Page 12 - bne_Tech_05_2019

Leaders
May 2019 www.intellinews.com I Page 12
Net profit of Russian internet major Mail.ru drops 47% in 1Q19
Russian internet major Mail.ru reported net profit drop of 47% year-on-year to RUB1.6bn under IFRS, the company said on April 25.
Net income dropped due to lower Ebitda and emerged interest expense, BCS Global Markets commented, reminding that Mail.ru took out debt due to significant M&A-related payments in 1Q19.
“The numbers came in weak on EBITDA; on revenue could have been better as well (though in line with consensus),” BCS GM noted, while reminding that Mail.ru warned of the possible weakness in Q1 due to shift of marketing costs to the start of the year. In the 2H19 Mail.ru expects both acceleration of revenue growth and moderation of costs (as in 2018).
Revenue was up 22% y/y in the reporting quarter driven by 19% increase in ad revenue (decelera- tion from 38% in 4Q18), 22% growth in games, 167% growth in Youla platform revenue (to RUB0.38bn and 2019 revenue target is RUB2bn versus RUB1.2bn in 2018), and 108% growth in Delivery Club revenue (to RUB0.88bn).
Ebitda in the reporting period declined by 26% y/y due to higher marketing costs (+88%), and agent
and partner fees (+42%). Excluding the Delivery Club food delivery service and Youla platform, revenue was up 18% (to RUB 18.9bn), Ebitda declined 10% (to RUB6.2bn), net profit declined 19% (to RUB3.96bn).
In the meantime, the company did not confirm the timeline for the joint venture with Alibaba Chinese e-commerce major, only stating that “Negotiations ... have progressed since March. We expect the partnership to be launched soon”. The completion of Alibaba deal was previously seen as one of the main catalysts for the stock.
While BCS GM maintains the Buy recommendation for the stock at target price of $32, it suggests
to watch Mail.ru ‘s revenue trends, especially in social networks and games, cost trends, as well as performance of the services aimed for spin- off – Delivery Club and Youla, and progress with closure of e-commerce JV deal with Alibaba, and further M&A activity.
Mail.ru’s bad news was contrasted by internet search engine Yandex’s good news that saw income up by 49% in the same period.
One year after ban, Telegram still accessible from Russia with growing audience
One year after Russian authorities decided
to block it, the instant messenger Telegram continues to be widely accessible from Russia, reports East-West Digital News (EWDN).
Almost half of Telegram users in Russia do need to use VPNs to access the service, according to Telegram Analytics; but the number of daily users of the service in Russia grew from 3.7mn in April
2018 to 4.4mn in February 2019, according to Mediascope data.
Thus, despite the ban, Telegram continues to rank third in Russia after WhatsApp and Viber.
Telegram was banned in Russia on April 13, 2018, following its refusal to let the Russian secret service FSB to decipher user messengers as required by law.