Page 124 - RusRPTMay20

15pp q/q slowdown in ad revenue growth (mere +9% y/y). Mail.ru revoked the guidance of 18-20% revenue growth for 2020 following the publication of the 1Q20 results on low visibility, and said it expects the ad revenues to decline 2Q20. In 1Q20 the Ebitda lagged behind the revenue growth due to higher share of games in revenue mix as ad in social networks got hit (games being less profitable segment) , as well we y/y decline in communication and social segment’s margin (also due to cost of provision of music service). Net income decline for Mail.ru was attributed to jump in net interest costs (net debt increase given contribution to established joint ventures) and higher D&A and impairments by the BCS GM analysts. Overall, the BCS GM sees the results as in line with the expectations, as well as on the forecast for significant hit to Mail.ru financials in 2Q20 due to anti-virus measures and reduced economic activity. BCS GM reiterated the Buy call on Mai.ru shares with a target price of $20, and suggests to focus on impact of COVID-19, risks to 2020 guidance, trends in social networks and games segments, and any data points on e-commerce joint venture with Alibaba, and taxi/foodtech joint venture with Sberbank.
The​ ​Mail.ru Group​ and Sberbank joint venture signed binding documents to invest in e-grocery service Samokat ​and acquire 75.6% in the asset. The deal is to be closed in 1H20, with the JV buying shares from financial investors. Samokat’s founders and management are to hold minority stakes. Samokat focuses on the rapid delivery (15-30 min) of groceries and basic consumer goods, receiving orders via its mobile app. It has 140 warehouses in Moscow and St Petersburg and offers around 2,500 items for sale. According to Inc., in 2019 Samokat carried out one million orders. In January 2020, the service fulfilled 400,000 orders, while during the lockdown it has started to fulfill 30,000 orders per day.
Yandex.Taxi​, the largest player in the Russian taxi market, hopes to post a profit in 2020 ​despite the ​sharp decline in demand for taxi and carsharing during the coronavirus (COVID-19) lockdown​, Reuters reported on April 28 citing the head of the company, Daniil Shuleyko. As reported by ​bne IntelliNews,​ the joint venture of internet major Yandex and Uber Technologies Yandex.Taxi is the largest Russian company slated for an IPO. But in 1Q20 the revenues in the taxi segment dropped by 50%, ​IFRS report of Yandex showed​, and ​no IPOs are seen as likely this year.​ Yandex.Taxi includes the food tech and driverless businesses of Yandex and accounts for almost a quarter of the revenues of the internet major. Yandex expects Yandex.Taxi to show a 60% drop in revenues in Moscow in the second quarter, a negative Ebitda, but still anticipates the segment breaking even in 2020.
EPAM​ has announced that it expects 1Q20 top line growth of at least 24.5% y/y to $649-653mn​. It also expects profitability to be consistent with, or better than, the initial outlook provided during the FY19 results release. At the same time, due to uncertainties related to the potential impacts of COVID–19 on the company's 2Q20 and FY20 business results, EPAM has decided to withdraw its FY20 financial outlook. The company also announced that it had switched 98% of employees over to working from home with minimal service interruptions and that is was in close collaboration with its customers. Initially, the company expected revenues to grow at least 23% y/y to at least $642mn in 1Q20, and guided for GAAP income from operations to be in the range of 12-13% of revenues, and non-GAAP income from operations to be in the range of 15-16% of revenues. So, the new outlook for 1Q20 implies a better performance in the period than was initially guided at the beginning of the year.
124​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com