Page 132 - RusRPTDec22

9.2.5 Retail corporate news
• Yandex
Russian tech giant Yandex reported 46% revenue growth year-on-year
during the third quarter, reaching 113.2 billion rubles ($2.1 billion).
The internet company continues to grow despite rising inflation and multiple
CEOs resigning after being targeted by EU sanctions. The areas with the
most robust revenue growth include their smart device sector at 74% growth
y-o-y and Yandex Cloud, which grew by 175% y-o-y.
Yandex and VK showed continuation of very strong ad revenue trends in
3Q22. Yandex’s Search&Portal revenue (a key source of its ad revenue; 46%
of Yandex’s top line in 3Q22) grew 45% y/y even accelerating from 29% in
2Q22 and 24% in 1Q22. VK’s ad revenue (c60% top line after the announced
sale and deconsolidation of the gaming business) was up 29% excluding the
gaming business versus a total growth of 28% in 2Q22 and 6% in 1Q22.
This was despite a second consecutive quarter of a real GDP decline y/y, on
BCS macro team estimates, while GDP dynamics was historically a major
factor of ad revenue trends.
The key reason for this decoupling of performance remained the same as in
2Q22 – a positive impact of reduced competition and thus market share gains
as major foreign internet players either were blocked or voluntarily suspended
monetization in 2022, which should keep supporting top line in 4Q22
In a BCS GM survey last year investors were asked what would be a financial
impact Yandex and VK if competition for ad budgets in Russia dramatically
drops – specifically, if Google services are blocked in Russia. Investors
expected a positive effect for both, which did materialize.
“We note that such a positive impact is a one-off, and, assuming status-quo in
competition, the companies’ ad revenue should return to more normalized
growth pattern in 2Q23-3Q23 (as comparison base evens out), back to
tracking GDP performance. However, we expect this factor to keep boosting
the companies’ ad revenue in 4Q22 despite the macro uncertainties. We have
a 12MF Buy rating for Yandex and VK. Key risks include macro factors and
foreign incorporation,” BCS GM said in a note.
• X5
X5 Group has closed an acquisition of Siberian retailers Slata and Krasny Yar, receiving 70% stakes in them, the company said in a statement on November 3. "As part of the agreement, X5 acquired 70% of Krasny Yar’s and
132 RUSSIA Country Report December 2022 www.intellinews.com