critical Accounting Policies, Estimates and Assumptions—Tax Provisions” for additional information about our income tax expense. A reconciliation of our statutory income tax rate to our effective tax rate is set forth in Note 10 — “Income tax” of our consolidated financial statements included elsewhere in this Annual Report.

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operating activities include payments to employees, purchase of goods and content assets, and payments to our Yandex Advertising Network partners and distribution partners. Other uses of cash from operating activities include payments to suppliers for professional services, tax authorities for income taxes, and other general corporate expenditures.

Net cash provided by operating activities increased by RUB 32,395 million from 2021 to 2022. The increase in 2022 mainly resulted from positive operating leverage effect in Search and Portal driven by solid trends in advertising revenue supported by savings related to reduced advertising and marketing expenses, as well as increase of inflow from Mobility services driven by (i) the growth in the number of rides on the back of improvement of the rider base and order frequency in Russia, fast growth of new users in CIS; and (ii) operational efficiency improvement and optimization of marketing expenses.

Net cash provided by operating activities decreased by RUB 23,311 million from 2020 to 2021. The decrease mainly was due to significant outflows related to the growth of scale in our E-Commerce business.

Cash flows (used in)/provided by investing activities.

Cash provided by investing activities consists primarily of maturities of term deposits and sales of investments in marketable and non-marketable securities. Cash used in investing activities consists primarily of purchases of property and equipment (the purchases of servers and networking equipment for data centers, fulfillments and sort centers, investments in equipment for scooters and to the construction of a new office building for our headquarters), payments for acquisitions of businesses, investments in term deposits, purchases of marketable and nonmarketable securities.

Net cash used in investing activities in 2022 in the amount of RUB 22,738 million compared to net cash provided by investing activities in 2021 in the amount of RUB 21,994 million was mainly a result of a decrease in cash flows from maturities of term deposits (net of investment in term deposits) of RUB 57,714 million. Cash used for purchases of property and equipment and intangible assets increased by RUB 5,923 million in 2022.

Net cash provided by investing activities in 2021 in the amount of RUB 21,994 million compared to net cash used in investing activities in 2020 in the amount of RUB 119,947 million was mainly a result of maturities term deposits in 2021 and investments in term deposits in 2020 (in net amounts).

Cash used for acquisitions of businesses net of cash acquired in the amount of RUB 8,236 million in 2021 mainly related to the acquisitions: Axelcroft Group in February 2021 (RUB 7,228 million), Acropol Bank and other acquisitions (see Note 3 — “Business combinations and Investment transactions” of our consolidated financial statements included in this Annual Report). Cash used for purchases of property and equipment and intangible assets increased by RUB 20,070 million. In addition, in 2021, we made several treasury investments in the amount of RUB 10,604 million.

Cash flows (used in)/provided by financing activities.

Net cash used in financing activities in 2022 was RUB 5,519 million, consisting mainly of cash outflows from repayment of debt for the amount of RUB 49,560 million and cash inflow from new debt in the amount of RUB 50,666 million. Repayment of debt primarily refers to the repurchase of our convertible notes (For more details see Note 13 – “Debt” of our consolidated financial statements included in this Annual Report). The cash inflow from proceeds from new debt reflected primarily a RUB-denominated commercial loan maturing in June 2025 used to fund the cash portion of such repurchase price.

Net cash used in financing activities in 2021 was RUB 84,845 million, consisting mainly of cash outflows from payment under the transaction with Uber of RUB 73,077 million.

Cash inflow from financing activities in 2020 was RUB 139,676 million, consisting mainly of cash inflows from proceeds from issuance of convertible notes of RUB 82,046 million and proceeds from issuance of ordinary shares of RUB 72,650 million, slightly offset by the cash outflow related to repurchases of ordinary shares of RUB 10,165 million.

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Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents principally reflects fluctuations of Russian ruble against the U.S. dollar. The Russian ruble appreciated against the U.S. dollar in 2022, was relatively stable in 2021 and depreciated in 2020.

Off-Balance Sheet Items

We do not currently engage in material off balance sheet financing arrangements, and do not have any material interest or obligation, including a contingent obligation, arising out of a variable interest, in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

The table above presents our long term rent obligations for our offices, data center facilities and cars, long-term debt, production and licensing of streaming content and other purchase obligations related to utilities fees, data center operations and facility build-outs, devices production and other services and obligations.

For agreements denominated in U.S. dollars, the amounts shown in the table above are based on the U.S. dollar/Russian ruble exchange rate prevailing on December 31, 2022. All amounts are shown excluded value added tax, where applicable.

Critical Accounting Policies, Estimates and Assumptions

Our accounting policies affecting our financial condition and results of operations are more fully described in our consolidated financial statements for the years ended December 31, 2020, 2021 and 2022, included elsewhere in this Annual Report. The preparation of these consolidated financial statements requires us to make judgments in selecting appropriate assumptions for calculating accounting estimates, which inherently contain some degree of uncertainty. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe our critical accounting policies that affect the more significant judgments and estimates used in the preparation of our consolidated financial statements are as follows:

Tax Provisions

Significant judgment is required in evaluating our uncertain tax positions and determining our income tax expense. FASB authoritative guidance on accounting for uncertainty in income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on tax audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

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Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made. The income tax expense includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest. Our actual taxes may be in excess of the estimated amount expensed to date and accrued as of December 31, 2022, due to ambiguities in, and the evolution of, local tax legislation, varying approaches by regional and local tax inspectors, and inconsistent rulings on technical matters at the judicial level. See “Risk Factors—Risks Related to Tax Matters—Changes in the tax systems in the countries in which we operate, or unpredictable or unforeseen application of existing rules, may materially adversely affect our business, financial condition and results of operations.”

In addition, significant management judgment is required in determining whether deferred tax assets will be realized. A valuation allowance is recognized to reduce deferred tax assets to amounts that are more likely than not to ultimately be utilized based on our ability to generate sufficient future taxable income. Establishing or reducing a tax valuation allowance requires us to make assessments about the timing of future events, including the probability of expected future taxable income and available tax planning strategies. If actual events differ from management’s estimates, or to the extent that these estimates are adjusted in the future, any changes in the valuation allowance could materially impact our consolidated financial statements.

Business Combinations

The FASB authoritative guidance requires us to allocate the fair value of purchase consideration to the assets of businesses acquired and respective liabilities assumed based on their fair values. Our estimates of the fair value of the identified intangible assets of businesses acquired are based on our expectations of the future results of operations of such businesses. The fair value assigned to identifiable intangible assets acquired is supported by valuations that involve the use of a large number of estimates and assumptions provided by management.

The purchase consideration that requires estimation of fair value is determined by valuation techniques which involve the use of significant estimates and assumptions determined by the management.

Impairment of Goodwill

We assess the carrying value of goodwill arising from business combinations on an annual basis, or more frequently if events or changes in circumstances indicate that such carrying value may not be recoverable. Other than our annual review, factors we consider important that could trigger an impairment review include under-performance of our reporting units compared with our internal budgets or changes in projected results, changes in the manner of utilization of the asset, and negative market conditions or economic trends. We determine whether impairment has occurred by assigning goodwill to the reporting unit identified in accordance with the authoritative guidance, and comparing the carrying amount of the reporting unit to the fair value of the reporting unit. We generally measure the fair value of the reporting unit by considering discounted estimated future cash flows using an appropriate discount rate. Therefore, our judgment as to the future prospects of our business has a significant impact on our results and financial condition. If these future prospects do not materialize as expected or there is a future adverse change in market conditions, we may be unable to recover the carrying amount of an asset, resulting in future impairment losses.

Fair Value of the Share Consideration Part of the Convertible Debt

We accounted for the modification of our 0.75% convertible notes due March 3, 2025 (the “Notes”) as a troubled debt restructuring and recognized as a gain the difference between the carrying value of all the Notes and the fair value of the purchase price paid and payable, including the cash component and share consideration. The fair value of the share consideration was determined based on the analysis of the most appropriate valuation technique in light of the trading halt in our Class A shares on NASDAQ.

Recent Accounting Pronouncements

See Note 1 — “Description of Business and Summary of Significant Accounting Policies” of our consolidated financial statements included elsewhere in this Annual Report.

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Mr. Boynton has been a non-executive director since 2000 and was appointed to serve as Chairman of the Board in 2016. He was a founding shareholder of Yandex and has served the Board in a number of capacities including Chairman of the Nominating and Governance Committee, Chairman of the Compensation Committee, and Member of the Audit Committee. He is a member of the National Association of Corporate Directors. In addition to Yandex, he was co-founder of CompTek and InfiNet Wireless in Russia and has served as a founder, investor and/or board member in a variety of growth companies in technology, healthcare services, and real estate. His career was shaped by a student trip to the Soviet Union in 1983. He was studying Russian language at the time, and that trip inspired him to direct his entrepreneurial energy toward Russia after graduating from Harvard in 1988.

Mr. Rijnja has been a non-executive director of Yandex since 2013. Mr. Rijnja is a management consultant and executive coach. Previously he served as a Senior Vice President of Human Resources and a member of the executive committee at D.E Master Blenders, a Dutch public company listed on the Amsterdam stock exchange. Earlier, Mr. Rijnja served as head of the human resources departments at several international companies, including Maxeda (2008 to 2011), Numico N.V. (2004 to 2008) and Amazon.com (2002 to 2004). Prior to this, he was director of global management development at Reckitt Benckiser PLC from 1998 to 2002, and a human resources manager for Nike Europe from 1996 to 1998. Between 1989 and 1996, Mr. Rijnja held several positions at Apple in The Netherlands and the United States. Mr. Rijnja has a degree in law studies from Leiden University in The Netherlands.

Mr. Ryan became a non-executive director of Yandex at the time of its initial public offering in 2011. A finance professional with 29 years of experience in both the Russian and international markets, Mr. Ryan co-founded United Financial Group (UFG) and became its Chairman and CEO in 1994. In 1998, Mr. Ryan initiated the New Technology Group within UFG Asset Management, which sponsored an early-stage technology investment in ru-Net Holdings whose investments include Yandex. In 2006, Deutsche Bank acquired 100% of UFG’s investment banking business, and Mr. Ryan was appointed chief country officer and CEO of Deutsche Bank Group in Russia and remained in that position until the end of 2008, when he became chairman of UFG Asset Management. From 2008 through the end of 2010, Mr. Ryan was a consultant for Deutsche Bank. Prior to founding UFG, Mr. Ryan worked as an associate and principal banker with the European Bank for Reconstruction and Development in London from 1991 to 1994 and as a financial analyst with CS First Boston from 1989 to 1991. Mr. Ryan is also a founder and the general partner of Almaz Capital Partners, an international VC firm, headquartered in Silicon Valley, which connects entrepreneurs and engineering talent in the USA and Eastern European /CIS countries and brings prominent startups to the global market. Mr. Ryan has a degree in Government from Harvard University. The Board of Directors has determined that Mr. Ryan meets the SEC criteria for an Audit Committee Financial Expert.

Mr. Voloshin has been a non-executive director of Yandex since August 2010 after serving as an advisor to the company for two years. Since February 2012, Alexander Voloshin has served as Chairman of the Board and Independent Director at JSC Freight One. As the leader of the Moscow International Financial Centre working group, Mr. Voloshin championed an overhaul to Russia’s corporate governance rules, helping to update guidance in line with global best practice. He also served as Chairman of the Board of Directors of Uralkali from 2010 to 2014. Prior to joining our Board of Directors, Mr. Voloshin served as Chairman of the Board of MMC Norilsk Nickel from 2008 to 2010 and as Chairman of the Board of Directors of RAO “UES of Russia” from 1999 to 2008. Mr. Voloshin has been Chairman of the Board at Moscow Business School Skolkovo since 2016. He graduated from the Moscow Institute of Transport Engineers in 1978 and holds a degree in economics from the All-Russia Foreign Trade Academy.

Mr. Yakovitsky has been a non-executive director of Yandex since 2019. He started his career in equity research at United Financial Group (UFG). He was ranked the No. 1 telecom analyst for Russia by Institutional Investor in 2004 and was cohead of Russian equity research at UFG and Deutsche Bank (which acquired UFG) in 2005-2008. He then joined VTB Capital in 2008 as co-head of equities and head of research and served as its Moscow CEO from 2009 until Q1 2022. Mr. Yakovitsky has degrees from Moscow Lomonosov State University, Department of History, as well as from the Nelson A. Rockefeller College of Public Affairs and Policy (Albany, US).

Dr. Moldovan first joined the Board in June 2021. Dr. Moldovan is Chairman of the Academic Council of the Vinogradov Institute and a full member of the Russian Academy of Sciences. He is one of the foremost experts on the history and evolution of the Russian language. His collaborations with Yandex date back more than 20 years when he worked with Arkady Volozh and Ilya Segalovich to develop the first National Russian Language Corpus on top of our core search platform. As a member of our Board of Directors, Dr. Moldovan will be well-positioned to help Yandex develop a variety of projects related to speech and language technologies as well as ESG initiatives related to inclusivity and adaptation of the Company’s products for all audiences, including people with disabilities. Mr. Moldovan’s

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popularity in scientific circles will help the Company gain access to cutting edge R&D, and of course, Dr. Moldovan’s experience will be useful in Yandex’s educational initiatives.

To our knowledge, there are no family relationships among any of the members of our board or senior management.

Following the resignations of our two executive directors in 2022, these positions remain vacant. In the absence of executive directors, as matter of Dutch law, our Board of Directors collectively exercises executive authority over our company. The Board grants powers of attorney from time to time to company representatives as required, and supervises and directs the other members of management.

Compensation and Share Ownership of Executive Officers and Directors

In light of the trading halt in our Class A shares on Nasdaq, our Board of Directors approved an amendment of our outstanding equity incentive awards: our participants receive cash compensation on the vesting dates of the relevant RSU equity awards, in an amount equal to the target value of each tranche of such awards. Accordingly, no awards have been or are due to be vested between February 28, 2022 until the end of 2023, and participants will instead receive cash compensation on the vesting dates of the relevant RSU equity awards, in an amount equal to the target value of each tranche of such awards.

The aggregate cash compensation paid or accrued in 2022 for members of our senior management (a total of 11 persons), as a group, was RUB 1,423 million ($20.2 million), including cash compensation of RUB 1,131 million ($16.1 million), which was paid instead of the relevant vested equity awards. In addition, in 2022, we granted an aggregate of 137,627 RSUs and 62,046 PSUs before February 28, 2022, and 367,191 Business Units Equity Awards during 2022 to the members of this senior management group. RSUs generally vest over four years with one-sixteenth vesting each quarter; the PSUs vest at the end of the three-year vesting period, subject to the achievement of defined performance goals. Based on the level of performance, participants may earn up to 250% of the target number of PSUs. Business Units Equity Awards will vest 25% after one year and the remaining part on a quarterly basis over three years. The RSUs, PSUs and Business Units Equity Awards have ten-year terms.

For information on share ownership and options held by our directors and senior management, please see “Major Shareholders and Related Party Transactions”.

Corporate Governance

The principal standing committees of our board of directors are the audit, compensation, nominating, corporate governance, investment, and public interest committees. We have adopted a charter for each of these committees.

Audit Committee

Our audit committee consists of Messrs. Ryan (chairperson), Boynton and Rijnja. Each member satisfies the “independence” requirements of the NASDAQ listing standards, and Mr. Ryan qualifies as an “audit committee financial expert,” as defined in Item 16A of Form 20-F and as determined by our board of directors. The audit committee oversees our accounting and financial reporting processes and the audits of our consolidated financial statements. The audit committee is responsible for, among other things:

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