Yandex

Yandex Announces Second Quarter 2023 Financial Results

July 27, 2023

AMSTERDAM, the Netherlands, July 27, 2023 -- Yandex (NASDAQ and MOEX: YNDX), a Dutch public limited company and one of Europe's largest internet businesses, today announced its unaudited financial results for the second quarter ended June 30, 2023.

Q2 2023 Financial and Operational Highlights1, 2

         
In RUB millions  

Three months ended June 30

 

 

2022

2023

Change

    Total Revenues

 117,748

 182,495

55%

 

  Total Adjusted EBITDA

 25,694

 24,746

-4%

Total Group

Total Adjusted EBITDA margin, %

21.8%

13.6%

-8.2 pp

 

  Net income

 8,056

 14,631

82%

    Adjusted Net Income

 13,134

 9,646

-27%

     Share of Russian search market, %

62.1%

63.6%

1.5 pp

 

  Search share on Android, %

61.9%

63.4%

1.4 pp

 

  Search share on iOS, %

48.4%

49.7%

1.4 pp

Search and

  Revenues

 51,209

 78,416

53%

Portal

  Ex-TAC revenues

 42,777

 64,558

51%

    Adjusted EBITDA

 29,441

 41,011

39%

 

Adjusted EBITDA margin, %

57.5%

52.3%

-5.2 pp

    Revenues

 56,732

 94,951

67%

E-Commerce, Mobility

  GMV of Mobility3

 178,963

 254,212

42%

 and Delivery

  GMV of E-commerce4

 58,568

 110,477

89%

     GMV of other O2O services5

 38,364

 73,996

93%

    Total Adjusted EBITDA/(loss)

 2,011

 (6,119)

n/m

Plus and Entertainment Services

  Yandex Plus subscribers6, MM

 13.8

 23.5

70%

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars in this release at a rate of RUB 87.0341 to $1.00, the official exchange rate quoted as of June 30, 2023 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 and adjusted net income. 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 (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.

(4) 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 Market Delivery grocery service (delivered and paid for), including VAT.

(5) 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 Market Delivery food delivery services, Lavka Israel, and several other smaller O2O experiments, including VAT.

(6) Starting from June 2022, we have made several adjustments to improve our methodology for calculating the number of subscribers, including by improving the quality of counting unique users who have multiple Plus subscriptions, as well as including the mobile operators’ subscribers who do not have a Yandex account. As a result, the previously disclosed numbers for Q2 2022 have been re-presented.

Financial outlook

Given that uncertainty concerning future geopolitical developments and the macro environment remains high, our visibility over the short- and medium-term is limited and we remain unable to provide any forward-looking expectations at this stage. We aim to remain transparent about the current performance and key trends across our businesses.

Corporate and Subsequent Events

  • On April 21, 2023, Yandex entered into an agreement with Uber NL Holdings 1 B.V., a subsidiary of Uber Technologies Inc., and on the same day Yandex acquired Uber’s entire remaining 28.98% interest in the MLU B.V. mobility joint venture, for total consideration in cash of $702.5 million. The boards of directors of both Uber and Yandex approved this transaction and it was not subject to the approval of the shareholders of either party. The parties received all required regulatory approvals.
  • As announced on May 25, 2023, Yandex’s Board of Directors is progressing its plans for its potential corporate restructuring, and continues to work with a number of potential investors with a view to agreeing the acquisition of an economic interest in our core businesses, including all Russia-based businesses. The proposed restructuring would be subject to shareholder approval (including separate approval of Class A shareholders), and the Company’s goal is to bring a restructuring proposal to shareholders for approval later this year.
  • On June 6, 2023, Yandex received a favorable decision from the Nasdaq Listing Hearings Panel to grant the request of Yandex to continue its listing on Nasdaq, subject to certain conditions related to the timing and implementation of Yandex’s proposed corporate restructuring. This decision followed a notice that we received from the Listing Qualifications Staff of Nasdaq on March 15, 2023, which determined to delist the company’s securities from the Nasdaq Global Select Market as of March 24, 2023, exercising its broad discretionary authority under Nasdaq Listing Rule 5101 to delist securities. As of the date of this press release, the trading of our shares on the Moscow Exchange remains intact, however the liquidity of our shares on that exchange remains limited to the number of shares held in the Russian settlement system.
  • On June 19, 2023, Yandex published its 2022 Sustainability Progress Report, which outlines the company’s results across 12 sustainability streams and related objectives formalized in 2020, including support for employees and partners, the development of educational programs, enhancement of a service quality, and the reduction of environmental footprint of our offline operations.
  • On June 30, 2023, Yandex announced leadership changes in its financial department in preparation for the potential corporate restructuring. Effective August 1, 2023, Svetlana Demyashkevich, currently Chief Financial Officer of the Yandex N.V. group, will transition to the role of Senior Vice President of Finance, and Alexander Balakhnin, currently Chief Financial Officer and Head of Strategy of the E-commerce, Mobility and Delivery segment, will be appointed as the new Chief Financial Officer for the group.
  • Neither Yandex N.V. nor any of its group companies is a target of sanctions in the United States, European Union, Switzerland or United Kingdom, and the Yandex group is not owned or controlled by any persons who have been designated under such sanctions. In July, our “Yandex Pay” subsidiary was designated in Canada; such designation does not apply to Yandex N.V. or its other group companies or operations. Yandex continues to closely monitor developments in this regard.

Impact of the current geopolitical crisis

Current geopolitical tensions and their impact on the Russian and global economy have created an exceptionally challenging environment for our business, team and shareholders.

These developments have adversely impacted (and may in the future materially adversely impact) the macroeconomic climate in Russia, resulting in volatility of the ruble, including significant recent devaluation, currency controls, increased interest rates and inflation and a potential contraction in consumer spending, as well as the withdrawal of foreign businesses and suppliers from the Russian market. In addition, laws or regulations may be adopted that may adversely affect our non-Russian shareholders and the value of the shares they hold in our company. We provided detailed information on our risk exposure and possible adverse impacts on our businesses in our Annual Report on Form 20-F for the year ended December 31, 2022, which was filed on April 20, 2023.

We continue to provide services to our users and partners with no interruptions. We are taking appropriate measures to conserve cash and to consider our capital allocation and budget appropriately during this period of uncertainty, while remaining committed to continue investing in the development of our key businesses and services. We are closely monitoring sanctions and export control developments as well as the macroeconomic climate and consumer sentiment in Russia and we are assessing contingency plans to address potential developments. Our Board and management are focused on the wellbeing of our more than 24,000 employees in Russia and abroad, while doing everything we can to safeguard the interests of our shareholders and other stakeholders.

Consolidated Results

The following table provides a summary of our key consolidated financial results for the three and six months ended June 30, 2022 and 2023:

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues

 117,748

 182,495

55%

 223,758

 345,770

55%

Ex-TAC revenues

 110,412

 169,852

54%

 210,276

 322,024

53%

Income/(loss) from operations

 8,746

 11,494

31%

 (3,688)

 13,464

n/m

Adjusted EBITDA

 25,694

 24,746

-4%

 26,965

 37,540

39%

Net income/(loss)

 8,056

 14,631

82%

 (4,981)

 20,416

n/m

Adjusted net income

 13,134

 9,646

-27%

 5,010

 12,217

144%

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


Cash and cash equivalents as of June 30, 2023:

  • RUB 71.9 billion ($825.9 million) on a consolidated basis.

Segment financial results

Search & Portal

Our Search and Portal segment includes Search, Geo, Weather and a number of other services offered in Russia, Belarus and Kazakhstan.

Key operational trends:

  • Share of Russian search market, including mobile, averaged 63.6% in Q2 2023, up 1.5 pp from 62.1% in Q2 2022 and an improvement from 63.3% in Q1 2023, according to Yandex Radar
  • Search share on Android in Russia was 63.4% in Q2 2023, up 1.4 pp from 61.9% in Q2 2022 and an improvement from 62.6% in Q1 2023, according to Yandex Radar
  • Search share on iOS in Russia was 49.7% in Q2 2023, up 1.4 pp from 48.4% in Q2 2022 and an improvement from 49.1% in Q1 2023, according to Yandex Radar
  • Mobile search traffic was 68.2% of our total search traffic in Q2 2023. Mobile revenues represented 61.5% of our search revenues in Q2 2023
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues

51,209 

78,416 

53%

95,012 

145,961 

54%

Ex-TAC revenues

42,777 

64,558 

51%

79,540 

119,815 

51%

Adjusted EBITDA

29,441 

41,011 

39%

49,002 

75,724 

55%

Adjusted EBITDA margin

57.5%

52.3%

-5.2 pp

51.6%

51.9%

0.3 pp

Revenues increased by 53% and Ex-TAC revenues grew by 51% year-on-year in Q2 2023 mainly driven by the strong results of our core search business (primarily due to Android and iOS platforms) and the Yandex Advertising Network (mainly driven by growth on partner apps and websites) on the back of our investments in ad-products and technologies with an ongoing focus on SMB (small and medium business) and e-commerce areas as well as inventory expansion.

Adjusted EBITDA margin came to 52.3% in Q2 2023 compared with 57.5% in Q2 2022. The margin trends were supported by a positive operating leverage effect on the back of strong performance of our advertising businesses and the segregation of corporate overheads to our Other Business Units and Initiatives segment. This was however offset mainly by the increase in marketing and advertising costs and personnel expenses, which grew from a low base of the last year when we suspended our promotional activities and introduced a hiring freeze.

E-commerce, Mobility and Delivery

The E-commerce, Mobility and Delivery segment includes our transactional online-to-offline (O2O) 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 Market Delivery (since September 8, 2022, when the acquisition was completed; the service was earlier known as Delivery Club); and (iii) our other O2O businesses, including Yandex Delivery, our last- and middle-mile logistics solution for individuals, enterprises and SMB; Yandex Eats and Market Delivery, our ready-to-eat delivery from restaurants services; Lavka Israel, our hyperlocal convenience store delivery service; and Yandex Fuel, our contactless payment service at gas stations, and several smaller experiments.

Key operational trends:

  • Total E-CommerceGMV increased by 89% year-on-year in Q2 2023

Yandex Market

  • The share of GMV sold by third-party sellers on our Yandex Market marketplace was 84% in Q2 2023 remaining unchanged year-on-year
  • Marketplace’s assortment was 53.2 million SKUs as of the end of Q2 2023, up from 39.9 million SKUs as of the end of Q2 2022
  • The number of active buyers7 on the Yandex Market marketplace increased by 45% year-on-year and reached 16.5 million as of the end of Q2 2023
  • The number of active sellers8 on Yandex Market marketplace increased by 100% year-on-year and reached 61.8 thousand as of the end of Q2 2023

Mobility

  • The number of rides in the Mobility services increased by 18% compared to Q2 2022
  • GMV of the Mobility services grew 42% compared to Q2 2022

(7) An active buyer is a buyer who made at least 1 purchase in the last 12 months prior to the reporting date.

(8) An active seller is a seller who made at least 1 sale in the last 1 month prior to the reporting date.
 

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

GMV:  

 

 

 

 

 

 

Mobility

 178,963

 254,212

42%

 346,381

 478,946

38%

E-Commerce

 58,568

 110,477

89%

 123,148

 218,312

77%

First party (1P) business model

 17,418

 29,569

70%

 36,595

 63,403

73%

Third party (3P) commission business model

 41,150

 80,908

97%

 86,553

 154,909

79%

Other O2O services

 38,364

 73,996

93%

 78,468

 142,511

82%

Revenues:

 

 

 

 

 

 

Mobility

 29,938

 38,162

27%

 56,499

 70,704

25%

E-Commerce

 19,653

 40,176

104%

 40,397

 81,013

101%

Revenues from sale of goods (1P)9

 14,140

 23,690

68%

 29,700

 50,734

71%

Commission and other e-commerce revenues10

 5,513

 16,486

199%

 10,697

 30,279

183%

Other O2O services11

 8,297

 18,475

123%

 17,467

 35,653

104%

Eliminations

 (1,156)

 (1,862)

61%

 (2,437)

 (3,944)

62%

Total revenues

 56,732

 94,951

67%

 111,926

 183,426

64%

Adjusted EBITDA/(loss) E-commerce, Mobility and Delivery:

 2,011

 (6,119)

n/m

 (6,434)

 (16,919)

163%

(9) Revenues related to sales of goods include revenues from Yandex Market 1P sales, revenues from Yandex Lavka 1P sales in Russia, where we use a first-party (1P) business model and act as a direct retailer, and exclude delivery fee revenues related to these businesses.

(10) Commission and other e-commerce revenues include Yandex Market marketplace (3P) commission, delivery, service fee and advertising revenues of grocery delivery services of Yandex Eats and Maket Delivery, as well as delivery fee and advertising revenue of Yandex Lavka in Russia and other revenues.

(11) Other O2O Revenues include revenues from RouteQ in Q1 2023 and was presented retroactively in all previous periods.


The growth in GMV of Mobility reached 42% year-on-year in Q2 2023, driven by an increase in the number of rides, growth of rider base and order frequency across all of the regions we operate in, and an increase of surge coefficient, primarily driven by seasonal driver undersupply as well as vehicle undersupply on the market. The growth in GMV of E-commerce accelerated to 89% year-on-year in Q2 2023 supported by an expansion of our pickup points network and an organic growth in the user base, as well as acquisition of Delivery Club in September 2022. GMV of other O2O services grew by 93% year-on-year in Q2 2023, with Yandex Delivery and Yandex Food Delivery services including Market Delivery, being the largest contributors reporting growth of 144% year-on-year.

E-commerce, Mobility and Delivery segment revenues increased by 67% year-on-year in Q2 2023, mainly driven by E-commerce services (where Yandex Market was the largest contributor to growth in absolute terms, followed by Yandex Lavka) and Other O2O services (driven by Food Delivery). Mobility revenues increased by 27% on the back of higher investment into driver acquisition, while E-commerce revenues increased by 104%. The faster-than-GMV revenue growth is explained by an improvement of 3P take rates and an accelerated growth of advertising revenue. Other O2O services revenues delivered 123% year-on-year growth where Delivery was the key contributor to growth, followed by the effect of the acquisition of Delivery Club, which has now been integrated into the Food Delivery services business.

Eliminations related to the E-commerce, Mobility and Delivery segment represent the eliminations of intercompany revenues between different businesses within the segment. The year-on-year dynamic was mainly attributed to our expansion of intercompany synergies with a higher volume of E-commerce and Food Delivery orders fulfilled by our Yandex Delivery business compared to a year ago.

Adjusted EBITDA loss of E-commerce, Mobility and Delivery was RUB 6,119 million in Q2 2023 compared to a positive adjusted EBITDA of RUB 2,011 million in Q2 2022. This dynamic was primarily driven by the growing scale of E-commerce and Delivery businesses, higher investments into driver supply, as well as higher operating expenses, which grew from a low base of the last year when we implemented strict cost control measures on the back of geopolitical uncertainty (including a hiring freeze and optimizing of marketing expenses, among other things).

Plus and Entertainment Services

The Plus and Entertainment 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 23.5 million as of the end of Q2 2023, up 70% from the end of Q2 2022
             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues

6,150 

15,503 

152%

11,981 

28,859 

141%

Adjusted EBITDA/(loss)

(2,595)

1,800 

-169%

(5,766)

1,574 

-127%

Adjusted EBITDA margin

-42.2%

11.6%

53.8 pp

-48.1%

5.5%

53.6 pp

Plus and Entertainment Services revenues grew 152% in Q2 2023 compared with Q2 2022. The increase was primarily driven by the growth of subscription revenue on the back of the expanding base of paid subscribers and changes in tariff mix, as well as solid trends in other revenue streams, including licensing and advertising. Adjusted EBITDA turned positive for the first time reaching RUB 1.8 billion from a loss of RUB 2.6 billion in Q2 2022 driven by a positive operating leverage effect on the back of the subscription revenue growth (which grew 113% year-on-year) as well as significant cost-efficiency improvement.

Classifieds

The Classifieds segment includes Auto.ru, Yandex Realty, Yandex Rent and Yandex Travel.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues

2,568 

5,573 

117%

4,979 

10,011 

101%

Adjusted EBITDA/(loss)

493 

(46)

-109%

666 

(163)

-124%

Adjusted EBITDA margin

19.2%

-0.8%

-20 pp

13.4%

-1.6%

-15 pp

Classifieds revenues increased by 117% in Q2 2023 compared with Q2 2022. The revenue growth was supported by the solid performance of Auto.ru due to a low base in 2022 after a car market squeeze, as well as by Yandex Travel due to improvement in our market share on the back of increasing demand for our travel aggregator service. Adjusted EBITDA amounted to a loss of RUB 0.05 billion in Q2 2023 compared with a positive adjusted EBITDA of RUB 0.5 billion in Q2 2022 as a result of the continuing investments in the long-term growth of our businesses, such as Yandex Travel and Yandex Rent.

Other Business Units and Initiatives

The Other Business Units and Initiatives category includes our self-driving vehicles business (Yandex SDG), Yandex Cloud and Yandex 360, Yandex Education (Practicum and other education initiatives), Devices and Alice, FinTech (including Yandex Pay and Yandex ID) and a number of other experiments as well as unallocated corporate expenses.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues

10,868 

14,891 

37%

18,673 

29,077 

56%

Adjusted EBITDA loss

(3,704)

(12,302)

232%

(10,651)

(23,358)

119%

Adjusted EBITDA loss margin

-34.1%

-82.6%

-48.5 pp

-57.0%

-80.3%

-23.3 pp

Other Business Units and Initiatives revenues increased 37% year-on-year in Q2 2023, driven mainly by Yandex Cloud, Devices and Alice and Fintech. Yandex Cloud revenue grew 61% year-on-year, supported by product portfolio expansion as well as improvement in our market share on the back of increasing demand for our services. The Devices and Alice revenue increased 19% year-on-year to RUB 5.1 billion in Q2 2023 and 71% year-on-year in the first half of this year due to the expansion in the range of models available (including new edition of station Max and smart home devices) as well as the launch of TV and smart home devices sales in Belarus and Kazakhstan. This growth was offset by seasonal normalization after the peak in demand experienced in December 2022 and in the beginning of 2023.

The adjusted EBITDA loss amounted to RUB 12.3 billion compared to RUB 3.7 billion in Q2 2022. The loss increase was mainly attributed to segregation of unallocated corporate expenses from reportable segments’ adjusted EBITDA and their inclusion in the Other Business Units and Initiatives category (since Q3 2022), investments made to growth Yandex Cloud (including internationally) and Yandex SDG (where adjusted EBITDA loss came to RUB 2.5 billion in Q2 2023), and development of other verticals.

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, devices sales and others.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Revenues:

 

 

 

 

 

 

Segment revenues

127,527 

209,334 

64%

242,571 

397,334 

64%

Eliminations

(9,779)

(26,839)

174%

(18,813)

(51,564)

174%

Total revenues

117,748 

182,495 

55%

223,758 

345,770 

55%

Adjusted EBITDA:

 

 

 

 

 

 

Segment adjusted EBITDA

25,646 

24,344 

-5%

26,817 

36,858 

37%

Eliminations

48 

402 

n/m

148 

682 

361%

Total adjusted EBITDA

25,694 

24,746 

-4%

26,965 

37,540 

39%

Eliminations related to our revenues increased 174% in Q2 2023 compared with Q2 2022. The increase was mainly attributed to the increased intercompany revenue between our businesses (related to cross service advertising and marketing activities, the usage of data centers, other IT infrastructure, device sales, and other centralized services by all business units), as a result of greater integration of services and overall growth across the Group.

Consolidated Operating Costs and Expenses

Our operating costs and expenses consist of cost of revenues (COS), product development expenses (PD), sales, general and administrative expenses (SG&A), depreciation and amortization expenses (D&A) and goodwill impairment. COS, PD and SG&A categories include personnel-related costs and expenses, relevant office space rental, and related share-based compensation expenses. Increases across all cost categories reflect investments in overall growth. In Q2 2023, our headcount increased by 1,561 full-time employees. The total number of full-time employees was 24,282 as of June 30, 2023, up by 7% compared with March 31, 2023, and up 29% from June 30, 2022, which was primarily driven by the accelerated pace of hiring in Yandex Cloud, Search and Portal and Yandex Market, as well as by the growth of Mobility, Plus and Entertainment Services among others.
 

Operating Expenses

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Cost of revenues

 48,721

 79,120

62%

 99,732

 156,659

57%

Cost of revenues as a % of revenues

41.4%

43.4%

2 pp

44.6%

45.3%

0.7 pp

     including TAC

 7,336

 12,643

72%

 13,482

 23,746

76%

           TAC as a % of revenues

6.2%

6.9%

0.7 pp

6.0%

6.9%

0.9 pp

Product development

 16,826

 23,911

42%

 35,987

 46,215

28%

As a % of revenues

14.3%

13.1%

-1.2 pp

16.1%

13.4%

-2.7 pp

Sales, general and administrative

 35,742

 57,498

61%

 76,547

 110,673

45%

As a % of revenues

30.4%

31.5%

1.1 pp

34.2%

32.0%

-2.2 pp

Depreciation and amortization

 7,713

 9,336

21%

 15,180

 17,623

16%

As a % of revenues

6.6%

5.1%

-1.5 pp

6.8%

5.1%

-1.7 pp

Goodwill impairment

 -

 1,136

n/m

 -

 1,136

n/m

As a % of revenues

 -

0.6%

0.6 pp

 -

0.3%

0.3 pp

Total operating expenses

 109,002

 171,001

57%

 227,446

 332,306

46%

As a % of revenues

92.6%

93.7%

1.1 pp

101.6%

96.1%

-5.5 pp

Total operating expenses increased by 57% in Q2 2023 compared with Q2 2022. The increase was mainly due to the сost of revenues related to E-commerce, Mobility and Delivery businesses, Plus and Entertainment services, Devices and Alice, and growth of headcount and related personnel expenses across most of our business units due to the overall expansion of the businesses.

TAC grew 72% in Q2 2023 compared with Q2 2022 and represented 6.9% of total revenues, 70 basis points higher than in Q2 2022. The year-on-year growth of TAC as a share of revenue was primarily driven by TAC related to our distribution partners and the growing contribution of ad revenues related to the Yandex Advertising Network.

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

SBC expense included in cost of revenues

 129

 177

37%

 280

 341

22%

SBC expense included in product development

 3,926

 3,188

-19%

 7,466

 6,469

-13%

SBC expense included in SG&A

 2,440

 2,134

-13%

 5,014

 4,489

-10%

Total SBC expense

 6,495

 5,499

-15%

 12,760

 11,299

-11%

As a % of revenues

5.5%

3.0%

-2.5 pp

5.7%

3.3%

-2.4 pp

Total SBC expenses decreased by 15% in Q2 2023 compared with Q2 2022. The decrease was primarily related to the replacement of new RSU grants during 2022 with an increase in salaries and bonuses as well as settlement of Business Unit Equity Awards in cash in Q2 2022, which led to additional cost recognized in Q2 2022; partly offset by the material appreciation of the U.S. dollar against the ruble. In light of the ongoing halt of trading in our Class A shares on Nasdaq, during 2022 and 2023, participants have received and will 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. In Q2 2023, RUB 3.0 billion of the total RUB 5.5 billion in SBC expenses related to RSU equity awards settled in cash were recorded as part of personnel expenses, which reduced consolidated adjusted EBITDA.
 

Income/(loss) from operations

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Income/(loss) from operations

 8,746

 11,494

31%

 (3,688)

 13,464

n/m

Income from operations amounted to RUB 11.5 billion in Q2 2023 compared to RUB 8.7 billion in Q2 2022. This dynamic was mainly driven by the improved profitability of our Search and Portal and Plus and Entertainment segments.

Other income, net for Q2 2023 amounted to RUB 9,020 million, up from other loss, net of RUB 6,105 million in Q2 2022. Other income/(loss), net includes foreign exchange gains of RUB 8,954 million in Q2 2023 and foreign exchange loss of RUB 5,903 million in Q2 2022. Foreign exchange gains and losses dynamics reflect changes of USD denominated monetary assets in our Russian subsidiaries on the back of the depreciation of the Russian ruble against the US dollar by 11% during Q2 2023 and the appreciation of the Russian ruble against the US dollar by 64% during Q2 2022.

Income tax expense for Q2 2023 was RUB 4,909 million, up from RUB 3,732 million in Q2 2022. Our effective tax rate of 25.1% in Q2 2023 was lower than 31.7% in Q2 2022. The Group’s income tax expense for interim periods is determined based on the tax rate effective during that period. The major factors influencing changes effective tax rates in Q2 2023 and Q2 2022 were: differences in foreign tax rates of our subsidiaries (including reduced tax rate in certain Russian subsidiaries), deferred tax asset valuation allowances, non-deductible SBC expenses, statutory expenses not deductible for income tax purposes, tax on dividends and tax provision recognized and the effects on debt relief income exemption and permanent difference both related to restructuring of convertible debt in Q2 2022.

Net income was RUB 14.6 billion in Q2 2023, compared with RUB 8.1 billion in Q2 2022. The changes were mainly attributable to growth of operational profitability and favourable foreign exchange gains and losses dynamics described above, as well as the gain on restructuring of convertible debt in Q2 2022.

Cash provided by operating activities was RUB 13.6 billion and cash paid for property and equipment, intangible assets and assets to be leased was RUB 24.2 billion for Q2 2023.

The total number of shares issued and outstanding as of June 30, 2023 was 361,482,282, including 325,783,607 Class A shares, 35,698,674 Class B shares, and one Priority share and excluding 558,663 Class A shares held in treasury.

There were also employee share options outstanding to purchase up to an additional 2.9 million shares, at a weighted average exercise price of $44.32 per share, 2.2 million of which were fully vested; equity-settled share appreciation rights (SARs) for 0.1 million shares, at a weighted average measurement price of $32.85, all of which were fully vested; restricted share units (RSUs) covering 9.0 million shares, of which RSUs to acquire 6.2 million shares were fully vested; and performance share units (PSUs) for 0.2 million shares. In addition, we have outstanding awards in respect of our various Business Units, including options and synthetic options, for 4.9 million shares, 2.4 million of which were fully vested and are settled in equity of our Business Units, cash or Yandex Class A shares.

ABOUT YANDEX

Yandex (NASDAQ and MOEX: YNDX) is a technology company registered in the Netherlands 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 navigation products, while also expanding into mobility, e-commerce, online entertainment, cloud computing and other markets to assist millions of consumers in Russia and a number of international markets. 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 current geopolitical and macroeconomic developments 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, macroeconomic and geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment and regulatory and business responses to that crisis, including international economic sanctions and export controls, 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, 2022 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 20, 2023 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 27, 2023, 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/(loss), Adjusted EBITDA margin and Adjusted net income/(loss). 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/(loss) means U.S. GAAP net income/(loss) plus (1) depreciation and amortization, (2) certain SBC expense, (3) interest expense, (4) income tax expense, (5) expenses (reversal of expenses) related to the contingent compensation payable to employees in connection with certain business combinations, (6) loss from equity method investments, (7) one-off restructuring and other expenses and (8) impairment of goodwill and other intangible assets less (1) interest income, (2) other income/(loss), net and (3) gain on restructuring of convertible debt.
  • Adjusted EBITDA margin means adjusted EBITDA/(loss) divided by U.S. GAAP revenues.
  • Adjusted net income/(loss) means U.S. GAAP net income/(loss) plus (1) certain SBC expense, (2) expenses (reversal of expenses) related to the contingent compensation payable to certain employees in connection with certain business combinations, (3) one-off restructuring and other expenses, (4) impairment of goodwill and other intangible assets adjusted for the related income tax effect and (5) amortization of debt discount and issuance costs related to our convertible debt adjusted for the related income tax effect, less (1) foreign exchange gains/(losses) adjusted for the related income tax effect and (2) gain on restructuring of convertible debt adjusted for the related income tax effect.

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 bonuses but, unlike sales bonuses, are not deducted from U.S. GAAP revenues. By presenting revenue, 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 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. However, because we settled the RSU equity awards of our employees in cash during 2022 and first half of 2023, starting from Q3 2022 we no longer eliminate the relevant SBC expense corresponding to the cash payment from adjusted EBITDA and adjusted net income.

Foreign exchange gains

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.

Amortization of debt discount and issuance costs

We also adjust net income/(loss) 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. We have repurchased substantially all of the outstanding notes to date.

Expenses related to contingent consideration

We may incur expenses in connection with acquisitions that are not indicative of our recurring core operating performance. In particular, we are required under U.S. GAAP to accrue as an expense the contingent compensation that is payable to certain employees in connection with certain business combinations. We eliminate these acquisition-related expenses from adjusted EBITDA and adjusted net income to provide management and investors a tool for comparing on a period-to-period basis our operating performance in the ordinary course of operations.

Goodwill and other intangible assets impairment

Adjusted net income and adjusted EBITDA for Q2 2022 and Q2 2023 exclude a loss from goodwill and intangible assets impairment related to E-commerce, Mobility and Delivery segment of RUB 2,740 million and RUB 1,199 million, respectively and related income tax gain of RUB 548 million and nil, respectively.

Gain on restructuring of convertible debt

Adjusted net income, adjusted EBITDA and related margin measures for Q2 2022 exclude gain on restructuring of our convertible debt. Adjusted net income for Q2 2022 and its margin measures also exclude income tax attributable to this gain. 

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. 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. We have repurchased substantially all of the outstanding notes to date.

One-off restructuring and other expenses

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. Adjusted net income and adjusted EBITDA exclude expenses related to the corporate restructuring and other similar one-off expenses.

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, 

   

2022*

 

2023

 

2023

   

RUB

 

RUB

 

$

ASSETS  

 

 

 

 

 

    Cash and cash equivalents   

 83,131

 

 71,885

 

 825.9

    Accounts receivable  

 58,014

 

 64,928

 

 746.0

    Sales financing receivable  

 5,738

 

 5,720

 

 65.7

    Prepaid expenses  

 16,968

 

 20,277

 

 233.0

    Inventory  

 28,220

 

 23,519

 

 270.2

    Funds receivable  

 8,290

 

 6,220

 

 71.5

    VAT reclaimable  

 22,602

 

 24,829

 

 285.3

    Other current assets   

 16,971

 

 20,750

 

 238.4

           Total current assets  

 239,934

 

 238,128

 

 2,736.0

    Property and equipment  

 127,706

 

 147,415

 

 1,693.8

     Operating lease right-of-use assets  

 28,646

 

 28,847

 

 331.4

    Intangible assets  

 31,766

 

 36,227

 

 416.2

    Content assets  

 16,844

 

 18,856

 

 216.7

    Goodwill  

 143,778

 

 142,784

 

 1,640.6

    Equity method investments  

 2,118

 

 2,518

 

 28.9

     Investments in non-marketable equity securities   

 6,746

 

 8,362

 

 96.1

    Deferred tax assets  

 3,904

 

 6,436

 

 73.9

    Other non-current assets   

 15,277

 

 22,402

 

 257.4

           Total non-current assets  

 376,785

 

 413,847

 

 4,755.0

                 TOTAL ASSETS  

 616,719

 

 651,975

 

 7,491.0

LIABILITIES AND SHAREHOLDERS’ EQUITY  

 

 

 

 

 

     Accounts payable, accrued and other liabilities  

 122,816

 

 139,970

 

 1,608.2

    Debt, current portion  

 21,306

 

 68,764

 

 790.1

     Income and non-income taxes payable   

 28,137

 

 31,124

 

 357.6

    Deferred revenue   

 15,585

 

 18,482

 

 212.4

           Total current liabilities  

 187,844

 

 258,340

 

 2,968.3

    Debt, non-current portion  

 29,885

 

 23,883

 

 274.4

    Deferred tax liabilities  

 5,473

 

 7,222

 

 83.0

    Operating lease liabilities  

 17,609

 

 17,391

 

 199.8

    Finance lease liabilities  

 21,185

 

 25,201

 

 289.6

    Other accrued liabilities   

 16,545

 

 24,772

 

 284.6

           Total non-current liabilities  

 90,697

 

 98,469

 

 1,131.4

                 Total liabilities  

 278,541

 

 356,809

 

 4,099.7

Commitments and contingencies  

 

 

 

 

 

Shareholders’ equity:  

 

 

 

 

 

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: 326,342,270, Class B: 35,698,674, and Class C: 10,000 and nil, respectively); shares outstanding (Class A: 325,783,607, Class B: 35,698,674 and Class C: nil)  

 282

 

 282

 

 3.2

Treasury shares at cost (Class A: 558,663)  

 (1,393)

 

 (1,393)

 

 (16.0)

Additional paid-in capital  

 119,464

 

 81,505

 

 936.5

Accumulated other comprehensive income   

 24,258

 

 22,550

 

 259.1

Retained earnings   

 173,697

 

 192,206

 

 2,208.4

           Total equity attributable to Yandex N.V.  

 316,308

 

 295,150

 

 3,391.2

Noncontrolling interests  

 21,870

 

 16

 

 0.1

           Total shareholders’ equity   

 338,178

 

 295,166

 

 3,391.3

                 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  

 616,719

 

 651,975

 

 7,491.0

*    Derived from audited consolidated financial statements


 

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, 

 

Six months ended June 30, 

   

2022

 

2023

 

2023

 

2022

 

2023

 

2023

   

RUB

 

RUB

 

$

 

RUB

 

RUB

 

$

   

 

         

 

       
Revenues  

117,748

 

182,495

 

2,096.8

 

223,758

 

345,770

 

3,972.8

Operating costs and expenses:  

 

 

 

 

 

 

 

 

 

 

 

    Cost of revenues(1)  

48,721

 

79,120

 

909.1

 

99,732

 

156,659

 

1,800.0

    Product development(1)  

16,826

 

23,911

 

274.7

 

35,987

 

46,215

 

531.0

    Sales, general and administrative(1)  

35,742

 

57,498

 

660.6

 

76,547

 

110,673

 

1,271.5

    Depreciation and amortization   

7,713

 

9,336

 

107.3

 

15,180

 

17,623

 

202.5

Goodwill impairment  

 -

 

 1,136

 

 13.1

 

 -

 

 1,136

 

 13.1

Total operating costs and expenses  

109,002

 

171,001

 

1,964.8

 

227,446

 

332,306

 

3,818.1

Income/(loss) from operations  

 8,746

 

 11,494

 

 132.0

 

 (3,688)

 

 13,464

 

 154.7

Interest income  

1,037

 

1,108

 

12.7

 

2,399

 

2,323

 

 26.7

Interest expense  

 (1,109)

 

 (1,973)

 

 (22.7)

 

 (1,729)

 

 (3,146)

 

 (36.1)

Gain on restructuring of convertible debt  

 9,305

 

 -

 

 -

 

 9,305

 

 -

 

 -

Loss from equity method investments  

 (86)

 

 (109)

 

 (1.3)

 

 (451)

 

 (241)

 

 (2.8)

Other income/(loss), net  

 (6,105)

 

 9,020

 

 103.8

 

 (4,567)

 

 14,877

 

 170.9

    Net income before income taxes  

 11,788

 

 19,540

 

 224.5

 

 1,269

 

 27,277

 

 313.4

Income tax expense  

 3,732

 

 4,909

 

 56.4

 

 6,250

 

 6,861

 

 78.8

    Net income/(loss)  

 8,056

 

 14,631

 

 168.1

 

 (4,981)

 

 20,416

 

 234.6

Net income attributable to noncontrolling interests  

 (2,290)

 

 (402)

 

 (4.6)

 

 (3,676)

 

 (1,905)

 

 (21.9)

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

 5,766

 

 14,229

 

 163.5

 

 (8,657)

 

 18,511

 

 212.7

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

 

 

 

 

 

 

 

 

 

 

 

Basic  

 15.54

 

 38.37

 

 0.44

 

 (23.53)

 

 49.92

 

 0.57

Diluted  

 (7.03)

 

 38.23

 

 0.44

 

 (45.86)

 

 49.74

 

 0.57

Weighted average number of Class A and Class B shares used in per share computation                        
Basic  

371,106,744

 

370,823,163

 

370,823,163

 

367,856,773

 

370,839,366

 

370,839,366

Diluted  

376,105,159

 

372,224,647

 

372,224,647

 

370,832,165

 

372,169,479

 

372,169,479

   

 

 

 

 

 

 

 

 

 

 

 

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

129

 

177

 

2.0

 

280

 

341

 

3.9

Product development  

3,926

 

3,188

 

36.6

 

7,466

 

6,469

 

74.3

Sales, general and administrative  

2,440

 

2,134

 

24.6

 

5,014

 

4,489

 

51.6


 

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Cash Flows

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

             
   

Three months ended June 30, 

   

2022

 

2023

 

2023

   

RUB

 

RUB

 

$

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:            
Net income  

 8,056

 

 14,631

 

 168.1

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

 5,858

 

 6,741

 

 77.5

     Amortization of intangible assets  

 1,855

 

 2,595

 

 29.8

     Amortization of content assets  

 2,324

 

 2,160

 

 24.8

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

 3,485

 

 3,494

 

 40.1

     Amortization of debt discount and issuance costs  

 532

 

 -

 

 -

     Share-based compensation expense (excluding cash settled awards of RUB 9,208 and  

 (2,713)

 

 2,273

 

 26.1

     RUB 3,226, respectively)            
     Deferred income tax expense  

 353

 

 478

 

 5.5

     Foreign exchange losses/(gains)  

 5,903

 

 (8,954)

 

 (102.9)

     Loss from equity method investments  

 86

 

 109

 

 1.3

     Gain on restructuring of convertible debt  

 (9,305)

 

 -

 

 -

     Impairment of long-lived assets  

 2,740

 

 1,199

 

 13.8

     Provision for expected credit losses  

 401

 

 532

 

 6.1

     Other  

 240

 

 1,099

 

 12.7

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

 283

 

 (4,420)

 

 (50.8)

     Prepaid expenses  

 (1,714)

 

 (757)

 

 (8.7)

     Inventory  

 (2,401)

 

 3,691

 

 42.4

     Accounts payable, accrued and other liabilities and non-income taxes payable  

 9,354

 

 (3,755)

 

 (43.2)

     Deferred revenue  

 910

 

 1,891

 

 21.7

     Other assets  

 517

 

 (2,334)

 

 (26.8)

     VAT reclaimable  

 287

 

 (1,983)

 

 (22.8)

     Funds receivable  

 (1,999)

 

 (59)

 

 (0.7)

     Sales financing receivable  

 (635)

 

 (1,410)

 

 (16.2)

     Content assets  

 (3,017)

 

 (3,408)

 

 (39.2)

     Content liabilities  

 (524)

 

 (263)

 

 (3.0)

           Net cash provided by operating activities  

 20,876

 

 13,550

 

 155.6

CASH FLOWS USED IN INVESTING ACTIVITIES:            
Purchases of property and equipment and intangible assets  

 (7,704)

 

 (18,421)

 

 (211.7)

Purchase of assets to be leased  

 -

 

 (5,783)

 

 (66.4)

Maturities of term deposits  

 2,000

 

 -

 

 -

Loans granted  

 (13)

 

 (628)

 

 (7.2)

Proceeds from repayments of loans  

 41

 

 476

 

 5.5

Other investing activities  

 32

 

 232

 

 2.7

           Net cash used in investing activities  

 (5,644)

 

 (24,124)

 

 (277.1)

CASH FLOWS USED IN FINANCING ACTIVITIES:            
Proceeds from issuance of debt  

 46,446

 

 61,010

 

 701.0

Repayment of debt  

 (45,832)

 

 (40,000)

 

 (459.6)

Purchase of non-redeemable noncontrolling interests  

 -

 

 (57,337)

 

 (658.8)

Payment for finance leases  

 (372)

 

 (766)

 

 (8.8)

Other financing activities  

 (645)

 

 (5,674)

 

 (65.2)

           Net cash used in financing activities  

 (403)

 

 (42,767)

 

 (491.4)

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

 (25,274)

 

 5,825

 

 66.9

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

 (10,445)

 

 (47,516)

 

 (546.0)

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

 86,312

 

 120,138

 

 1,380.4

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

 75,867

 

 72,622

 

 834.4

             

YANDEX N.V.

Unaudited Condensed Consolidated Statements of Cash Flows

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

             
   

Six months ended June 30, 

   

2022

 

2023

 

2023

   

RUB

 

RUB

 

$

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:            
Net income/(loss)  

 (4,981)

 

 20,416

 

 234.6

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

 11,649

 

 12,922

 

 148.5

     Amortization of intangible assets  

 3,531

 

 4,701

 

 54.0

     Amortization of content assets  

 4,626

 

 4,540

 

 52.2

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

 7,711

 

 6,794

 

 78.1

     Amortization of debt discount and issuance costs  

 585

 

 -

 

 -

     Share-based compensation expense (excluding cash settled awards of RUB 9,208 and  

 3,552

 

 2,980

 

 34.2

     RUB 8,319, respectively)  

 

       
     Deferred income tax expense/(benefit)  

 315

 

 (377)

 

 (4.3)

     Foreign exchange losses/(gains)  

 4,231

 

 (14,878)

 

 (170.9)

     Loss from equity method investments  

 451

 

 241

 

 2.8

     Gain on restructuring of convertible debt  

 (9,305)

 

 -

 

 -

     Impairment of long-lived assets  

 3,644

 

 1,199

 

 13.8

     Provision for expected credit losses  

 1,038

 

 2,263

 

 26.0

     Other  

 481

 

 806

 

 9.2

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

 4,540

 

 (6,999)

 

 (80.4)

     Prepaid expenses  

 (2,395)

 

 (1,722)

 

 (19.9)

     Inventory  

 (6,065)

 

 4,260

 

 48.9

     Accounts payable, accrued and other liabilities and non-income taxes payable  

 (1,108)

 

 5,223

 

 59.9

     Deferred revenue  

 694

 

 2,554

 

 29.3

     Other assets  

 (194)

 

 (2,853)

 

 (32.8)

     VAT reclaimable  

 165

 

 (956)

 

 (11.0)

     Funds receivable  

 949

 

 2,413

 

 27.7

     Sales financing receivable  

 (735)

 

 (977)

 

 (11.2)

     Content assets  

 (6,199)

 

 (6,424)

 

 (73.8)

     Content liabilities  

 (353)

 

 (57)

 

 (0.7)

           Net cash provided by operating activities  

 16,827

 

 36,069

 

 414.2

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

 

Purchases of property and equipment and intangible assets  

 (25,687)

 

 (25,169)

 

 (289.2)

Purchase of assets to be leased  

 -

 

 (8,589)

 

 (98.7)

Acquisitions of businesses, net of cash acquired  

 (820)

 

 -

 

 -

Proceeds from sale of marketable equity securities  

 5,859

 

 -

 

 -

Investments in term deposits  

 (2,000)

 

 (6)

 

 (0.1)

Maturities of term deposits  

 25,769

 

 160

 

 1.8

Loans granted  

 (25)

 

 (997)

 

 (11.4)

Proceeds from repayments of loans  

 480

 

 1,198

 

 13.8

Other investing activities  

 (106)

 

 181

 

 2.1

           Net cash provided by/(used in) investing activities  

 3,470

 

 (33,222)

 

 (381.7)

CASH FLOWS USED IN FINANCING ACTIVITIES:          

 

Proceeds from issuance of debt  

 46,781

 

 81,681

 

 938.5

Repayment of debt  

 (45,832)

 

 (40,335)

 

 (463.4)

Repayments of overdraft borrowings  

 (2,940)

 

 -

 

 -

Purchase of non-redeemable noncontrolling interests  

 -

 

 (57,337)

 

 (658.8)

Payment of contingent consideration and holdback amount  

 (69)

 

 (77)

 

 (0.9)

Payment for finance leases  

 (719)

 

 (1,455)

 

 (16.7)

Other financing activities  

 (1,156)

 

 (5,674)

 

 (65.1)

           Net cash used in financing activities  

 (3,935)

 

 (23,197)

 

 (266.4)

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

 (19,893)

 

 8,531

 

 98.2

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

 (3,531)

 

 (11,819)

 

 (135.7)

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

 79,398

 

 84,441

 

 970.1

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

 75,867

 

 72,622

 

 834.4

           

 


 

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, 

 

2022

2023

Change

2022

2023

Change

Total revenues

 117,748

 182,495

55%

 223,758

 345,770

55%

Less: traffic acquisition costs (TAC)

 7,336

 12,643

72%

 13,482

 23,746

76%

Ex-TAC revenues

 110,412

 169,852

54%

 210,276

 322,024

53%

 

Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income/(loss)

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Net income/(loss)

 8,056

 14,631

82%

 (4,981)

 20,416

n/m

Add: depreciation and amortization

 7,713

 9,336

21%

 15,180

 17,623

16%

Add: certain SBC expense

 6,495

 2,506

-61%

 12,760

 5,043

-60%

Add: one-off restructuring and other expenses

 -

 211

n/m

 -

 211

n/m

Add: reversal of compensation expense related to contingent consideration

 -

 -

n/m

 (27)

 -

n/m

Less: gain on restructuring of convertible debt

 (9,305)

 -

n/m

 (9,305)

 -

n/m

Less: interest income

 (1,037)

 (1,108)

7%

 (2,399)

 (2,323)

-3%

Add: interest expense

 1,109

 1,973

78%

 1,729

 3,146

82%

Add: loss from equity method investments

 86

 109

27%

 451

 241

-47%

Less: other income/(loss), net

 6,105

 (9,020)

n/m

 4,567

 (14,877)

n/m

Add: impairment of goodwill and other intangible assets

 2,740

 1,199

-56%

 2,740

 1,199

-56%

Add: income tax expense

 3,732

 4,909

32%

 6,250

 6,861

10%

Adjusted EBITDA

 25,694

 24,746

-4%

 26,965

 37,540

39%

 

Reconciliation of Adjusted Net Income to U.S. GAAP Net Income/(loss)

             
In RUB millions

Three months ended June 30, 

Six months ended June 30, 

 

2022

2023

Change

2022

2023

Change

Net income/(loss)

 8,056

 14,631

82%

 (4,981)

 20,416

n/m

Add: certain SBC expense

 6,495

 2,506

-61%

 12,760

 5,043

-60%

Add: reversal of compensation expense related to contingent consideration

 -

 -

n/m

 (27)

 -

n/m

Less: foreign exchange gains/(losses)

 5,903

 (8,954)

n/m

 4,231

 (14,878)

n/m

Add: income tax attributable to foreign exchange gains/(losses)

 (1,491)

 53

n/m

 (1,183)

 226

n/m

Add: one-off restructuring and other expenses

 -

 211

n/m

 -

 211

n/m

Less: gain on restructuring of convertible debt

 (9,305)

 -

n/m

 (9,305)

 -

n/m

Add: income tax attributable to gain on restructuring of convertible debt

 752

 -

n/m

 752

 -

n/m

Add: impairment of goodwill and other intangible assets

 2,740

 1,199

-56%

 2,740

 1,199

-56%

Less: income tax attributable to impairment of goodwill and other intangible assets

 (548)

 -

n/m

 (548)

 -

n/m

Add: amortization of debt discount and issuance costs

 532

 -

n/m

 585

 -

n/m

Less: income tax attributable to amortization of debt discount and issuance costs

 -

 -

n/m

 (14)

 -

n/m

Adjusted net income

 13,134

 9,646

-27%

 5,010

 12,217

144%




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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

Head office in Russia: Moscow

Head office
16, Leo Tolstoy St., Moscow, Russia 119021
Investor Relations
Public relations
Corporate Secretary

Yandex N.V.

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Schiphol Boulevard 165, 1118 BG Schiphol, The Netherlands
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