Page 125 - RusRPTNov19

Russian internet major Yandex delivered strong results in the 3Q19 under US GAAP, with revenues growing by 38% year-on-year, Ebitda up by 29% y/y with 31% margin, and net profit up by 12% y/y. The top line and earnings have beaten analysts’ expectations, while the bottom line somewhat lagged behind due to consolidated losses from e-commerce joint venture with Sberbank Yandex.Market. Not accounting for the JV, net income was up 30% in 3Q19, BCS Global Markets wrote on October 28. After the solid 3Q19, Yandex has upgraded the guidance for 2019 to 36-38% revenue growth (from previous 32-36%) excluding Yandex.Market, which BSC GM sees as reasonable. Search (advertising) revenues in the reporting quarter were up by 21% y/y to RUB31bn. Sberbank CIB noted on October 28 that the ad revenue growth was in line with Mail.ru Group rival and ahead of the ad market overall.
Russian internet major Yandex together with Naver will develop cloud services in Russia and South Korea, the company announced on October 1. Yandex.Oblako (Yandex.Cloud) will cooperate with Naver Business Platform, aiming to reciprocally support each other's users. Early interest in such cross-border service was expressed by South Korean mobile games developers wishing to propose their products in Russia and use local infrastructure.
Driverless vehicles developed by Russian internet major Yandex have hit 1mn miles of test drive mileage in Russia, the US, and Israel, the company announced on October 17, and confirming previous reports by bne IntelliNews . To compare, the mileage of Google's driverless subsidiary Waymo is 12.9mn km, while all of its testing fleet has a mileage of 29mn km. The subsidiary of General Motors Cruise Automation had 0.9mn km mileage in 2018 and 2017, while Uber Technologies claimed to have reached 2mn km in 2017. Most of the mileage for Yandex was done on actual public roads in live traffic, most of it Moscow and Tel Aviv since 2018. All of the tested vehicles bear the names from the science fiction series Westworld and the oldest car in the 50-odd park Bernard covered over 76,000km.
The development of Yandex.Market’s cross-border platform Bringly has been frozen, Kommersant reports. The article refers to the number of visitors to the platform, which declined from 2.5mn in April to 91,000 in September, according to SimilarWeb. Also, Bringly has announced the closure of its loyalty programme from 18 November. Bringly is not a project on which Yandex.Market is focused, according to the Head of Yandex.Market Maksim Grishakov. He notes cross-border is a complex market, and growth of this market is decelerating. The company has tested different models for Bringly, but it has not reached indicators that would allow the company to scale the business. Yandex continues to study which foreign goods are profitable for import to Russia and plans to create a section with foreign goods on its Beru platform.
Chinese Alibaba Group and Russian Direct Investment Fund (RDIF), MegaFon mobile operator and Mail.ru internet major closed a deal on establishing AliExpress Russia joint venture, the head of RDIF Kirill Dmitriev told Reuters on October 9. The parties intend to set up another joint venture on providing digital payment options to Russian users. The Mail.ru Group (MRG) will get a 15% economic stake and 18.7% voting stake in the JV, while contributing its Pandao e-commerce business and $182mn in cash. MegaFon will transfer its 9.97% stake in MRG to Alibaba Group in exchange for 24.3% in AliExpress Russia, with 30.2% voting stake. RDIF will invest
125 RUSSIA Country Report November 2019 www.intellinews.o