Page 144 - RusRPTMar21

Adjusted EBITDA rose 6% to RUB14bn in 4Q20, 7% above consensus and 4% above our forecast. The EBITDA margin slipped to 20% in 4Q20, from 26% in both 3Q20 and 4Q19. We think that the pressure came from the losses of Yandex.Market, which stood at RUB3bn in 4Q20, as well as the rising share of low margin revenues, including revenues, which are reported on the gross basis. Meanwhile, the recovery of high-margin advertising revenues likely partly offset these pressures. Among the key segments, the Search&Portal margin stood at 46.6% vs. 44.3% in 4Q19 and 52.5% in 3Q20, partly diluted q/q by the increased share of IoT revenues. The Taxi Segment's margin was 7.9% vs. -1% in 4Q19 and 9.4% in 3Q20, with a strong performance from ride-hailing, food delivery and car sharing partly counterbalanced by investments in egrocery and logistics.
2021 guidance: Yandex expects revenues of RUB305-320bn, which is below the Bloomberg consensus as of today and our forecast, but still implies strong growth. The company did not provide any margin guidance at the moment, but we expect to see trends similar to those in 4Q20 due to increased investments in growth along with the rising share of low-margin revenues.
Yandex Pay service might be launched. Yandex has published terms of use for payment service Yandex Pay. VTimes reported. Details in the document are scarce. It is only clear that the service could be used for payment on Yandex sites, for Yandex services, and on sites allowing login via Yandex account, and that users would link their bank card(s) to Yandex Pay to make a payment. Yandex representative told VTimes that the company constantly works to improve payment options on its sites, an Data available does not give a clear picture of which need the service would cover and how it would stand out vs competition. Fintech is among the areas where investors seek upside in Yandex, hence details will be key when revealed.
Russia’s Federal Antimonopoly Service (FAS) issued a warning to Yandex that insisted the company stop favoring its own services in its search results. According to the FAS, YNDX’s E-commerce, Classifieds and Media Services verticals appeared in YNDX’s interactive answers (special widgets placed before organic search results). At the same time, services outside of YNDX’s ecosystem are unable to make it into its interactive answers or only have a limited opportunity to do so, according to the regulator. The warning also requires YNDX to disclose the access terms for promotion opportunities in YNDX’s search engine (including interactive answers) and to allow other companies to take advantage of these opportunities. The FAS also insisted that YNDX organize its search results according to uniform ranking rules on equal terms to prevent the preferential treatment of YNDX’s services. YNDX will have one month to implement the FAS requirements and will have to update the regulator on the execution of these requirements every 10 days. If the company fails to comply, the regulator will initiate a case against YNDX.
144 RUSSIA Country Report March 2021 www.intellinews.com