UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

February 22, 2012

 

YANDEX N.V.

 

Laan Copes van Cattenburch 52

The Hague, the Netherlands, 2585 GB. Tel: +31-70-3454700

(Address, Including ZIP Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x  Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 



 

Furnished as Exhibit 99.1 to this Report on Form 6-K is a press release of Yandex N.V. dated February 22, 2012, announcing the Company’s results for the fourth quarter and the full year ended December 31, 2011.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

YANDEX N.V.

 

 

 

 

Date: February 22, 2012

By:

/S/ ARKADY VOLOZH

 

 

Arkady Volozh

 

 

Chief Executive Officer

 

 

 

 

 

 

 

By:

/S/ ALEXANDER SHULGIN

 

 

Alexander Shulgin

 

 

Chief Financial Officer

 

3



 

INDEX TO EXHIBITS

 

Number

 

Description

99.1

 

Press Release of Yandex N.V. dated February 22, 2012 announcing the results for the fourth quarter and the full year ended December 31, 2011

 

4


Exhibit 99.1

 

Yandex Announces Fourth Quarter and Full-Year 2011 Financial Results

 

MOSCOW AND THE HAGUE, February 22, 2012, Yandex (NASDAQ: YNDX), the leading internet company in Russia operating the country’s most popular search engine and most visited website, today announced its financial results for the fourth quarter and the full year ended December 31, 2011.

 

Q4 2011 Financial Highlights

 

·                  Revenues of RUR 6.4 billion ($200.0 million(1)), up 56% compared with Q4 2010
Ex-TAC revenues(2) (excluding traffic acquisition costs) up 50% compared with Q4 2010

 

·                  Income from operations of RUR 2.6 billion ($80.8 million), up 44% compared with Q4 2010

 

·                  Adjusted EBITDA(2) of RUR 3.3 billion ($101.5 million), up 48% compared with Q4 2010

 

·                  Operating margin of 40.4%

Adjusted EBITDA margin(2) of 50.8%

Adjusted ex-TAC EBITDA margin(2) of 60.1%

 

·                  Net income of RUR 2.1 billion ($65.9 million), up 51% compared with Q4 2010

 

·                  Adjusted net income(2) of RUR 2.2 billion ($68.3 million), up 50% compared with Q4 2010

 

·                  Net income margin of 33.0%

Adjusted net income margin(2) of 34.1%

Adjusted ex-TAC net income margin(2) of 40.4%

 

FY 2011 Financial Highlights

 

·                  Revenues of RUR 20.0 billion ($622.2 million(1)), up 60% compared with FY 2010

Ex-TAC revenues(2) (excluding traffic acquisition costs) up 56% compared with FY 2010

 

·                  Income from operations of RUR 7.0 billion ($218.5 million), up 46% compared with FY 2010

 

·                  Adjusted EBITDA(2) of RUR 9.2 billion ($286.9 million), up 50% compared with FY 2010

 

·                  Operating margin of 35.1%

Adjusted EBITDA margin(2) of 46.1%

Adjusted ex-TAC EBITDA margin(2) of 54.2%

 

·                  Net income of RUR 5.8 billion ($179.3 million), up 51% compared with FY 2010

Adjusted net income(2) of RUR 6.0 billion ($186.5 million), up 51% compared with FY 2010

 

·                  Net income margin of 28.8%

Adjusted net income margin(2) of 30.0%

Adjusted ex-TAC net income margin(2) of 35.2%

 

“Yandex demonstrated strong traffic and revenue growth, capping off results for 2011 at the top end of our guidance range and building upon our clear leadership in the Russian search market,” said Arkady Volozh, Chief Executive Officer of Yandex. “During the past year we continued to innovate and offer new services that make a difference in the lives of our users, including those in Turkey, our first market outside the CIS. This past year’s significant investments in talent and infrastructure, along with our focus on the needs of users, position us well going forward. We will continue to develop a broad range of services that complement our core search platform, including maps and personal services on the desktop and on mobile platforms, emphasizing collaboration with our strategic partners.”

 


(1)  Pursuant to SEC rules regarding convenience translations, Russian ruble (RUR) amounts have been translated into U.S. dollars at a rate of RUR 32.1961 to $1.00, the official exchange rate quoted as of December 31, 2011 by the Central Bank of the Russian Federation.

(2)  This is a non-GAAP financial measure. Please see “Use of Non-GAAP Financial Measures” below for a discussion of how we define this non-GAAP financial measure. You will find a reconciliation of this non-GAAP financial measure to the most directly comparable US GAAP measure in the accompanying financial tables at the end of this release.

 



 

The following table provides a summary of key financial results for the three months ended December 31, 2010 and 2011 and fiscal years 2010 and 2011:

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Revenues

 

4,125

 

6,439

 

56

%

12,500

 

20,033

 

60

%

Ex-TAC revenues(2)

 

3,618

 

5,437

 

50

%

10,927

 

17,035

 

56

%

Income from operations

 

1,807

 

2,603

 

44

%

4,823

 

7,034

 

46

%

Adjusted EBITDA(2)

 

2,206

 

3,269

 

48

%

6,164

 

9,237

 

50

%

Net income

 

1,410

 

2,123

 

51

%

3,817

 

5,773

 

51

%

Adjusted net income(2)

 

1,470

 

2,198

 

50

%

3,968

 

6,003

 

51

%

 

Q4 2011 Operational Highlights

 

·                  Share of Russian search market averaged 60.8% in Q4 2011 (according to LiveInternet)

·                  SERPs (search engine result pages) grew 36% from Q4 2010

·                  Number of advertisers was more than 173,000, up 43% from Q4 2010 and up 10% from Q3 2011. For FY2011, the number of advertisers increased by 44% to more than 270,000

·                  Acquisition of the mobile business of SPB Software

·                  Important partnerships in mobile: Yandex became the default search engine on Windows Phone in Russia and bada phones in the CIS

·                  Built upon our launch in Turkey by adding a new map service that includes built-in traffic maps as well as panoramic street images of Istanbul and Ankara

 

Revenues

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Advertising revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Text-based advertising

 

 

 

 

 

 

 

 

 

 

 

 

 

Yandex websites

 

3,079

 

4,405

 

43

%

9,454

 

14,590

 

54

%

Ad network

 

449

 

1,037

 

131

%

1,506

 

2,922

 

94

%

Total text-based advertising

 

3,528

 

5,442

 

54

%

10,960

 

17,512

 

60

%

Display advertising

 

501

 

864

 

72

%

1,229

 

2,096

 

71

%

Total advertising revenues

 

4,029

 

6,306

 

57

%

12,189

 

19,608

 

61

%

Online payment commissions

 

82

 

115

 

40

%

263

 

383

 

46

%

Other

 

14

 

18

 

29

%

48

 

42

 

(13

)%

Total revenues

 

4,125

 

6,439

 

56

%

12,500

 

20,033

 

60

%

 

Text-based advertising revenues, accounting for 85% of total revenues in Q4 2011, continued to determine overall top-line performance.

 


(2) This is a non-GAAP financial measure. Please see “Use of Non-GAAP Financial Measures” below for a discussion of how we define this non-GAAP financial measure. You will find a reconciliation of this non-GAAP financial measure to the most directly comparable US GAAP measure in the accompanying financial tables at the end of this release.

 



 

Text-based advertising revenues from Yandex’s own websites accounted for 68% of total revenues during Q4 2011, and increased by 43% compared with Q4 2010. Text-based advertising revenues from our ad network increased 131% compared with Q4 2010 and contributed 16% of total revenues during Q4 2011. The enhanced performance of our Yandex ad network reflects the addition of Rambler to our ad network in mid-2011 as well as improved monetization from our contextual partner network sites due to improvements in our advertising technology.

 

Paid clicks on Yandex’s and its partners’ websites, in aggregate, increased 65% in Q4 2011 compared with Q4 2010, while the average cost per click decreased 7% during the same period as a result of our efforts to improve CTR (click through rate) on both our own sites and our ad network, make our platform more attractive to new advertisers primarily from the regions and increase the efficiency of our clients’ advertising spend.

 

Display advertising revenue, accounting for 13% of total revenues during Q4 2011, increased 72% compared with Q4 2010 reflecting the strong commitment of our display advertising clients to maintaining their presence online.

 

Online payment commissions accounted for 2% of revenue during Q4 2011, and increased 40% compared with Q4 2010.

 

Operating Costs and Expenses

 

Yandex’s operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A), and depreciation and amortization expenses (D&A). Apart from D&A, each of the above expense categories includes personnel-related costs and expenses, including related share-based compensation expense. Increases across all cost categories, excluding D&A, reflect investments in overall growth, including personnel. In Q4 2011, Yandex added 149 full-time employees, an increase of 5% from September 30, 2011, and up 39% from December 31, 2010. The total number of full-time employees was 3,312 as of December 31, 2011. Total share-based compensation expense increased 50% in Q4 2011.

 

Costs of revenues, including traffic acquisition costs (TAC)

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

TAC:

 

 

 

 

 

 

 

 

 

 

 

 

 

Related to the Yandex ad network

 

277

 

665

 

140

%

921

 

1,853

 

101

%

Related to distribution partners

 

230

 

337

 

47

%

652

 

1,145

 

76

%

Total TAC

 

507

 

1,002

 

98

%

1,573

 

2,998

 

91

%

Total TAC as a % of total revenues

 

12.3

%

15.6

%

 

 

12.6

%

15.0

%

 

 

Other cost of revenues

 

288

 

483

 

68

%

1,012

 

1,709

 

69

%

Other cost of revenues as a % of revenues

 

7.0

%

7.5

%

 

 

8.1

%

8.5

%

 

 

Total cost of revenues

 

795

 

1,485

 

87

%

2,585

 

4,707

 

82

%

Total cost of revenues as a % of revenues

 

19.3

%

23.1

%

 

 

20.7

%

23.5

%

 

 

 



 

TAC increased from 14.4% of text-based revenues in Q4 2010 to 18.4% in Q4 2011, resulting primarily from growth in the percentage of our text-based revenues generated from our ad network for the period and, in turn, the growth in the share of those revenues paid to our ad network partners.

 

Other cost of revenues in Q4 2011 increased 68% compared with Q4 2010, reflecting principally an increase in datacenter-related costs and utilities, personnel expenses and content acquisition costs. The number of people employed in the departments allocated to costs of revenues increased 48%, from 219 as of December 31, 2010 to 325 as of December 31, 2011, with 6 employees added since September 30, 2011.

 

Product development

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Product development

 

594

 

853

 

44

%

2,073

 

3,124

 

51

%

As a % of revenues

 

14.4

%

13.2

%

 

 

16.6

%

15.6

%

 

 

 

The increase in product development expenses in Q4 2011 primarily reflects the increase in personnel-related expenses. Headcount in development staff increased 40% from 1,313 as of December 31, 2010, to 1,842 as of December 31, 2011, with 104 employees added since September 30, 2011.

 

Selling, general and administrative (SG&A)

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

SG&A

 

586

 

916

 

56

%

1,838

 

3,294

 

79

%

As a % of revenues

 

14.2

%

14.2

%

 

 

14.7

%

16.4

%

 

 

 

The increase in SG&A in Q4 2011 was driven primarily by increased personnel-related costs as well as increased advertising and marketing expenses. Headcount in departments whose costs are allocated to SG&A increased 34%, from 853 as of December 31, 2010 to 1,145 as of December 31, 2011, with 39 employees added since September 30, 2011.

 

Share-based compensation (SBC) expense

 

SBC expense is included in each of the cost of revenues, product development and SG&A categories discussed above.

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

SBC expense included in cost of revenues

 

5

 

7

 

40

%

16

 

26

 

63

%

SBC expense included in product development

 

29

 

42

 

45

%

87

 

153

 

76

%

SBC expense included in SG&A

 

22

 

35

 

59

%

57

 

150

 

163

%

Total SBC expense

 

56

 

84

 

50

%

160

 

329

 

106

%

As a % of revenues

 

1.4

%

1.3

%

 

 

1.3

%

1.6

%

 

 

 

Total SBC expense increased 50% in Q4 2011 compared with Q4 2010. The increase is primarily related to

 



 

share-based compensation on options granted to employees in 2010 and 2011, which had fair values significantly higher than previous grants.

 

Depreciation and amortization (D&A) expense

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

D&A expense

 

343

 

582

 

70

%

1,181

 

1,874

 

59

%

As a % of revenues

 

8.3

%

9.0

%

 

 

9.4

%

9.4

%

 

 

 

D&A expense increased 70% in Q4 2011 compared with Q4 2010, primarily reflecting our considerable recent investments in servers and data centers.

 

As a result of the factors described above, income from operations was RUR 2.6 billion ($80.8 million) in Q4 2011, a 44% increase from Q4 2010, while adjusted EBITDA reached RUR 3.3 billion ($101.5 million) in Q4 2011, up 48% from Q4 2010.

 

Interest income in Q4 2011 was RUR 105 million, up from RUR 46 million in Q4 2010. We derive a considerable portion of our interest income from ruble term deposits held in major Russian banks. Investments of our cash held in USD in the Netherlands in bank deposits, money market funds and debt securities generally yield considerably lower returns. Interest income increased principally due to investing more of our cash provided by operating activities in Russia, where our investments earn higher returns. Additionally, we earned significantly more interest income in the Netherlands due to the investment of our IPO proceeds.

 

Foreign exchange gain in Q4 2011 was RUR 6 million, compared to a foreign exchange loss of RUR 5 million in Q4 2010.  Because the functional currency of Yandex’s operating subsidiaries in Russia is the Russian ruble, changes in the ruble value of these subsidiaries’ monetary assets and liabilities that are denominated in other currencies (primarily U.S. dollar-denominated cash, cash equivalents and term deposits maintained in Russia) due to exchange rate fluctuations are recognized as foreign exchange gains or losses in the income statement. Although the U.S. dollar value of Yandex’s U.S. dollar-denominated cash, cash equivalents and term deposits was not impacted by these currency fluctuations, they resulted in upward and downward revaluations, respectively, of the ruble equivalent of these U.S dollar-denominated monetary assets in Q4 2011 and Q4 2010.

 

Income tax expense for Q4 2011 was RUR 573 million, up from RUR 441 million in Q4 2010. Our effective tax rate decreased from 23.8% in Q4 2010 to 21.3% in Q4 2011, primarily reflecting a change in our treasury policy following the IPO. In recent years, Yandex’s principal Russian operating subsidiary had been paying dividends to its Netherlands parent company and incurred a 5% withholding tax in Russia when these dividends were paid. Under the new treasury policy, however, management does not currently expect the company’s Russian operating subsidiary to pay dividends to the parent company out of 2011 earnings. Therefore, no accrual for dividend withholding tax was required for 2011.

 

Adjusted net income in Q4 2011 was RUR 2.2 billion ($68.2 million), a 50% increase from Q4 2010, broadly in line with the underlying operating results. It was positively impacted by a change in the effective income tax rate resulting from the elimination of the dividend withholding tax accrual. Adjusted net income margin was 34% in Q4 2011, compared to 36% in Q4 2010.

 

Net income was RUR 2.1 billion ($65.9 million) in Q4 2011, up 51% compared with Q4 2010. The higher growth in net income compared with adjusted net income was primarily the result of SBC expenses

 



 

representing a smaller portion of other operating costs and expenses when comparing Q4 2011 to Q4 2010.

 

As of December 31, 2011, Yandex had cash, cash equivalents, term deposits (including long-term deposits) and long-term debt securities of RUR 20.7 billion ($642.3 million).

 

Net operating cash flow and capital expenditures for Q4 2011 were RUR 2.7 billion ($85.0 million) and RUR 1.8 billion ($54.3 million), respectively.

 

The total number of shares issued and outstanding as of December 31, 2011 was 323,838,731, including 159,217,348 Class A shares, 164,621,382 Class B shares, and one Priority share and excluding Class C shares outstanding solely as a result of conversion of Class B shares into Class A shares; all such Class C shares will be cancelled. There were also options outstanding to purchase up to an additional 14.3 million shares, at a weighted average exercise price of $4.19 per share, of which options to purchase 9.8 million shares were fully vested; and equity-settled share appreciation rights equal to 0.8 million shares, at a weighted average measurement price of $20.80, none of which were vested.

 

Outlook for 2012

 

Yandex expects to report full-year ruble-based revenue growth of 40-45% for the full year 2012.

 



 

Conference Call Information

 

Yandex’s management will hold an earnings conference call on February 22, 2012 at 9:00 AM U.S. Eastern Time (6:00 PM Moscow time; 2:00 PM London time).

 

To access the conference call live, please dial:

 

US: +1 631 510 7498

UK: +44 (0) 1452 555 566

Russia: 8 10 800 20972044

 

Passcode: 45285902#

 

A replay of the call will be available through February 29, 2012. To access the replay, please dial:

 

US: +1 866 247 4222,

Russia/International: +44 (0) 1452 550 000

 

Passcode: 45285902#

 

A live and archived webcast of this conference call will be available at http://investor.shareholder.com/media/Yandex/eventdetail.cfm?eventid=108335

 



 

ABOUT YANDEX

 

Yandex (NASDAQ: YNDX) is the leading internet company in Russia, operating the country’s most popular search engine and most visited website. Yandex also operates in Ukraine, Kazakhstan, Belarus and Turkey. Yandex’s mission is to answer any question internet users may have.

 

FORWARD-LOOKING STATEMENTS

 

This press release contains forward-looking statements that involve risks and uncertainties. These include statements regarding the planned growth of our business and our anticipated revenue for full-year 2012. 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, competitive pressures, changes in advertising patterns, changes in the legal and regulatory environment, technological developments, unforeseen changes in our hiring patterns, 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Prospectus dated May 24, 2011, which is on file with the Securities and Exchange Commission and is available on our investor relations website at http://company.yandex.com/investor_relations/sec_filing.xml and on the SEC website at www.sec.gov. Additional risk factor disclosure and related information will also be set forth in our Annual Report in Form 20-F for the year ended December 31, 2011. All information provided in this release and in the attachments is as of February 22, 2012, and Yandex undertakes no duty to update this information unless required by law.

 

Contacts:

Investor Relations

Dmitry Barsukov, Katya Zhukova

Phone: +7 495 739-70-00

E-mail: askIR@yandex-team.ru

 

US Investor Contact

The Blueshirt Group, for Yandex

Alex Wellins

Phone: +1 415 217-5861

E-mail: alex@blueshirtgroup.com

 

Media Relations

Ochir Mandzhikov, Dina Litvinova

Phone: +7 495 739-70-00

E-mail: pr@yandex-team.ru

 



 

USE OF NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which are prepared and presented in accordance with US GAAP, we present the following non-GAAP financial measures: ex-TAC revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted ex-TAC EBITDA margin, adjusted net income, adjusted net income margin and adjusted ex-TAC net income margin. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with US 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 US GAAP measures,” included following the accompanying financial tables. We define the various non-GAAP financial measures we use as follows:

 

·                  Ex-TAC revenue means US GAAP revenues less total traffic acquisition costs (TAC).

·                  Adjusted EBITDA means net income plus (1) depreciation and amortization, (2) SBC expense and (3) provision for income taxes, less (A) interest income and (B) other income/(expense).

·                  Adjusted EBITDA margin means adjusted EBITDA divided by US GAAP revenues.

·                  Adjusted ex-TAC EBITDA margin means adjusted EBITDA divided by ex-TAC revenue.

·                  Adjusted net income means US GAAP net income plus (1) SBC expense adjusted for the income tax reduction attributable to SBC expense and (2) foreign exchange losses (less foreign exchange gains) adjusted for the (reduction) increase in income tax attributable to the foreign exchange losses (gains).

·                  Adjusted net income margin means adjusted net income divided by US GAAP revenues.

·                  Adjusted ex-TAC net income margin means adjusted net income divided by ex-TAC revenues.

 

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

 

In particular, we believe that it may be useful for investors and analysts to review certain measures both in accordance with US GAAP and net of the effect of TAC, which we view as comparable to sales commissions but, unlike sales commissions, are not deducted from US 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. In addition, SBC is a significant expense item, and an important part of our compensation and incentive programs. However, as it is a non-cash charge, 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 clear picture of our operating performance. Finally, as we hold significant assets in currencies other than our Russian ruble operating currency, and as foreign exchange fluctuations are outside of our operational control, we believe that it is useful to present adjusted net income and related margin measures excluding these effects, in order to provide greater clarity regarding our operating performance.

 

Although our management uses these measures for operational decision making and considers these non-GAAP 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 costs, particularly share-based compensation, that are recurring. 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.

 

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

 



 

YANDEX N.V.

 

Unaudited Consolidated Balance Sheets

 

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

 

 

 

As of December 31,

 

 

 

2010*

 

2011

 

2011

 

 

 

RUR

 

RUR

 

$

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

3,371

 

6,322

 

196.4

 

Term deposits

 

3,361

 

5,169

 

160.6

 

Accounts receivable, net

 

798

 

1,250

 

38.8

 

Funds receivable, net

 

49

 

174

 

5.4

 

Prepaid expenses

 

393

 

630

 

19.5

 

Deferred tax assets

 

27

 

297

 

9.2

 

Other current assets

 

196

 

663

 

20.6

 

Total current assets

 

8,195

 

14,505

 

450.5

 

Property and equipment, net

 

2,983

 

6,973

 

216.6

 

Intangible assets, net

 

129

 

486

 

15.1

 

Goodwill

 

662

 

1,132

 

35.2

 

Long-term prepaid expenses

 

275

 

616

 

19.1

 

Restricted cash

 

 

454

 

14.1

 

Term deposits

 

213

 

2,454

 

76.2

 

Investments in non-marketable equity securities

 

92

 

569

 

17.7

 

Investments in debt securities

 

 

6,733

 

209.1

 

Deferred tax assets

 

16

 

11

 

0.4

 

Other non-current assets

 

52

 

143

 

4.4

 

TOTAL ASSETS

 

12,617

 

34,076

 

1,058.4

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

979

 

1,722

 

53.4

 

Taxes payable

 

582

 

916

 

28.4

 

Deferred revenue

 

550

 

900

 

28.0

 

Funds payable and amounts due to customers

 

826

 

1,174

 

36.5

 

Total current liabilities

 

2,937

 

4,712

 

146.3

 

Deferred tax liabilities

 

50

 

189

 

5.9

 

Other accrued liabilities

 

15

 

222

 

6.9

 

Total liabilities

 

3,002

 

5,123

 

159.1

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

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

 

 

 

 

Preference shares: €0.01 par value; nil and 2,000,000,001 shares authorized, nil and nil shares issued and outstanding, respectively

 

 

 

 

Ordinary shares: par value (Class A €0.01, Class B €0.10 and Class C €0.09); shares authorized (Class A: 4,539,525,900 and 2,000,000,000, Class B: 302,635,060 and 273,764,304, and Class C: 302,635,060 and 276,063,445); shares issued (Class A: 30,058,214 and 159,217,348, Class B: 273,764,304 and 164,621,382, and Class C: 2,299,141 and 109,142,922 respectively); shares outstanding (Class A: 30,051,214 and 159,217,348, Class B: 273,764,304 and 164,621,382, respectively and Class C: nil)

 

972

 

595

 

18.5

 

Additional paid-in capital

 

467

 

12,729

 

395.3

 

Accumulated other comprehensive income

 

148

 

1,828

 

56.8

 

Retained earnings

 

8,028

 

13,801

 

428.7

 

Total shareholders’ equity

 

9,615

 

28,953

 

899.3

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

12,617

 

34,076

 

1,058.4

 

 


* Derived from audited financial statements

 



 

Unaudited Condensed Consolidated Statements of Income

 

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

 

 

 

Three months ended December 31,

 

 

 

2010

 

2011

 

2011

 

 

 

RUR

 

RUR

 

$

 

Revenues

 

4,125

 

6,439

 

200.0

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of revenues(1)

 

795

 

1,485

 

46.1

 

Product development(1)

 

594

 

853

 

26.5

 

Sales, general and administrative(1)

 

586

 

916

 

28.5

 

Depreciation and amortization

 

343

 

582

 

18.1

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

2,318

 

3,836

 

119.2

 

 

 

 

 

 

 

 

 

Income from operations

 

1,807

 

2,603

 

80.8

 

Interest income

 

46

 

105

 

3.3

 

Other expense, net

 

(2

)

(12

)

(0.4

)

Net income before income taxes

 

1,851

 

2,696

 

83.7

 

Provision for income taxes

 

441

 

573

 

17.8

 

 

 

 

 

 

 

 

 

Net income

 

1,410

 

2,123

 

65.9

 

 

 

 

 

 

 

 

 

Net income per Class A and Class B share:

 

 

 

 

 

 

 

Basic

 

4.64

 

6.57

 

0.20

 

Diluted

 

4.53

 

6.34

 

0.20

 

Weighted average number of Class A and Class B shares outstanding

 

 

 

 

 

 

 

Basic

 

303,815,518

 

323,241,474

 

323,241,474

 

Diluted

 

311,570,884

 

334,864,888

 

334,864,888

 

 


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

 

Cost of revenues

 

5

 

7

 

0.2

 

Product development

 

29

 

42

 

1.3

 

Sales, general and administrative

 

22

 

35

 

1.1

 

 



 

YANDEX N.V.

 

Unaudited Consolidated Statements of Income

 

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

 

 

 

Year ended December 31,

 

 

 

2010*

 

2011

 

2011

 

 

 

RUR

 

RUR

 

$

 

Revenues

 

12,500

 

20,033

 

622.2

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of revenues(1)

 

2,585

 

4,707

 

146.2

 

Product development(1)

 

2,073

 

3,124

 

97.0

 

Sales, general and administrative(1)

 

1,838

 

3,294

 

102.3

 

Depreciation and amortization

 

1,181

 

1,874

 

58.2

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

7,677

 

12,999

 

403.7

 

 

 

 

 

 

 

 

 

Income from operations

 

4,823

 

7,034

 

218.5

 

Interest income

 

156

 

222

 

6.9

 

Other income, net

 

24

 

62

 

1.9

 

Net income before income taxes

 

5,003

 

7,318

 

227.3

 

Provision for income taxes

 

1,186

 

1,545

 

48.0

 

 

 

 

 

 

 

 

 

Net income

 

3,817

 

5,773

 

179.3

 

 

 

 

 

 

 

 

 

Net income per Class A and Class B share:

 

 

 

 

 

 

 

Basic

 

12.56

 

18.30

 

0.57

 

Diluted

 

12.37

 

17.59

 

0.55

 

Weighted average number of Class A and Class B shares outstanding

 

 

 

 

 

 

 

Basic

 

303,817,388

 

315,541,639

 

315,541,639

 

Diluted

 

308,580,600

 

328,155,087

 

328,155,087

 

 


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

 

Cost of revenues

 

16

 

26

 

0.8

 

Product development

 

87

 

153

 

4.8

 

Sales, general and administrative

 

57

 

150

 

4.6

 

 


* Derived from audited financial statements

 


 


 

YANDEX N.V.

 

Unaudited Condensed Consolidated Statements of Cash Flows

 

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

 

 

 

Three months ended December 31,

 

 

 

2010

 

2011

 

2011

 

 

 

RUR

 

RUR

 

$

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

1,410

 

2,123

 

65.9

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

337

 

553

 

17.2

 

Amortization of acquisition-related intangible assets

 

6

 

29

 

0.9

 

Share-based compensation expense

 

56

 

70

 

2.2

 

Deferred income taxes

 

21

 

(7

)

(0.2

)

Foreign exchange losses/(gains)

 

5

 

(6

)

(0.2

)

Other

 

 

19

 

0.6

 

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

 

 

 

 

 

 

 

Accounts receivable, net

 

(234

)

(296

)

(9.2

)

Funds receivable

 

(3

)

(76

)

(2.4

)

Prepaid expenses and other assets

 

181

 

(333

)

(10.3

)

Accounts payable and accrued liabilities

 

332

 

274

 

8.5

 

Deferred revenue

 

125

 

174

 

5.4

 

Funds payable and amounts due to customers

 

119

 

212

 

6.6

 

Net cash provided by operating activities

 

2,355

 

2,736

 

85.0

 

 

 

 

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchase of property and equipment

 

(712

)

(1,749

)

(54.3

)

Acquisitions of businesses, net of cash acquired

 

(1

)

(735

)

(22.8

)

Investments in non-marketable equity securities

 

1

 

 

 

Investments in debt securities

 

 

(3,429

)

(106.5

)

Investments in term deposits

 

(1,914

)

(4,291

)

(133.3

)

Maturities of term deposits

 

2,307

 

5,174

 

160.6

 

Escrow cash deposit

 

 

(433

)

(13.4

)

Net cash used in investing activities

 

(319

)

(5,463

)

(169.7

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

Ordinary shares issuance costs

 

 

(5

)

(0.2

)

Proceeds from issuance of ordinary shares

 

 

 

 

Proceeds from exercise of share options

 

 

89

 

2.8

 

Repurchase of share options

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in)/provided by financing activities

 

 

84

 

2.6

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(20

)

312

 

9.7

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

2,016

 

(2,331

)

(72.4

)

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,355

 

8,653

 

268.8

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

3,371

 

6,322

 

196.4

 

 



 

YANDEX N.V.

 

Unaudited Consolidated Statements of Cash Flows

 

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

 

 

 

Years ended December 31,

 

 

 

2010*

 

2011

 

2011

 

 

 

RUR

 

RUR

 

$

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

3,817

 

5,773

 

179.3

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

1,147

 

1,826

 

56.7

 

Amortization of acquisition-related intangible assets

 

34

 

48

 

1.5

 

Share-based compensation expense

 

160

 

286

 

8.9

 

Deferred income taxes

 

2

 

(169

)

(5.3

)

Foreign exchange gains

 

(11

)

(101

)

(3.1

)

Other

 

 

40

 

1.2

 

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

 

 

 

 

 

 

 

Accounts receivable, net

 

(437

)

(434

)

(13.5

)

Funds receivable

 

(3

)

(125

)

(3.9

)

Prepaid expenses and other assets

 

176

 

(1,092

)

(33.9

)

Accounts payable and accrued liabilities

 

641

 

1,045

 

32.5

 

Deferred revenue

 

166

 

348

 

10.8

 

Funds payable and amounts due to customers

 

271

 

349

 

10.9

 

Net cash provided by operating activities

 

5,963

 

7,794

 

242.1

 

 

 

 

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchase of property and equipment

 

(2,199

)

(5,566

)

(172.9

)

Acquisitions of businesses, net of cash acquired

 

(143

)

(735

)

(22.9

)

Investments in non-marketable equity securities

 

(92

)

(478

)

(14.8

)

Investments in debt securities

 

 

(6,548

)

(203.4

)

Investments in term deposits

 

(5,248

)

(13,519

)

(419.9

)

Maturities of term deposits

 

3,616

 

9,485

 

294.6

 

Escrow cash deposit

 

 

(433

)

(13.4

)

Net cash used in investing activities

 

(4,066

)

(17,794

)

(552.7

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Dividends paid

 

(906

)

 

 

Ordinary shares issuance costs

 

 

(28

)

(0.9

)

Proceeds from issuance of ordinary shares

 

 

11,403

 

354.2

 

Proceeds from exercise of share options

 

1

 

231

 

7.2

 

Repurchase of share options

 

(2

)

(8

)

(0.3

)

 

 

 

 

 

 

 

 

Net cash (used in)/provided by financing activities

 

(907

)

11,598

 

360.2

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(24

)

1,353

 

42.1

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

966

 

2,951

 

91.7

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

2,405

 

3,371

 

104.7

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

3,371

 

6,322

 

196.4

 

 


* Derived from audited financial statements

 



 

YANDEX N.V.

 

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

TO THE NEAREST COMPARABLE US GAAP MEASURES

 

Reconciliation of Ex-TAC Revenues to US GAAP Revenues

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Total revenues

 

4,125

 

6,439

 

56

%

12,500

 

20,033

 

60

%

Less: traffic acquisition costs (TAC)

 

507

 

1,002

 

98

%

1,573

 

2,998

 

91

%

Ex-TAC revenues

 

3,618

 

5,437

 

50

%

10,927

 

17,035

 

56

%

 

Reconciliation of Adjusted EBITDA to US GAAP Net Income

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Net income

 

1,410

 

2,123

 

51

%

3,817

 

5,773

 

51

%

Add: depreciation and amortization

 

343

 

582

 

70

%

1,181

 

1,874

 

59

%

Add: share-based compensation (SBC) expense

 

56

 

84

 

50

%

160

 

329

 

106

%

Less: interest income

 

(46

)

(105

)

128

%

(156

)

(222

)

42

%

Add: other expense / (income), net

 

2

 

12

 

n/m

 

(24

)

(62

)

n/m

 

Add: provision for income taxes

 

441

 

573

 

30

%

1,186

 

1,545

 

30

%

Adjusted EBITDA

 

2,206

 

3,269

 

48

%

6,164

 

9,237

 

50

%

 

Reconciliation of Adjusted Net Income to US GAAP Net Income

 

 

 

Three months
ended December 31,

 

Twelve months
ended December 31,

 

In RUR millions

 

2010

 

2011

 

Change

 

2010

 

2011

 

Change

 

Net income

 

1,410

 

2,123

 

51

%

3,817

 

5,773

 

51

%

Add: SBC expense

 

56

 

84

 

50

%

160

 

329

 

106

%

Less: reduction in income tax attributable to SBC expense

 

 

(4

)

n/m

 

 

(13

)

n/m

 

Add: foreign exchange loss /(gain)

 

5

 

(6

)

n/m

 

(11

)

(101

)

818

%

Less: reduction / (increase) in income tax attributable to foreign exchange loss /(gain)

 

(1

)

1

 

n/m

 

2

 

15

 

n/m

 

Adjusted net income

 

1,470

 

2,198

 

50

%

3,968

 

6,003

 

51

%

 



 

Reconciliation of Adjusted EBITDA Margin and Adjusted Ex-TAC EBITDA Margin to US GAAP Net Income Margin for the Three Months and Twelve Months Ended December 31, 2011

 

In RUR millions

 

 

 

US
GAAP
Actual

 

Net
Income
Margin (1)

 

Adjustment
(2)

 

Adjusted
EBITDA

 

Adjusted
EBITDA
Margin
(3)

 

Adjusted
Ex-TAC
EBITDA
Margin (4)

 

Three months ended December 31, 2011

 

Net income

 

2,123

 

33.0

%

1,146

 

3,269

 

50.8

%

60.1

%

Twelve months ended December 31, 2011

 

Net income

 

5,773

 

28.8

%

3,464

 

9,237

 

46.1

%

54.2

%

 


(1)

Net income margin is defined as net income divided by total revenues.

(2)

Adjusted to eliminate depreciation and amortization expense, SBC expense, interest income, other income/(expense), net, and provision for income taxes. For a reconciliation of adjusted EBITDA to net income, please see the table above.

(3)

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

(4)

Adjusted ex-TAC EBITDA margin is defined as adjusted EBITDA divided by ex-TAC revenues. For a reconciliation of ex-TAC revenues to US GAAP revenues, please see the table above.

 

Reconciliation of Adjusted Net Income Margin and Adjusted Ex-TAC Net Income Margin to US GAAP Net Income Margin for the Three Months and Twelve Months Ended December 31, 2011

 

In RUR millions

 

 

 

US
GAAP
Actual

 

Net
Income
Margin (1)

 

Adjustment
(2)

 

Adjusted
Net Income

 

Adjusted
Net 
Income
Margin (3)

 

Adjusted
Ex-TAC
Net
Income
Margin (4)

 

Three months ended December 31, 2011

 

Net income

 

2,123

 

33.0

%

75

 

2,198

 

34.1

%

40.4

%

Twelve months ended December 31, 2011

 

Net income

 

5,773

 

28.8

%

230

 

6,003

 

30.0

%

35.2

%

 


(1)

Net income margin is defined as net income divided by total revenues.

(2)

Adjusted to eliminate SBC expense (as adjusted for the income tax reduction attributable to SBC expense) and foreign exchange losses (less foreign exchange gains) (as adjusted for the (reduction) increase in income tax attributable to the loss (gain)). For a reconciliation of adjusted net income to net income, please see the table above.

(3)

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

(4)

Adjusted ex-TAC net income margin is defined as adjusted net income divided by ex-TAC revenues. For a reconciliation of ex-TAC revenues to US GAAP revenues, please see the table above.