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Yandex Announces First Quarter 2013 Financial Results

Stocks in this article: YNDX

1 Pursuant to SEC rules regarding convenience translations, Russian ruble (RUR) amounts have been translated into U.S. dollars at a rate of RUR 31.0834 to $1.00, the official exchange rate quoted as of March 31, 2013 by the Central Bank of the Russian Federation.

2 This is a non-GAAP financial measure. Please see "Use of Non-GAAP Financial Measures" below for a discussion of how we define this non-GAAP financial measure. You will find a reconciliation of this non-GAAP financial measure to the most directly comparable US GAAP measure in the accompanying financial tables at the end of this release.

3 Adjusted EBITDA and adjusted net income are non-GAAP financial measures. Please see "Use of Non-GAAP Financial Measures" below for a discussion of how we define adjusted EBITDA and adjusted net income. You will find a reconciliation of adjusted EBITDA and adjusted net income to GAAP net income, the most directly comparable US GAAP measure for both non-GAAP measures, in the accompanying financial tables at the end of this release.

Q1 2013 Operational and Corporate Highlights

  • Share of Russian search market averaged 61.6% in Q1 2013 (according to LiveInternet), an increase of 1.1 p.p. sequentially and a 2.2 p.p. increase on a year-over-year basis
  • SERPs (search engine result pages) grew 25% from Q1 2012
  • Number of advertisers grew to more than 226,000, up 26% from Q1 2012 and up 6% from Q4 2012
  • Enhanced the contextual ads served through our partner network with the addition of images
  • Launched a newly redesigned homepage
  • Announced a share repurchase program of up to 12MM shares; as of April 24 th, 2013, we have repurchased 2MM shares


In RUR millions Three months
  ended March 31, 
  2012 2013 Change
Advertising revenues:      
  Text-based advertising      
  Yandex websites 4,284 5,850 37%
 Ad network 1,020 1,304 28%
  Total text-based advertising 5,304 7,154 35%
 Display advertising 420 623 48%
Total advertising revenues 5,724 7,777 36%
Online payment commissions 114 187 64%
Other 36 35 -3%
Total revenues 5,874 7,999 36%

Text-based advertising revenues, accounting for 89% of total revenues in Q1 2013, continued to determine overall top-line performance.

Text-based advertising revenues from Yandex's own websites accounted for 73% of total revenues during Q1 2013, and increased by 37% compared with Q1 2012. Text-based advertising revenues from our ad network increased 28% compared with Q1 2012 and contributed 16% of total revenues during Q1 2013. Revenues from Yandex websites grew faster than those from our ad network as we implemented changes to our advertising technologies on our owned and operated sites.   

Paid clicks on Yandex's and its partners' websites, in aggregate, increased 18% in Q1 2013 compared with Q1 2012. Our average cost per click in Q1 2013 increased 14% compared with Q1 2012.

Display advertising revenue accounted for 8% of total revenues during Q1 2013, and increased 48% compared with Q1 2012. Display advertising rebounded strongly from the 12% growth observed in Q4 2012.

Online payment commissions accounted for 2% of revenues during Q1 2013, and increased 64% compared with Q1 2012.

Operating Costs and Expenses

Yandex's operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A), and depreciation and amortization expenses (D&A). Apart from D&A, each of the above expense categories includes personnel-related costs and expenses, including related share-based compensation expense. Increases across all cost categories, excluding D&A, reflect investments in overall growth, including personnel. In Q1 2013, Yandex added 211 full-time employees, an increase of 6% from December 31, 2012, and up 19% from March 31, 2012. The total number of full-time employees was 3,972 as of March 31, 2013.

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