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Russia's Yandex.Taxi's IPO still on, as it struggles to stay profitable
Earlier this month, Yandex.Taxi CEO Tigran Khudaverdyan was quoted by The Bell as saying that the company has not abandoned plans to
go for an IPO, but, given the current coronavirus restrictions, this is not a priority. He didn't provide any timeline for the mooted IPO, which was originally expected in 2020.
The news about Yandex.Taxi's IPO plans first broke last November, when the company reportedly hired three investment banks for the purpose. However, the coronavirus outbreak has put many market events, including Yandex.Taxi's IPO plans, on hold.
Currently, Yandex.Taxi, which merged with Uber Technologies in 2017 in a deal that gave Uber a 36.6% stake in the combined company, remains the largest Russian company slated for an IPO.
Before the outbreak of COVID-19, Sberbank CIB had predicted that the Russian taxi market would grow by 35-40% in 2020, but the forecast was later revised to a much more modest 7% growth figure. Still, according to the forecast, Yandex.Taxi would be still able to beat the market with a 12% increase in traffic.
In the January-March period, Yandex' revenues in the taxi segment dropped by 50%, according to the company's IFRS report, while the segment's overall prospects are unclear due to the ongoing restrictions aimed at curbing the spread of the coronavirus (COVID-19).
Still, the company itself remains optimistic and said last month that it hopes to post a profit
in 2020. Yandex.Taxi as been losing money for years while it focused on low prices to establish
a market share. However, the strategy changed last year as it is now the dominant service and the company went into profit as the prices rose. Those
profits are clearly going to be hit by the impact of the stop-shock this year.
In January-March, the taxi business accounted for almost 25% of Yandex' revenue, with adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) returning a profit for the fourth consecutive quarter.
The lockdown takes its toll
Russia's taxi segment has been hit hard by the sharp decline in demand for taxi due to the coronavirus (COVID-19) lockdown, which was introduced on a national scale in late March, while restrictions are expected to stay in place – in one form or another – for a long time.
In April, Yandex.Taxi’s gross merchandise volume (GMV) in Moscow dropped by 60% year-on-year, and by 70% month-on-month, Daniil Shuleiko, general director of Yandex.Taxi, said during a conference call in late April.
"We started seeing a slowdown in the second part of March due to fears of the spread of COVID-19," he said. "As a result, if in early March we were seeing almost 5mn rides per day, towards the end of March this number decreased significantly."
If the GMV in the second quarter falls by 60%, Yandex.Taxi will report a negative Ebitda, but a fall of 40% would see a breakeven, the company forecasted.
"I do not have an exact forecast, but we expect some recovery in the third and fourth quarters
... If we compare the second half of 2020 with
the first half, we expect that the taxi service will be profitable,” Evgeniy Senderov, Yandex.Taxi’s finance director, was quoted as saying by Reuters.
"We are in good shape to get through the current situation, we have strong balance sheet," he went on to say.
Meanwhile, in a bid to ease the impact of the coronavirus lockdown on its business, Yandex.Taxi