Page 150 - RusRPTAug22

U.S. markets since late February's Russian invasion of Ukraine.
Yandex released its 2Q22 US GAAP results on July 26. Revenues grew 11.1% q/q and 44.7% y/y to R117.7bn. Adjusted EBITDA of R25.7bn was up 3.5x q/q (adjusting for one-off personnel retention expenses) and 4.5x y/y. Adjusted net income amounted to R13.1bn, following an R8.1bn loss in 1Q22.
The search and portal segment's revenues increased 30.7% y/y and 16.9% q/q, with the EBITDA margin widening from 42% in 1Q22 and 47.3% in 2Q21 to an impressive 55.6%. This was thanks to a further improvement in Yandex's search share (to 62.1% in 2Q22, up from 59.7% in 2Q21 and 61.0% in 1Q22, according to Yandex Radar), a solid performance from the SMB segment and a shift in advertising budgets from foreign platforms (which increased Yandex's market share). The company also noted that advertising revenue growth so far in July remained in positive double-digit territory.
The e-commerce, mobility and delivery segment posted a 53% y/y and 3% q/q increase in revenues, which led to positive EBITDA of R2.1bn (in the previous four quarters, it posted EBITDA losses ranging from R7.3-10.6bn). This significant increase in profitability was driven by the optimization of the 1P pricing strategy and 3P take rates, the streamlining of promotional activities, increased productivity at Yandex's own warehouses and sorting centers (by 21% and 43% q/q, respectively), and improved efficiency in delivery operations (including increased utilization of delivery vehicles and more efficient order batching).
Due to the high level of uncertainty, Yandex focused on cash generation and stricter cost control in the quarter. Its efforts to rein in costs included a hiring freeze and optimization of marketing expenses and other overhead. However, we do not expect the increase in profitability to persist over the remainder of the year, as the company still needs to make significant investments in business development and market share.
● VK
VK Company, a Kremlin-controlled Russian Internet giant, is seeking to acquire the leading local classifieds platform Avito, which is owned by Naspers affiliate Prosus. Prosus could also sell its 25.7% stake in VK Company, reported the Russian media citing Bloomberg. Russian oligarch Vladimir Potanin is also regarded as a potential acquirer of Avito, according to the news agency. After making Avito a fully autonomous entity in March, Prosus announced its intention to leave Russia and sell Avito in May . Bloomberg heard that analysts now estimate the platform’s value between 67 to 100bn rubles (around $1-1.5bn at the current rate). The company was valued at $2.7bn in 2015, when Naspers acquired a controlling stake in the company, and at $3.85bn in 2019, when the South African group completed
150 RUSSIA Country Report October 2020 www.intellinews.com