Yandex

Yandex Announces Second Quarter 2021 Financial Results

July 28, 2021

MOSCOW and AMSTERDAM, the Netherlands, July 28, 2021 -- Yandex (NASDAQ and MOEX: YNDX), one of Europe's largest internet companies and the leading search and ride-hailing provider in Russia, today announced its unaudited financial results for the second quarter ended June 30, 2021

Q2 2021 Financial and Operational Highlights 1,2

         
In RUB millions  

Three months ended June 30, 

 

 

2020

2021

Change

  Total Revenues

 47,915

 81,402

70%

Total Group on a 

Online Ad Revenues

 26,906

 39,586

47%

like-for-like basis

Online Ad Revenues Ex-TAC

 22,546

 33,355

48%

including

Total Adjusted EBITDA

 6,628

 5,780

-13%

 Yandex.Market

Total Adjusted EBITDA margin, %

13.8%

7.1%

-6.7 pp

in 2020

Net loss

 (5,172)

 (4,664)

-10%

  Adjusted Net Income

 755

 1,012

34%

  Share of Russian search market, %

59.6%

59.7%

0.1 pp

 

Search share on Android, %

57.5%

59.5%

2.0 pp

Search and Portal

Revenues

 25,554

 39,419

54%

 

Revenues Ex-TAC

 20,909

 32,358

55%

  Adjusted EBITDA

 10,991

 18,226

66%

 

Adjusted EBITDA margin, %

43.0%

46.2%

3.2 pp

  Revenues

 13,131

 28,120

114%

  Rides YoY growth in the Ride-hailing service (excl. Logistics), %

-7%

104%

n/m

 

GMV3 of Ride-hailing (excl. Logistics)

 51,713

 134,909

161%

Taxi (MLU)

GMV of FoodTech

 9,985

 17,421

74%

  Total MLU Adjusted EBITDA (incl. Ride-hailing, FoodTech, Drive and Logistics)

 51

 1,568

n/m

  Ride-hailing Adjusted EBITDA margin (as % of GMV)

3.6%

3.5%

-0.1 pp

 

Total E-Commerce GMV4

 13,764

 35,139

155%

Yandex.Market

Yandex.Market marketplace GMV

 10,947

 26,692

144%

 

Yandex.Market Adjusted EBITDA 

 (1,844)

 (9,918)

n/m

Media Services

Yandex Plus subscribers, MM

 4.0

 9.0

128%

Zen

Zen DAU, MM

 16.8

 19.2

14%

  Share of video as % of time spent on Zen

14%

28%

14 pp

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars at a rate of RUB 72.3723 to $1.00, the official exchange rate quoted as of June 30, 2021 by the Central Bank of the Russian Federation.

(2) The following measures presented in this release are “non-GAAP financial measures”: ex-TAC revenues, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income margin, financial results on a like-for-like basis including Yandex.Market in the prior year period. Please see the section “Use of Non-GAAP Financial Measures” below for a discussion of how we define these measures, as well as reconciliations at the end of this release of each of these measures to the most directly comparable U.S. GAAP measures.

(3) GMV is value of delivered (and settled by customers) orders recognized on the date of delivery at their final prices, including VAT.

(4) E-Commerce GMV is defined as the value of all merchandise sold through our Yandex.Market marketplace and Yandex.Lavka as well as the value of grocery products sold through Yandex.Eats (delivered and paid for) to customers including VAT. 

Financial outlook

Based on recent performance, we currently expect our total group revenues to be between RUB 330 and 340 billion for the full year 2021.

We are increasing our Search & Portal ruble-based revenue outlook to mid-twenties growth (from high-teens previously) for the full year 2021 compared with 2020. We continue to expect Adjusted EBITDA margin in Search & Portal to be stable for the full year 2021 compared with 2020. 

We expect our total E-Commerce GMV (includes GMV of Yandex.Market marketplace, our e-grocery business Yandex.Lavka and grocery-originated GMV of Yandex.Eats) to increase up to 3x for the full year 2021 compared with 2020. We also expect our ride-hailing GMV (excluding Logistics) to demonstrate around 60% growth for the full year 2021 compared to 2020.

Our outlook reflects our current view, based on the trends that we have seen in the first seven months of the year, and may change subject to developments in market conditions, including the economic impact of the coronavirus pandemic and potential further disruptions caused by the health crisis.

Consolidated Results

The following table provides a summary of our key consolidated financial results for the three and six months ended June 30, 2020 and 2021, which includes the results of Yandex.Market from July 24, 2020 (the date of consolidation):

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

 41,407

 81,402

97%

 88,410

 154,538

75%

Ex-TAC revenues

 37,252

 75,171

102%

 78,896

 142,906

81%

Income/(loss) from operations

 116

 (4,723)

n/m

 5,305

 (4,990)

n/m

Adjusted EBITDA

 8,471

 5,780

-32%

 20,596

 16,801

-18%

Net (loss)/income

 (3,744)

 (4,664)

25%

 1,684

 (7,884)

n/m

Adjusted net income

 1,901

 1,012

-47%

 7,031

 4,020

-43%

The table below provides a summary of our key financial results including Yandex.Market on a like-for-like basis (including Yandex.Market for the full periods in 2020) for the three and six months ended June 30, 2020 and 2021:

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

 47,915

 81,402

70%

 100,344

 154,538

54%

Ex-TAC revenues

 43,555

 75,171

73%

 90,437

 142,906

58%

Loss from operations

 (2,599)

 (4,723)

82%

 (486)

 (4,990)

n/m

Adjusted EBITDA

 6,628

 5,780

-13%

 16,561

 16,801

1%

Net loss

 (5,172)

 (4,664)

-10%

 (1,284)

 (7,884)

n/m

Adjusted net income

 755

 1,012

34%

 4,611

 4,020

-13%

Our segment disclosure is provided in the Segment financial results section below.

Cash, cash equivalents and term deposits as of June 30, 2021:

  • RUB 208.2 billion ($2,876.6 million) on a consolidated basis
  • Of which RUB 20.9 billion ($288.5 million) is related to Taxi segment


 

Consolidated revenues breakdown

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Online advertising revenues

 24,760

 39,586

60%

 54,869

 75,582

38%

Revenues related to Taxi segment, excluding sales of goods

 10,782

 21,448

99%

 24,024

 42,181

76%

Revenues related to sales of goods

 2,886

 13,413

365%

 4,075

 24,281

n/m

Other revenues

 2,979

 6,955

133%

 5,442

 12,494

130%

Total revenues

 41,407

 81,402

97%

 88,410

 154,538

75%

Online advertising revenues grew 60% in Q2 2021 compared with Q2 2020 and generated 49% of total revenues. Online advertising revenues in Q2 2021 on a like-for-like basis (including revenues of Yandex.Market in the 2020 period) grew 47% YoY, excluding TAC they grew 48%. The growth was primarily driven by the low base effect of last year related to the pandemic-driven decline in our online advertising revenues, strong performance in Search and Zen advertising revenues as well as Listings and strong trends in display and video advertising in Yandex Ad Network, partly offset by a decrease in Yandex.Market CPC revenues. On a 2-year stack basis online advertising revenues grew by 14%, excluding TAC by 16%.

Revenues related to the Taxi segment, excluding sales of goods, grew 99% in Q2 2021 compared with Q2 2020 and accounted for 26% of total revenues, at a similar level as in Q2 2020. On a 2-year stack basis revenues related to the Taxi segment, excluding sales of goods grew by 44%. Revenues related to the Taxi segment include revenues from our Ride-hailing, Logistics, Yandex.Eats and Yandex.Drive businesses, but exclude revenues related to sales of goods from Yandex.Lavka. The increase of revenues related to the Taxi segment was attributed to the recovery of our Ride-hailing and Drive businesses driven by the acceleration of both rides and GMV growth (supported, among others, by the low base effect as the negative impact of the COVID pandemic on our ride-hailing operations peaked in Q2 2020) as well as the strong performance of the Logistics business.

Revenues related to sales of goods grew 365% in Q2 2021 compared with Q2 2020 and accounted for 16% of total revenues. Revenues related to sales of goods include revenues from Yandex.Market 1P sales, revenues from Yandex.Lavka, where we use a first-party (1P) business model and act as a direct retailer, and from our Devices business. This growth principally reflects the consolidation of Yandex.Market. On a like-for-like basis (including Yandex.Market in both Q2 2021 and Q2 2020) revenues related to sales of goods grew by 95% year on year mainly due to Yandex.Market 1P revenue growth, and to a lesser extent the strong performance of Yandex.Lavka and Devices businesses.

Other revenues grew 133% in Q2 2021 compared with Q2 2020 and amounted to 9% of total revenues. Other revenues include revenues from Media Services subscriptions, marketplace 3P fees and commissions, Yandex.Cloud, Education, and other services. On a like-for-like basis (including Yandex.Market’s commissions and other marketplace revenues in both Q2 2021 and Q2 2020) other revenues grew 108% year-on-year. This growth was primarily driven by subscription revenues of Media Services and expansion of our Cloud businesses, which was partially offset by the decline in Yandex.Market commission revenue on the back of the lower blended take-rates.

Consolidated Operating Costs and Expenses

Our operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A), depreciation and amortization expenses (D&A). Apart from D&A, each of the above expense categories include personnel-related costs and expenses, relevant office space rental, and related share-based compensation expense. Increases across all cost categories reflect investments in overall growth. In Q2 2021 our headcount increased by 1,859 full-time employees. The total number of full-time employees was 14,850 as of June 30, 2021, up by 14% compared with March 31, 2021, and up 45% from June 30, 2020, which is primarily driven by gradually accelerating pace of hiring, as well as the consolidation of Yandex.Market. On a like-for-like basis the growth of headcount was 28% YoY, which was primarily driven by accelerated pace of hiring in E-commerce (including Yandex.Market, Lavka and Yandex.Eats) as well as by the fast growth of Cloud, Media Services, Logistics and other businesses.

Cost of revenues, including traffic acquisition costs (TAC)

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

TAC

 4,155

 6,231

50%

 9,514

 11,632

22%

Total TAC as a % of total revenues

10.0%

7.7%

 

10.8%

7.5%

 

Costs related to Taxi segment, excluding sales of goods

 5,648

 11,842

110%

 12,399

 22,043

78%

Costs related to Taxi segment, excluding sales of goods as a % of revenues

13.6%

14.5%

 

14.0%

14.3%

 

Cost of devices and other goods sold5

 2,402

 12,398

416%

 3,365

 22,334

n/m

Cost of devices and other goods sold as a % of revenues

5.8%

15.2%

 

3.8%

14.5%

 

Other cost of revenues

 3,707

 11,303

205%

 6,869

 19,806

188%

Other cost of revenues as a % of revenues

9.0%

13.9%

 

7.8%

12.8%

 

Total cost of revenues

 15,912

 41,774

163%

 32,147

 75,816

136%

Total cost of revenues as a % of revenues

38.4%

51.3%

 

36.4%

49.1%

 

(5) Including sales of 1P products on Yandex.Market marketplace .

TAC grew 50% in Q2 2021 compared with Q2 2020 and represented 7.7% of total revenues, down 238 basis points compared with Q2 2020. The year-on-year dynamic of TAC as a share of revenue was primarily driven by a decrease of the share of advertising revenues as a percentage of total revenues as well as the optimization of TAC rates.

Costs related to the Taxi segment, excluding sales of goods increased 110% compared with Q2 2020. The growth was mainly a result of the increase in our corporate Taxi offering, delivery costs attributed to Yandex.Lavka, Logistics and Yandex.Eats and leasing costs attributed to Yandex.Drive, our car-sharing business. We are the principal in transactions with our Taxi corporate clients; therefore, we recognize both revenues and cost of revenues on a gross basis. B2B revenue amounted to 23% of ride-hailing revenues in Q2 2021 (up from 21% in Q1 2021) and grew 94% compared to Q2 2020.

Costs related to devices and other goods sold increased 416% compared with Q2 2020, which was mainly due to the consolidation of Yandex.Market. On a like-for-like basis (including cost of revenues related to Yandex.Market in both Q2 2021 and Q2 2020) costs related to devices and other goods sold increased 100% on the back of increased 1P sales of Yandex.Market as well as strong growth of Yandex.Lavka and our Devices business.

Other cost of revenues in Q2 2021 increased 205% compared with Q2 2020, primarily driven by the consolidation of Yandex.Market. Other costs of revenues include сosts of Yandex.Market sales, excluding sales of goods, Media Services subscriptions, Zen content and other services. On a like-for-like basis (including cost of revenues related to Yandex.Market in both Q2 2021 and Q2 2020) other costs of revenues were up 75%, principally reflecting increased Yandex.Market sales, excluding sales of goods, as well as increased investments in content within Media Services and Zen.

Operating Expenses

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Product development

 8,970

 11,234

25%

 16,898

 22,243

32%

As a % of revenues

21.7%

13.8%

 

19.1%

14.3%

 

Sales, general and administrative

 12,357

 27,476

122%

 25,998

 50,571

95%

As a % of revenues

29.8%

33.8%

 

29.4%

32.7%

 

Depreciation and amortization

 4,052

 5,641

39%

 8,062

 10,898

35%

As a % of revenues

9.8%

6.9%

 

9.1%

7.1%

 

Total operating expenses

 25,379

 44,351

75%

 50,958

 83,712

64%

As a % of revenues

61.3%

54.5%

 

57.6%

54.2%

 

Total operating expenses increased 75% in Q2 2021 compared with Q2 2020. On a like-for-like basis (including Yandex.Market in both Q2 2021 and Q2 2020) total operating expenses increased 58% in Q2 2021 mainly due to an increase in advertising and marketing activities, which supported revenue growth of Search and Portal, Taxi, Media Services and GMV growth acceleration of Yandex.Market. Q2 2021 dynamics was also affected by the low operating costs base in Q2 2020 due to COVID-related cost optimization measures that were undertaken in Q2 2020.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

SBC expense included in cost of revenues

 138

 126

-9%

 214

 250

17%

SBC expense included in product development

 2,598

 2,592

0%

 4,280

 6,034

41%

SBC expense included in SG&A

 1,473

 2,144

46%

 2,466

 4,382

78%

Total SBC expense

 4,209

 4,862

16%

 6,960

 10,666

53%

As a % of revenues

10.2%

6.0%

 

7.9%

6.9%

 

Total SBC expense increased 16% in Q2 2021 compared with Q2 2020. The growth primarily reflects new equity-based grants made in 2020-2021 as well as the increased share price of Yandex N.V. and material appreciation of the U.S. dollar against the ruble, largely offset by the high base effect (related to the replacement of cash bonuses by equity compensation for some senior employees in Q2 2020, in the course of the Company’s COVID-19 related cost optimization initiatives).

Income/(loss) from operations

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Income/(loss) from operations

 116

 (4,723)

n/m

 5,305

 (4,990)

n/m

Loss from operations amounted to RUB 4.7 billion in Q2 2021 compared to income from operations of RUB 0.1 billion in Q2 2020. Including Yandex.Market in both periods, loss from operations in Q2 2020 was RUB 2.6 billion. The decrease reflects the changes in segment mix amid the continuing investments in our rapidly growing new businesses (primarily Yandex.Market, FoodTech and Media Services).

Segment financial results

Search & Portal

Our Search and Portal segment includes Search, Geo, Yandex 360, Weather, News, Travel, Alice voice assistant and a number of other services offered in Russia, Belarus and Kazakhstan.

Key operational trends:

  • Share of Russian search market, including mobile, averaged 59.7% in Q2 2021, broadly in line with 59.6% in Q2 2020 and down slightly from 60.0% in Q1 2021 (primarily reflecting a seasonal normalization of the desktop market share), according to Yandex.Radar
  • Search share on Android in Russia was 59.5% in Q2 2021, up from 57.5% in Q2 2020 and 59.3% in Q1 2021, according to Yandex.Radar 
  • Mobile search traffic was 63.3% of our total search traffic in Q2 2021. Mobile revenues represented 56.7% of our search revenues in Q2 2021
  • Search queries in Russia decreased 5% in Q2 2021 on year-on-year basis driven by the high base in Q2 2020 when the start of the pandemic led to a material acceleration of search queries growth
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

25,554 

39,419 

54%

56,090 

74,564 

33%

Revenues Ex-TAC

20,909 

32,358 

55%

45,522 

61,174 

34%

Adjusted EBITDA

10,991 

18,226 

66%

25,733 

35,185 

37%

Adjusted EBITDA margin

43.0%

46.2%

3.2 pp

45.9%

47.2%

1.3 pp

Revenues increased by 54% and Revenues Ex-TAC increased by 55% year-on-year in Q2 2021, primarily driven by the low base effect of Q2 2020 related to the COVID-driven decline in economic activity and advertising demand. On a two-year stack basis the revenues increased by 16% reflecting the solid performance of the core search business on the back of the improved search share, mobile monetization and supported by our investments in advertising technology.

Adjusted EBITDA margin came to 46.2% in Q2 2021 compared with 43.0% in Q2 2020. The year-on-year improvement dynamic was primarily driven by the positive operating leverage effect on the back of the recovering revenue growth and improvement in TAC.

Taxi

The Taxi segment includes our mobility businesses, which consists of the Ride-hailing business (including Yandex.Taxi in Russia and 16 other countries across CIS and EMEA, and Uber in Russia and CIS) for both B2C and B2B, and Yandex.Drive, our car-sharing business; Yandex.Delivery (Logistics), our shipping and logistics service provider; and FoodTech businesses (including Yandex.Eats, our ready-to-eat and grocery delivery service; and Yandex.Lavka, our hyperlocal convenience store delivery service).

Key operational trends:

  • Number of rides in the Ride-hailing service, excluding logistics deliveries, increased 104% compared with Q2 2020
  • GMV in the Ride-hailing service, excluding logistics deliveries, reached RUB 134.9 billion as of the end of Q2 2021, up 161% from the end of Q2 2020
  • GMV of Yandex.Eats business reached RUB 11.1 billion as of the end of Q2 2021, up 53% from the end of Q2 2020
  • GMV of Yandex.Lavka service reached RUB 6.3 billion as of the end of Q2 2021, up 132% from the end of Q2 2020. The number of our own dark stores in Yandex.Lavka service reached 362 stores as of the end of June 2021
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

GMV:  

 

 

 

 

 

 

Mobility

 52,557

 138,580

164%

 136,728

 257,982

89%

Ride-hailing

 51,713

 134,909

161%

 132,721

 251,315

89%

Drive

 844

 3,671

335%

 4,007

 6,667

66%

Yandex.Delivery (Logistics)6

 1,706

 5,834

242%

 2,096

 10,283

391%

FoodTech

 9,985

 17,421

74%

 14,710

 32,448

121%

Total GMV

 64,248

 161,835

152%

 153,534

 300,713

96%

Revenues:

 

 

 

 

 

 

Mobility

 8,475

 18,526

119%

 20,718

 36,580

77%

Ride-hailing

 7,789

 15,445

98%

 17,429

 31,026

78%

Drive

 686

 3,081

349%

 3,289

 5,554

69%

Yandex.Delivery (Logistics)

 720

 2,318

222%

 805

 4,303

n/m

FoodTech

 4,203

 8,105

93%

 5,895

 15,190

158%

Eliminations

 (267)

 (829)

210%

 (266)

 (1,390)

n/m

Total revenues

 13,131

 28,120

114%

 27,152

 54,683

101%

Adjusted EBITDA:

 

 

 

 

 

 

Mobility

 925

 4,901

n/m

 1,875

 10,742

n/m

Ride-hailing

 1,872

 4,706

151%

 3,815

 10,439

174%

Drive

 (947)

 195

n/m

 (1,940)

 303

n/m

Yandex.Delivery (Logistics)

 (116)

 (279)

141%

 (185)

 (501)

171%

FoodTech

 (758)

 (3,054)

303%

 (1,760)

 (4,931)

180%

Total Adjusted EBITDA

 51

 1,568

n/m

 (70)

 5,310

n/m

Adjusted EBITDA margin as % of GMV:

 

 

 

 

 

 

Mobility

1.8%

3.5%

1.7 pp

1.4%

4.2%

2.8 pp

Ride-hailing

3.6%

3.5%

-0.1 pp

2.9%

4.2%

1.3 pp

Drive

-112.2%

5.3%

117.5 pp

-48.4%

4.5%

52.9 pp

Yandex.Delivery (Logistics)

-6.8%

-4.8%

2.0 pp

-8.8%

-4.9%

3.9 pp

FoodTech

-7.6%

-17.5%

-9.9 pp

-12.0%

-15.2%

-3.2 pp

Total Adjusted EBITDA as % of GMV

0.1%

1.0%

0.9 pp

0.0%

1.8%

1.8 pp

(6) Delivery (Logistics) GMV is defined as total transaction amounts, paid by individual users and B2B clients for a last-mile delivery service, including VAT and excluding any adjustment for consumer discounts and refunds, Partner (Driver / Courier) earnings and Partner incentives.

Taxi segment revenues increased by 114%, primarily driven by the solid performance of our Ride-hailing (including our corporate Taxi business) and Yandex.Lavka businesses, as well as the growth of car-sharing and Logistics. Ride-hailing and Drive revenue increased by 98% and 349% respectively due to an increase in a number of rides on the back of the low base effect of Q2 2020 as well as recovering consumer demand. FoodTech revenue delivered solid 93% year-on-year growth despite high base effect in Q2 2020 on the back of the increasing penetration of food delivery services as well as the improving market position of our services. On a 2-year stack revenue in Ride-Hailing, Drive and FoodTech increased by 39%, 33% and 223% respectively.

Eliminations related to the Taxi segment represent the eliminations of intercompany revenues between different businesses within Taxi Group. The increase of 210% in Q2 2021 compared with Q2 2020 was mainly attributed to a higher volume of FoodTech orders fulfilled by our Yandex.Delivery (Logistics) vertical.

Adjusted EBITDA of Taxi was RUB 1,568 million in Q2 2021, up from RUB 51 million in Q2 2020. The increase of adjusted EBITDA was primarily driven by the significant improvement of our Ride-hailing Adjusted EBITDA and Yandex.Drive (which has delivered positive Adjusted EBITDA for four consecutive quarters), partially offset by the investments into the rapidly growing Yandex.Lavka and Yandex.Eats (grocery delivery from retail chains in particular) businesses as well as our Logistics services.

Yandex.Market

The Yandex.Market segment includes our marketplace, price comparison service, and several small experiments.

Key operational trends:

  • The GMV of Yandex.Market marketplace increased by 144% year-on-year in Q2 2021
  • Total E-CommerceGMV (Yandex.Market marketplace, our e-grocery business Yandex.Lavka and grocery-originated GMV of Yandex.Eats) increased by 155% year-on-year in Q2 2021
  • The share of GMV sold by third-party sellers on our Yandex.Market marketplace reached 70% in Q2 2021 compared to 56% in Q2 2020
  • Marketplace’s assortment reached 16.8 million SKUs as of the end of Q2 2021 compared to 3.8 million SKUs as of the end of Q1 2021 and 1 million SKUs as of the end of Q2 2020
  • The number of active buyers on Yandex.Market marketplace increased by 78% year-on-year and reached 7.1 million as of the end of Q2 2021

The table below presents the financial results of the Yandex.Market segment on a like-for-like basis for the full three and six months periods ended June 30, 2020 and 2021.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020 *

2021

Change

2020 *

2021

Change

GMV of Yandex.Market

 10,947

 26,692

144%

 18,775

 44,360

136%

Revenues:

 7,189

 8,828

23%

 13,262

 16,172

22%

Revenues from sale of goods (1P)

 3,998

 6,675

67%

 7,483

 11,503

54%

Commission and other marketplace revenues (3P)

 1,097

 957

-13%

 1,668

 1,641

-2%

CPC revenues7

 2,094

 1,196

-43%

 4,111

 3,028

-26%

Adjusted EBITDA

 (1,844)

 (9,918)

n/m

 (4,037)

 (16,406)

306%

Adjusted EBITDA margin

-25.7%

-112.3%

-86.6 pp

-30.4%

-101.4%

-71.0 pp

* Financial results of Yandex.Market for the six and three months ended June 30, 2020 were not included in Yandex’s consolidated financial results on a consolidated basis, but portion of the results were recognized in line «Loss from equity method investments» due to accounting for the equity stake in Yandex.Market.

(7) CPC revenues are defined as revenues from price comparison services priced on a CPC (cost-per-click) basis and recognized only when a user clicks on product offerings placed by merchants on Yandex.Market. Whereas marketplace revenues (from sales of goods (1P) and commission and other marketplace revenues (3P)) are priced on cost per action model.

The GMV of Yandex.Market marketplace accelerated to 144% year-on-year in Q2 2021 compared with 126% in Q1 2021 despite high growth recorded in the Q2 2020. The acceleration was driven by the combination of factors, including audience growth, significant expansion in assortment and logistics infrastructure, swift transition of merchants from CPC to CPA (powered by dropship by seller “DBS” model), as well as support from the integration with our Yandex Plus program.

Yandex.Market total revenues grew 23% in Q2 2021 compared with Q2 2020. The slower-than-GMV revenue growth is explained by the changes in marketplace revenue mix (increase in the share of 3P GMV to 70% in Q2 2021 compared with 56% in Q2 2020), the decrease of the merchants commission as well as the decline in the price comparison revenue (by 43% year-on-year on the back of the conversion of merchants from CPC to our 3P marketplace model). Revenues from sale of goods (1P) grew 67% and were influenced by overall business growth and partly offset by a decrease in 1P as a share of GMV. Commission and other marketplace revenues (3P) decreased by 13% driven by the decrease of the merchants commissions and 3P blended take-rates (on the back of the expansion of the DBS model) partially offset by the overall growth of 3P GMV.

Adjusted EBITDA loss of Yandex.Market business was RUB 9.9 billion in Q2 2021, compared to a loss of RUB 1.8 billion in Q2 2020, primarily as a result of investments in the expansion of our operations, including our assortment, fulfillment and delivery infrastructure, reduction of marketplace commissions as well as additional distribution and marketing support following the marketplace rebranding in Q4 2020.

Media Services

The Media Services segment includes our subscription service Yandex Plus, Yandex.Music, KinoPoisk, Yandex.Afisha and our production center Yandex.Studio.

Key operational trends:

  • Number of Yandex Plus subscribers reached 9 million as of the end of Q2 2021, up 128% from the end of Q2 2020
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

1,700

4,094

141%

3,133 

7,580 

142%

Adjusted EBITDA

(857)

(1,732)

102%

(1,567)

(2,989)

91%

Adjusted EBITDA margin

-50.4%

-42.3%

8.1 pp

-50.0%

-39.4%

10.6 pp

Media Services revenues grew 141% in Q2 2021 compared with Q2 2020. The increase was primarily driven by the growth of Yandex Plus subscription revenues as well as by B2B revenues, which includes growth of advertising revenues on the back of overall recovery in advertising expenditures and licensing revenues due to increased activities in licensing sales of KinoPoisk Originals and sublicensing of exclusives. Increasing adjusted EBITDA losses reflect our investments in content and marketing to support the growth of our business.

Classifieds

The Classifieds segment includes Auto.ru, Yandex.Realty, Yandex.Jobs, and Yandex Classifieds.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

886

1,995

125%

2,374

3,778

59%

Adjusted EBITDA

80

728

n/m

(24)

1,113

n/m

Adjusted EBITDA margin

9.0%

36.5%

27.5 pp

-1.0%

29.5%

30.5 pp

Classifieds revenues increased by 125% in Q2 2021 compared with Q2 2020, due to a low base effect in Q2 2020 and was driven mainly by the recovering revenue from auto dealers’ listings. Auto finance and insurance service revenue has grown more than 7x as compared to Q2 2020 due to the product development. On a 2-year stack basis Classifieds revenues grew by 24%. The Adjusted EBITDA margin has improved to 36.5% in Q2 2021 from 9.0% in Q2 2020 primarily driven by acceleration of Auto.ru revenue growth and consequent operating leverage improvement.

Other Business Units and Initiatives

The Other Business Units and Initiatives segment includes our self-driving vehicles business (“Yandex SDG”), Zen, Yandex.Cloud, Yandex.Education, Devices, and Yandex.Uslugi (“Services”), as well as several other experiments.

Key operational trends:

  • Zen's daily average users was 19.2 million in June 2021, up 14% from June 2020
  • Share of video as percentage of time spent on Zen is around 28% as of the end of June 2021 compared to 14% in the end of June 2020
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

2,037

4,898

140%

3,782 

9,628 

155%

Adjusted EBITDA

(1,870)

(3,169)

69%

(3,634)

(5,579)

54%

Adjusted EBITDA margin

-91.8%

-64.7%

27.1 pp

-96.1%

-57.9%

38.2 pp

Other Business Units and Initiatives revenues increased 140% in Q2 2021 compared with Q2 2020. The increase was primarily driven by the fast growth in Devices (revenue increased 196% year-on-year to RUB 1.6 billion in Q2 2021 on the back of the strong demand for our stations), Zen and Cloud.

Adjusted EBITDA loss amounted to RUB 3.2 billion, up from a loss of RUB 1.9 billion in Q2 2020, primarily driven by the increased investments in Yandex.Uslugi, Yandex SDG (where adjusted EBITDA loss was RUB 1 billion in Q2 2021) and other initiatives. The Adjusted EBITDA loss of Devices business came to RUB 222 million in Q2 2021 compared to RUB 172 million in Q2 2020, primarily driven by significant increase in sales, marketing activities and R&D expenses partly offset by improved profitability as a result of the growing economy of scale.

Eliminations

Eliminations related to our revenues represent the elimination of transactions between the reportable segments, including advertising revenues, intercompany revenues related to brand royalties, data centers, logistics service, devices intercompany sales and others.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues:

 

 

 

 

 

 

Segment revenues

43,308

87,354

102%

92,531

166,405

80%

Eliminations

(1,901)

(5,952)

213%

(4,121)

(11,867)

188%

Total revenues

41,407

81,402

97%

88,410

154,538

75%

Adjusted EBITDA:

 

 

 

 

 

 

Segment adjusted EBITDA

8,395

5,703

-32%

20,438

16,634

-19%

Eliminations

76

77

1%

158

167

6%

Total adjusted EBITDA

8,471

5,780

-32%

20,596

16,801

-18%

Eliminations related to our revenues increased 213% in Q2 2021 compared with Q2 2020. On a like-for-like basis (including Yandex.Market in both Q2 2021 and Q2 2020), eliminations related to our revenues increased 130% in Q2 2021. The increase was mainly attributed to higher intercompany TAC related to fast growing Zen business, intercompany revenue in Search & Portal (related to brand royalties, data centers rent paid by business units as well as cross-service advertising and marketing activities) as well as the intercompany eliminations related to Yandex Plus program (advertising and marketing support in Taxi and Media Services).

Adjusted EBITDA decreased 32% in Q2 2021 compared with Q2 2020. On a like-for-like basis (including Yandex.Market in both Q2 2021 and Q2 2020), adjusted EBITDA decreased 13%. The decline was mainly driven by investments in E-commerce (including Yandex.Market, Lavka and Yandex.Eats), Other Business Units and Initiatives and Media Services, which were partly offset by Search and Portal, Ride-hailing and Classifieds revenue growth and EBITDA margin improvement compared to Q2 2020.

Interest income in Q2 2021 was RUB 1,180 million, compared with RUB 971 million in Q2 2020, reflecting an increase in cash on deposits in Q2 2021 compared with Q2 2020.

Interest expense in Q2 2021 was RUB 861 million, up from RUB 678 million in Q2 2020, reflecting interest on the convertible bonds issued in February 2020.

Foreign exchange loss in Q2 2021 was RUB 555 million, compared with a foreign exchange loss of RUB 1,296 million in Q2 2020. This loss reflects the appreciation of the Russian ruble during Q2 2021.

Income tax expense for Q2 2021 was RUB 485 million, down from RUB 1,966 million in Q2 2020 mainly due to change in deferred tax asset valuation allowances. If we remove the effects of deferred tax asset valuation allowances, SBC expense, tax on dividends and tax provisions recognized, our effective tax rate for Q2 2021 was 23.9%, compared with 26.5% for Q2 2020 as adjusted for certain losses from equity-method investments, which are non-deductible, and similar effects in that period. The decrease in the tax rate without above-mentioned effects was primarily driven by the permanent difference between US GAAP and tax accounting in the books of certain of our subsidiaries.

Net loss was RUB 4.7 billion ($64.4 million) in Q2 2021, compared with net loss of RUB 3.7 billion in Q2 2020. Net loss in Q2 2021 was driven by the consolidation of Yandex.Market, as well as significant investments in FoodTech and Media Services compared with Q2 2020.

Adjusted net income in Q2 2021 was RUB 1.0 billion ($14.0 million), a 47% decrease from Q2 2020, primarily driven by the consolidation of Yandex.Market, as well as significant investments in FoodTech, Media Services and Other Business Units and Initiatives, which were partly offset by revenue growth and adjusted EBITDA margin improvement in Search and Portal, Ride-hailing and Classifieds compared to Q2 2020.

Adjusted net income margin was 1.2% in Q2 2021, compared with 4.6% in Q2 2020.

As of June 30, 2021, Yandex had cash, cash equivalents and term deposits of RUB 208.2 billion ($2,876.6 million), including cash, cash equivalents and term deposits of Yandex.Taxi in total amount of RUB 20.9 billion ($288.5 million).

Net cash flow used in operating activities for Q2 2021 was RUB 4.9 billion ($67.3 million) and capital expenditures were RUB 13.7 billion ($189.1 million).

Redeemable noncontrolling interests presented in our unaudited condensed consolidated balance sheets relate to the equity incentive arrangements we have made available to the senior employees of the Classifieds segment, pursuant to which such persons are eligible to acquire depositary receipts, or receive options to acquire depositary receipts, which entitles them to economic interests in the respective business unit subsidiaries.

The total number of shares issued and outstanding as of June 30, 2021 was 357,380,344, including 321,681,669 Class A shares, 35,698,674 Class B shares, and one Priority share and excluding 1,058,810 Class A shares held in treasury and all Class C shares outstanding solely as a result of the conversion of Class B shares into Class A shares. Any such Class C shares will be cancelled.

There were also employee share options outstanding to purchase up to an additional 3.0 million shares, at a weighted average exercise price of $44.17 per share, 1.7 million of which were fully vested; equity-settled share appreciation rights (SARs) for 0.1 million shares, at a weighted average measurement price of $32.72, all of which were fully vested; restricted share units (RSUs) covering 15.7 million shares, of which RSUs to acquire 5.2 million shares were fully vested; performance share units (PSUs) for 0.4 million shares and synthetic options for 2.1 million, 0.3 million of which were fully vested. Equity awards in respect of business unit subsidiaries are described under Redeemable noncontrolling interests above.

Impact of the COVID-19 Pandemic

In Q2 2021 we have seen a continuing strengthening of the Russian economy as well as gradual recovery of consumer demand across our key markets. From a lower base of Q2 2020 as a result of the pandemic, we have seen improved financial performance in our key businesses, including online advertising and ride-hailing. We expect the trends to normalize in the following quarters as the low base effect fades. The businesses that saw an acceleration of demand during the pandemic continued to demonstrate solid growth trends on the back of fewer COVID-19 restrictions, including our FoodTech businesses, Yandex.Market marketplace and Media Services. We believe this is related to the change in consumer behavior and habits, and low penetration of these services in Russia. With regards to our financial position as of the end of June 30, 2021, our analysis of the effect from COVID-19 on goodwill, non-current assets and redeemable non-controlling interests shows no measurable impact. The development of the situation with respect to COVID-19 may also lead to changes in estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

Conference Call Information

Yandex’s management will hold an earnings conference call on July 28, 2021 at 8:00 AM U.S. Eastern Time (3:00 PM Moscow time; 1:00 PM London time).

We recommend using the dial-in option if you plan to ask questions. In this case please dial-in at least 10 minutes prior to the call start time (using dial-in number and confirmation code stated below).

To access the conference call live, please dial:

US: +1 929 477 0324

UK/International: +44 (0) 330 336 9434

Russia: 8 10 800 2867 5011

Passcode: 1800526

A live and archived webcast of this conference call will be available at

https://www.webcast-eqs.com/yandex20210728

Following the call, a webcast replay will be available at the Yandex Investor Relations website at https://ir.yandex/events-and-presentations

ABOUT YANDEX

Yandex (NASDAQ and MOEX: YNDX) is a technology company that builds intelligent products and services powered by machine learning. Our goal is to help consumers and businesses better navigate the online and offline world. Since 1997, we have delivered world-class, locally relevant search and information services. Additionally, we have developed market-leading on-demand transportation services, navigation products and other mobile applications for millions of consumers across the globe. Yandex, which has more than 30 offices worldwide, has been listed on the NASDAQ since 2011 and on the MOEX since 2014.

More information on Yandex can be found at https://ir.yandex/.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance, our business and strategy and the impact of the COVID-19 pandemic on our industry, business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, the impact of the ongoing COVID-19 pandemic and regulatory and business responses to that crisis, macroeconomic and geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment, competitive pressures, changes in advertising patterns, changes in user preferences, technological developments, and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions “Risk Factors” and “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2020 and “Risk Factors” in the Shareholder Circular filed as Exhibit 99.2 to our Current Report on Form 6-K, which were filed with the U.S. Securities and Exchange Commission (SEC) on April 1, 2021 and November 18, 2019, respectively, and are available on our investor relations website at https://ir.yandex/sec-filings and on the SEC website at https://www.sec.gov/. All information in this release and in the attachments is as of July 28, 2021, and Yandex undertakes no duty to update this information unless required by law.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement the financial information prepared and presented in accordance with U.S. GAAP, we present the following non-GAAP financial measures: ex-TAC revenues, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income margin, financial results on a like-for-like basis including Yandex.Market. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable U.S. GAAP measures”, included following the accompanying financial tables. We define the various non-GAAP financial measures we use as follows:

  • Ex-TAC revenues means U.S. GAAP revenues less total traffic acquisition costs (TAC)
  • Adjusted EBITDA means U.S. GAAP net (loss)/income plus (1) depreciation and amortization, (2) SBC expense, (3) interest expense, (4) income tax expense/(benefit), (5) one-off restructuring expenses, (6) accrual of expense related to the contingent compensation payable to employees in connection with certain business combinations, (7) loss from equity method investments, less (1) interest income and (2) other income, net
  • Adjusted EBITDA margin means adjusted EBITDA divided by U.S. GAAP revenues
  • Adjusted net income means U.S. GAAP net (loss)/income plus (1) SBC expense adjusted for the income tax attributable to the SBC expense, (2) accrual of expense related to the contingent compensation payable to certain employees in connection with certain business combinations, (3) one-off restructuring expenses adjusted for the related reduction in income tax, (4) amortization of debt discount related to our convertible debt adjusted for the related reduction in income tax, (5) foreign exchange losses/(gains) adjusted for (reduction)/increase in income tax attributable to foreign exchange losses/(gains)
  • Adjusted net income margin means adjusted net income divided by U.S. GAAP revenues
  • Financial results on a like-for-like basis including Yandex.Market means revenues, ex-TAC revenues, income from operations, adjusted EBITDA and net income of the combined results of operations as if the acquisition of Yandex.Market completed as of January 1, 2020. These amounts have been calculated after the elimination of revenue related to intercompany transactions and adjusting the results of Yandex.Market to reflect amortization associated with intangibles acquired and related income tax results

These non-GAAP financial measures are used by management for evaluating financial performance as well as decision-making. Management believes that these metrics reflect the organic, core operating performance of the company, and therefore are useful to analysts and investors in providing supplemental information that helps them understand, model and forecast the evolution of our operating business.

Although our management uses these non-GAAP financial measures for operational decision-making and considers these financial measures to be useful for analysts and investors, we recognize that there are a number of limitations related to such measures. In particular, it should be noted that several of these measures exclude some recurring costs, particularly share-based compensation. In addition, the components of the costs that we exclude in our calculation of the measures described above may differ from the components that our peer companies exclude when they report their results of operations.

Below we describe why we make particular adjustments to certain U.S. GAAP financial measures:

TAC

We believe that it may be useful for investors and analysts to review certain measures both in accordance with U.S. GAAP and net of the effect of TAC, which we view as comparable to sales commissions and bonuses but, unlike sales commissions and bonuses, are not deducted from U.S. GAAP revenues. By presenting revenue, adjusted EBITDA margin and adjusted net income margin net of TAC, we believe that investors and analysts are able to obtain a clearer picture of our business without the impact of the revenues we share with our partners.

SBC

SBC is a significant expense item, and an important part of our compensation and incentive programs. As it is a non-cash charge, however, and highly dependent on our share price at the time of equity award grants, we believe that it is useful for investors and analysts to see certain financial measures excluding the impact of these charges in order to obtain a clearer picture of our operating performance.

Foreign exchange gains and losses

Because we hold significant assets and liabilities in currencies other than our Russian ruble operating currency, and because foreign exchange fluctuations are outside of our operational control, we believe that it is useful to present adjusted EBITDA, adjusted net income and related margin measures excluding these effects, in order to provide greater clarity regarding our operating performance.

One-off restructuring expenses

Adjusted net income and adjusted EBITDA exclude expenses related to restructuring targeted amendments to Corporate Governance Structure approved by shareholders in December 2019.  We believe that it is useful to present adjusted net income, adjusted EBITDA and related margin measures excluding impacts not related to our operating activities.

Amortization of debt discount

We also adjust net income for interest expense representing amortization of the debt discount related to our convertible senior notes due 2025 issued in Q1 2020. We have eliminated this expense from adjusted net income as it is non-cash in nature and is not indicative of our ongoing operating performance.

The tables at the end of this release provide detailed reconciliations of each non-GAAP financial measure we use from the most directly comparable U.S. GAAP financial measure.


 

YANDEX N.V.

Unaudited Condensed Consolidated Balance Sheets

(in millions of Russian rubles and U.S. dollars, except share and per share data)

 

             
   

 

 

As of

 

 

   

December 31,

 

June 30, 

 

June 30, 

   

2020*

 

2021

 

2021

   

RUB

 

RUB

 

$

ASSETS  

 

 

 

 

 

     Cash and cash equivalents   

 132,398

 

 87,867

 

 1,214.1

     Term deposits   

 105,787

 

 120,318

 

 1,662.5

     Investments in marketable equity securities  

 -

 

 5,503

 

 76.0

     Accounts receivable, net   

 25,440

 

 28,014

 

 387.1

     Prepaid expenses  

 6,727

 

 11,216

 

 154.9

     Inventory  

 4,810

 

 6,765

 

 93.5

     Funds receivable, net   

 2,289

 

 2,200

 

 30.4

     Other current assets   

 12,950

 

 21,276

 

 294.0

           Total current assets  

 290,401

 

 283,159

 

 3,912.5

     Property and equipment, net   

 61,772

 

 74,985

 

 1,036.1

     Operating lease right-of-use assets  

 20,800

 

 32,593

 

 450.4

     Intangible assets, net   

 21,842

 

 22,677

 

 313.3

     Non-current content assets, net  

 7,464

 

 10,175

 

 140.6

     Goodwill  

 104,275

 

 116,571

 

 1,610.7

     Long-term prepaid expenses  

 1,391

 

 2,498

 

 34.7

     Investments in non-marketable equity securities   

 1,135

 

 1,248

 

 17.2

     Deferred tax assets  

 1,639

 

 6,343

 

 87.6

     Other non-current assets   

 4,893

 

 7,203

 

 99.5

           Total non-current assets  

 225,211

 

 274,293

 

 3,790.1

                 TOTAL ASSETS  

 515,612

 

 557,452

 

 7,702.6

LIABILITIES AND SHAREHOLDERS’ EQUITY  

 

 

 

 

 

     Accounts payable and accrued liabilities  

 43,634

 

 65,851

 

 909.9

     Income and non-income taxes payable   

 12,573

 

 13,135

 

 181.5

     Deferred revenue   

 6,645

 

 6,883

 

 95.1

           Total current liabilities  

 62,852

 

 85,869

 

 1,186.5

     Convertible debt  

 83,277

 

 82,593

 

 1,141.2

     Deferred tax liabilities  

 3,705

 

 4,750

 

 65.6

     Operating lease liabilities  

 12,830

 

 22,086

 

 305.2

     Other accrued liabilities   

 4,846

 

 12,119

 

 167.5

           Total non-current liabilities  

 104,658

 

 121,548

 

 1,679.5

                 Total liabilities  

 167,510

 

 207,417

 

 2,866.0

Redeemable noncontrolling interests  

 3,167

 

 1,783

 

 24.6

Shareholders’ equity:  

 

 

 

 

 

Priority share: €1 par value; 1 share authorized, issued and outstanding  

 

 

Ordinary shares: par value (Class A €0.01, Class B €0.10 and Class C €0.09); shares authorized (Class A: 500,000,000, Class B: 37,138,658 and Class C: 37,748,658); shares issued (Class A: 320,430,479 and 322,740,479, Class B: 35,708,674 and 35,698,674, and Class C: 1,429,984 and 10,000, respectively); shares outstanding (Class A: 318,501,858 and 321,681,669, Class B: 35,708,674 and 35,698,674, and Class C: nil)  

 278

 

 280

 

 3.9

Treasury shares at cost (Class A: 1,928,621 and 1,058,810, Priority share: nil and nil, respectively)  

 (6)

 

 (5)

 

 (0.1)

Additional paid-in capital   

 160,857

 

 173,080

 

 2,391.5

Accumulated other comprehensive income   

 17,923

 

 16,332

 

 225.7

Retained earnings   

 145,789

 

 139,330

 

 1,925.2

           Total equity attributable to Yandex N.V.  

 324,841

 

 329,017

 

 4,546.2

Noncontrolling interests  

 20,094

 

 19,235

 

 265.8

           Total shareholders’ equity   

 344,935

 

 348,252

 

 4,812.0

                 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  

 515,612

 

 557,452

 

 7,702.6

Derived from audited consolidated financial statements and revised in the first quarter of 2021 due to immaterial discrepancies


 

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Operations

(in millions of Russian rubles and U.S. dollars, except share and per share data)

             
   

Three months ended June 30, 

   

2020

 

2021

 

2021

   

RUB

 

RUB

 

$

   

 

       
Revenues  

41,407

 

81,402

 

1,124.8

Operating costs and expenses:  

 

 

 

 

 

Cost of revenues(1)  

15,912

 

41,774

 

577.2

Product development(1)   

8,970

 

11,234

 

155.2

Sales, general and administrative(1)  

12,357

 

27,476

 

379.7

Depreciation and amortization   

4,052

 

5,641

 

77.9

    Total operating costs and expenses  

41,291

 

86,125

 

1,190.0

Income/(loss) from operations  

116

 

 (4,723)

 

 (65.2)

Interest income  

971

 

1,180

 

16.3

Interest expense  

 (678)

 

 (861)

 

 (11.9)

Loss from equity method investments  

 (977)

 

 (5)

 

 (0.1)

Other (loss)/income, net  

 (1,210)

 

 230

 

 3.2

    Net loss before income taxes  

 (1,778)

 

 (4,179)

 

 (57.7)

Income tax expense  

 1,966

 

 485

 

 6.7

    Net loss  

 (3,744)

 

 (4,664)

 

 (64.4)

Net loss attributable to noncontrolling interests  

 347

 

 785

 

 10.8

    Net loss attributable to Yandex N.V.  

 (3,397)

 

 (3,879)

 

 (53.6)

Net loss per Class A and Class B share:  

 

 

 

 

 

Basic  

 (10.36)

 

 (10.88)

 

 (0.15)

Diluted  

 (10.36)

 

 (10.88)

 

 (0.15)

Weighted average number of Class A and Class B shares outstanding            
Basic  

328,039,776

 

356,616,989

 

356,616,989

Diluted  

328,039,776

 

356,616,989

 

356,616,989

   

 

 

 

 

 

(1)        These balances exclude depreciation and amortization expenses, which are presented separately, and include share-based compensation expenses of:
             
Cost of revenues  

138

 

126

 

1.7

Product development  

2,598

 

2,592

 

35.8

Sales, general and administrative  

1,473

 

2,144

 

29.7

 


 

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Operations

(in millions of Russian rubles and U.S. dollars, except share and per share data)

               
   

Six months ended June 30, 

 
   

2020

 

2021

 

2021

 
   

RUB

 

RUB

 

$

 
   

 

         
Revenues  

88,410

 

154,538

 

2,135.3

 
Operating costs and expenses:  

 

 

 

 

 

 

Cost of revenues(1)  

32,147

 

75,816

 

1,047.6

 
Product development(1)   

16,898

 

22,243

 

307.3

 
Sales, general and administrative(1)  

25,998

 

50,571

 

698.8

 
Depreciation and amortization   

8,062

 

10,898

 

150.6

 
    Total operating costs and expenses  

83,105

 

159,528

 

2,204.3

 
Income/(loss) from operations  

5,305

 

 (4,990)

 

 (69.0)

 
Interest income  

1,699

 

2,357

 

 32.6

 
Interest expense  

 (903)

 

 (1,654)

 

 (22.9)

 
Loss from equity method investments  

 (2,083)

 

 (6)

 

 (0.1)

 
Other income, net  

 3,322

 

 689

 

 9.6

 
    Net income/(loss) before income taxes  

 7,340

 

 (3,604)

 

 (49.8)

 
Income tax expense  

 5,656

 

 4,280

 

 59.1

 
    Net income/(loss)  

 1,684

 

 (7,884)

 

 (108.9)

 
Net loss attributable to noncontrolling interests  

 713

 

 1,028

 

 14.2

 
    Net income/(loss) attributable to Yandex N.V.  

 2,397

 

 (6,856)

 

 (94.7)

 
Net income/(loss) per Class A and Class B share:  

 

 

 

 

 

 
Basic  

7.28

 

 (19.26)

 

 (0.27)

 
Diluted  

7.11

 

 (19.26)

 

 (0.27)

 
Weighted average number of Class A and Class B shares outstanding              
Basic  

329,069,513

 

356,017,710

 

356,017,710

 
Diluted  

335,854,248

 

356,017,710

 

356,017,710

 
   

 

 

 

 

 

 
(1)        These balances exclude depreciation and amortization expenses, which are presented separately, and include share-based compensation expenses of:  
               
Cost of revenues  

214

 

250

 

3.5

 
Product development  

4,280

 

6,034

 

83.4

 
Sales, general and administrative  

2,466

 

4,382

 

60.5

 


 

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions of Russian rubles and U.S. dollars)

             
   

Three months ended June 30, 

   

2020

 

2021

 

2021

   

RUB

 

RUB

 

$

CASH FLOWS USED IN OPERATING ACTIVITIES:            
Net loss  

 (3,744)

 

 (4,664)

 

 (64.4)

Adjustments to reconcile net loss to net cash used in operating activities:            
     Depreciation of property and equipment  

 3,336

 

 4,239

 

 58.5

     Amortization of intangible assets  

 716

 

 1,402

 

 19.4

     Amortization of content assets  

 961

 

 1,682

 

 23.2

     Operating lease right-of-use assets amortization and the lease liability accretion  

 1,504

 

 2,631

 

 36.4

     Amortization of debt discount and issuance costs  

 493

 

 519

 

 7.2

     Share-based compensation expense  

 4,209

 

 4,862

 

 67.2

     Deferred income tax expense/(benefit)  

 1,140

 

 (3,662)

 

 (50.6)

     Foreign exchange losses  

 1,296

 

 555

 

 7.7

     Loss from equity method investments  

 977

 

 5

 

 0.1

     Other  

 39

 

 231

 

 3.2

Changes in operating assets and liabilities excluding the effect of acquisitions:            
     Accounts receivable, net  

 526

 

 (910)

 

 (12.6)

     Prepaid expenses and other assets  

 (2,550)

 

 (8,236)

 

 (113.9)

     Inventory  

 (946)

 

 (382)

 

 (5.3)

     Accounts payable and accrued liabilities  

 (6,791)

 

 (1,034)

 

 (14.3)

     Deferred revenue  

 136

 

 462

 

 6.4

     Content assets  

 (1,517)

 

 (2,888)

 

 (39.9)

     Content liabilities  

 85

 

 315

 

 4.4

          Net cash used in operating activities  

 (130)

 

 (4,873)

 

 (67.3)

CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES:            
Purchases of property and equipment and intangible assets  

 (10,276)

 

 (13,685)

 

 (189.1)

Proceeds from sale of property and equipment  

 29

 

 11

 

 0.2

Acquisitions of businesses, net of cash acquired  

 (95)

 

 (46)

 

 (0.6)

Investments in non-marketable equity securities  

 -

 

 (155)

 

 (2.1)

Proceeds from sale of equity securities  

 -

 

 2,578

 

 35.6

Investments in marketable securities  

 -

 

 (1,422)

 

 (19.6)

Investments in term deposits  

 (60,247)

 

 (56,941)

 

 (786.8)

Maturities of term deposits  

 66,287

 

 70,437

 

 973.2

Loans granted  

-

 

(474)

 

(6.5)

Proceeds from repayments of loans  

 16

 

 577

 

 7.9

          Net cash (used in)/from investing activities  

 (4,286)

 

 880

 

 12.2

CASH FLOWS PROVIDED BY/(USED IN) FINANCING ACTIVITIES:            
Proceeds from exercise of share options  

 34

 

 244

 

 3.4

Repurchases of share options  

 (642)

 

 -

 

 -

Proceeds from issuance of ordinary shares  

 72,650

 

 -

 

 -

Ordinary shares issuance costs  

 (4)

 

 -

 

 -

Repurchases of ordinary shares  

 (1,719)

 

 -

 

 -

Repayments of overdraft borrowings  

 -

 

 (397)

 

 (5.5)

Payment for finance leases  

 (26)

 

 (128)

 

 (1.8)

Other financing activities  

 (33)

 

 (61)

 

 (0.9)

Purchase of redeemable noncontrolling interests  

 (47)

 

 (32)

 

 (0.4)

          Net cash provided by/(used in) financing activities  

 70,213

 

 (374)

 

 (5.2)

Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents  

 (6,651)

 

 (644)

 

 (9.0)

Net change in cash and cash equivalents, and restricted cash and cash equivalents  

 59,146

 

 (5,011)

 

 (69.3)

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period  

 125,189

 

 92,925

 

 1,284.0

Cash and cash equivalents, and restricted cash and cash equivalents, end of period  

 184,335

 

 87,914

 

 1,214.7

             
Reconciliation of cash and cash equivalents, and restricted cash and cash equivalents:            
Cash and cash equivalents, beginning of period  

 125,142

 

 92,878

 

 1,283.3

Restricted cash and cash equivalents, beginning of period  

 47

 

 47

 

 0.7

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period  

 125,189

 

 92,925

 

 1,284.0

             
Cash and cash equivalents, end of period  

 184,292

 

 87,867

 

 1,214.1

Restricted cash and cash equivalents, end of period  

 43

 

 47

 

 0.6

Cash and cash equivalents, and restricted cash and cash equivalents, end of period  

 184,335

 

 87,914

 

 1,214.7


 

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions of Russian rubles and U.S. dollars)

             
   

Six months ended June 30, 

   

2020

 

2021

 

2021

   

RUB

 

RUB

 

$

CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income/(loss)  

 1,684

 

 (7,884)

 

 (108.9)

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:            
     Depreciation of property and equipment  

 6,669

 

 8,015

 

 110.8

     Amortization of intangible assets  

 1,393

 

 2,883

 

 39.8

     Amortization of content assets  

 1,548

 

 3,072

 

 42.4

     Operating lease right-of-use assets amortization and the lease liability accretion  

 4,146

 

 5,030

 

 69.5

     Amortization of debt discount and issuance costs  

 637

 

 1,036

 

 14.3

     Share-based compensation expense  

 6,960

 

 10,666

 

 147.4

     Deferred income tax expense/(benefit)  

 692

 

 (4,065)

 

 (56.2)

     Foreign exchange (gains)/losses  

 (3,154)

 

 291

 

 4.0

     Loss from equity method investments  

 2,083

 

 6

 

 0.1

     Other  

 132

 

 180

 

 2.5

Changes in operating assets and liabilities excluding the effect of acquisitions:            
     Accounts receivable, net  

 1,553

 

 (2,476)

 

 (34.2)

     Prepaid expenses and other assets  

 (3,241)

 

 (13,306)

 

 (183.8)

     Inventory  

 (963)

 

 (1,988)

 

 (27.5)

     Accounts payable and accrued liabilities  

 (9,520)

 

 5,907

 

 81.6

     Deferred revenue  

 176

 

 287

 

 4.0

     Content assets  

 (2,603)

 

 (7,547)

 

 (104.3)

     Content liabilities  

 (628)

 

 3,581

 

 49.5

          Net cash from operating activities  

 7,564

 

 3,688

 

 51.0

CASH FLOWS USED IN INVESTING ACTIVITIES:          

 

Purchases of property and equipment and intangible assets  

 (12,681)

 

 (17,244)

 

 (238.3)

Proceeds from sale of property and equipment  

 38

 

 34

 

 0.5

Acquisitions of businesses, net of cash acquired  

 (95)

 

 (7,274)

 

 (100.5)

Investments in non-marketable equity securities  

 (15)

 

 (265)

 

 (3.7)

Proceeds from sale of equity securities  

 -

 

 2,735

 

 37.8

Investments in marketable securities  

 -

 

 (9,869)

 

 (136.4)

Investments in term deposits  

 (121,992)

 

 (187,251)

 

 (2,587.3)

Maturities of term deposits  

 93,586

 

 170,608

 

 2,357.4

Loans granted  

-

 

(560)

 

(7.7)

Proceeds from repayments of loans  

 16

 

 577

 

 7.9

          Net cash used in investing activities  

 (41,143)

 

 (48,509)

 

 (670.3)

CASH FLOWS PROVIDED BY/(USED IN) FINANCING ACTIVITIES:          

 

Proceeds from exercise of share options  

 48

 

 864

 

 11.9

Repurchases of share options  

 (642)

 

 (42)

 

 (0.6)

Proceeds from issuance of convertible debt   

 82,046

 

 -

 

 -

Proceeds from issuance of ordinary shares  

 72,650

 

 -

 

 -

Ordinary shares issuance costs  

 (4)

 

 -

 

 -

Repurchases of ordinary shares  

 (10,165)

 

 -

 

 -

Repayments of overdraft borrowings  

 -

 

 (397)

 

 (5.5)

Payment for contingent consideration  

 (10)

 

 (10)

 

 (0.1)

Purchase of redeemable noncontrolling interests  

 (47)

 

 (669)

 

 (9.2)

Payment for finance leases  

 (140)

 

 (202)

 

 (2.8)

Other financing activities  

 (66)

 

 (132)

 

 (1.8)

          Net cash provided by/(used in) financing activities  

 143,670

 

 (588)

 

 (8.1)

Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents  

 17,791

 

 877

 

 12.0

Net change in cash, cash equivalents, and restricted cash  

 127,882

 

 (44,532)

 

 (615.4)

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period  

 56,453

 

 132,446

 

 1,830.1

Cash and cash equivalents, and restricted cash and cash equivalents, end of period  

 184,335

 

 87,914

 

 1,214.7

           

 

Reconciliation of cash and cash equivalents, and restricted cash and cash equivalents:          

 

Cash and cash equivalents, beginning of period  

 56,415

 

 132,398

 

 1,829.4

Restricted cash and cash equivalents, beginning of period  

 38

 

 48

 

 0.7

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period  

 56,453

 

 132,446

 

 1,830.1

           

 

Cash and cash equivalents, end of period  

 184,292

 

 87,867

 

 1,214.1

Restricted cash and cash equivalents, end of period  

 43

 

 47

 

 0.6

Cash and cash equivalents, and restricted cash and cash equivalents, end of period  

 184,335

 

 87,914

 

 1,214.7


 

YANDEX N.V.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO THE NEAREST COMPARABLE U.S. GAAP MEASURES

Reconciliation of Ex-TAC Revenues to U.S. GAAP Revenues

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Total revenues

 41,407

 81,402

97%

 88,410

 154,538

75%

Less: traffic acquisition costs (TAC)

 4,155

 6,231

50%

 9,514

 11,632

22%

Ex-TAC revenues

 37,252

 75,171

102%

 78,896

 142,906

81%

Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Net (loss)/income

 (3,744)

 (4,664)

25%

 1,684

 (7,884)

n/m

Add: depreciation and amortization

 4,052

 5,641

39%

 8,062

 10,898

35%

Add: SBC expense

 4,209

 4,862

16%

 6,960

 10,666

53%

Add: compensation expense related to contingent consideration

 9

 -

n/m

 9

 227

n/m

Add: one-off restructuring expenses

 85

 -

n/m

 260

 -

n/m

Less: interest income

 (971)

 (1,180)

22%

 (1,699)

 (2,357)

39%

Add: interest expense

 678

 861

27%

 903

 1,654

83%

Add: loss from equity method investments

 977

 5

n/m

 2,083

 6

n/m

Less: other (income)/loss, net

 1,210

 (230)

n/m

 (3,322)

 (689)

-79%

Add: income tax expense

 1,966

 485

-75%

 5,656

 4,280

-24%

Adjusted EBITDA

 8,471

 5,780

-32%

 20,596

 16,801

-18%

Reconciliation of Adjusted Net Income to U.S. GAAP Net Income

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Net (loss)/income

 (3,744)

 (4,664)

25%

 1,684

 (7,884)

n/m

Add: SBC expense

 4,209

 4,862

16%

 6,960

 10,666

53%

Less: income tax attributable to SBC expense

 (32)

 -

n/m

 (48)

 -

n/m

Add: compensation expense related to contingent consideration

 9

 -

n/m

 9

 227

n/m

Add: foreign exchange loss/(gain)

 1,296

 555

-57%

 (3,154)

 291

n/m

Less: (reduction)/increase in income tax attributable to foreign exchange losses/(gains)

 (271)

 (130)

-52%

 883

 (57)

n/m

Add: one-off restructuring expenses

 85

 -

n/m

 260

 -

n/m

Less: income tax attributable to one-off restructuring expenses

 (21)

 -

n/m

 (41)

 -

n/m

Add: amortization of debt discount

 493

 519

5%

 637

 1,036

63%

Less: reduction in income tax attributable to amortization of debt discount

 (123)

 (130)

6%

 (159)

 (259)

63%

Adjusted net income

 1,901

 1,012

-47%

 7,031

 4,020

-43%

 

Reconciliation of Adjusted EBITDA Margin U.S. GAAP Net Loss Margin

             
In RUB millions             
 

U.S. GAAP Actual Net Loss

Net Loss Margin (1)

Adjustment (2)

Adjusted EBITDA

Adjusted EBITDA Margin (3)

Three months ended June 30, 2021

 (4,664)

-5.7%

 10,444

 5,780

7.1%

Six months ended June 30, 2021

 (7,884)

-5.1%

 24,685

 16,801

10.9%


(1) Net loss margin is defined as net loss divided by total revenues.

(2) Adjusted to eliminate depreciation and amortization expense, SBC expense, one-off restructuring expenses, accrual of expense related to contingent consideration, interest income, interest expense, loss from equity method investments, other income, net and income tax expense. For a reconciliation of adjusted EBITDA to net loss, please see the table above.

(3) Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenues.


 

Reconciliation of Adjusted Net Income Margin to U.S. GAAP Net Loss Margin

 

             
In RUB millions             
 

U.S. GAAP Actual Net Loss

Net Loss Margin (1)

Adjustment (2)

Adjusted Net Income

Adjusted Net Income Margin (3)

Three months ended June 30, 2021

 (4,664)

-5.7%

 5,676

 1,012

1.2%

Six months ended June 30, 2021

 (7,884)

-5.1%

 11,904

 4,020

2.6%


(1) Net loss margin is defined as net income divided by total revenues.

(2) Adjusted to eliminate SBC expense (as adjusted for the income tax attributable to SBC expense), accrual of expense related to contingent consideration, foreign exchange losses/(gains) as adjusted for the reduction/(increase) in income tax attributable to the losses/(gains), one-off restructuring expenses and amortization of debt discount (as adjusted for the related reduction in income tax). For a reconciliation of adjusted net income to net loss, please see the table above.

(3) Adjusted net income margin is defined as adjusted net income divided by total revenues.


Reconciliation of financial results on a like-for-like basis including Yandex.Market to U.S. GAAP financial results

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2020

2021

Change

2020

2021

Change

Revenues

 41,407

 81,402

97%

 88,410

 154,538

75%

Add: revenues of Yandex.Market, net of intercompany eliminations

 6,508

 -

n/m

 11,934

 -

n/m

Revenues, including Yandex.Market

 47,915

 81,402

70%

 100,344

 154,538

54%

Ex-TAC revenues

 37,252

 75,171

102%

 78,896

 142,906

81%

Add: Ex-TAC revenues related to Yandex.Market, net of intercompany eliminations

 6,303

 -

n/m

 11,541

 -

n/m

Ex-TAC revenues, including Yandex.Market

 43,555

 75,171

73%

 90,437

 142,906

58%

Online advertising revenue

 24,760

 39,586

60%

 54,869

 75,582

38%

Add: Online advertising revenue, related to Yandex.Market

 2,146

 -

n/m

 4,119

 -

n/m

Online advertising revenue, including Yandex.Market

 26,906

 39,586

47%

 58,988

 75,582

28%

Income/(loss) from operations

 116

 (4,723)

n/m

 5,305

 (4,990)

n/m

Less: depreciation and amortization of assets identified in a business combinations

 (454)

 -

n/m

 (554)

 -

n/m

Less: loss from operations of Yandex.Market, net of intercompany eliminations

 (2,261)

 -

n/m

 (5,237)

 -

n/m

Loss from operations, including Yandex.Market

 (2,599)

 (4,723)

82%

 (486)

 (4,990)

n/m

Net (loss)/income

 (3,744)

 (4,664)

25%

 1,684

 (7,884)

n/m

Less: depreciation and amortization of assets identified in a business combinations and related income tax effect

 (409)

 -

n/m

 (908)

 -

n/m

Less: loss of Yandex.Market

 (1,019)

 -

n/m

 (2,060)

 -

n/m

Net loss, including Yandex.Market

 (5,172)

 (4,664)

-10%

 (1,284)

 (7,884)

n/m




Contacts:

Investor Relations
Yulia Gerasimova
Phone: +7 495 974-35-38
E-mail: askIR@yandex-team.ru

Media Relations
Ilya Grabovskiy
Phone: +7 495 739-70-00
E-mail: pr@yandex-team.ru

Yandex LLC

Headquarters in Russia: Moscow

Headquarters
16, Leo Tolstoy St., Moscow, Russia 119021
Investor Relations
Corporate Secretary

Yandex N.V.

Registered office in Amsterdam

Schiphol Boulevard 165, 1118 BG Schiphol, The Netherlands