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TheStreet Open House

Yandex Announces First Quarter 2013 Financial Results

Stocks in this article: YNDX

Depreciation and amortization (D&A) expense

 
In RUR millions Three months
  ended March 31, 
  2012 2013 Change
D&A expense 661 879 33% 
As a % of revenues 11.3% 11.0%  

D&A expense increased 33% in Q1 2013 compared with Q1 2012, primarily reflecting our investments in servers and data centers made last year.

As a result of the factors described above, income from operations was RUR 2.5 billion ($78.9 million) in Q1 2013, a 57% increase from Q1 2012, while adjusted EBITDA reached RUR 3.5 billion ($112.7 million) in Q1 2013, up 47% from Q1 2012.

Interest income in Q1 2013 was RUR 368 million, up from RUR 167 million in Q1 2012, principally as a result of investing more of our cash provided by operating activities in Russia, where our investments earn higher returns.

Foreign exchange gain in Q1 2013 was RUR 7 million, compared to a foreign exchange loss of RUR 114 million in Q1 2012. The foreign exchange gain is due to the appreciation of the U.S. dollar during Q1 2013 from RUR 30.3727 to $1.00 on December 31, 2012 to RUR 31.0834 to $1.00 on March 31, 2013. Yandex's Russian operating subsidiaries' functional currency is the Russian ruble, and therefore changes in the ruble value of these subsidiaries' monetary assets and liabilities that are denominated in other currencies due to exchange rate fluctuations are recognized as foreign exchange gains or losses in the income statement. Although the U.S. dollar value of Yandex's U.S. dollar-denominated cash, cash equivalents and term deposits was not impacted by these currency fluctuations, they resulted in an upward revaluation of the ruble equivalent of these U.S. dollar-denominated monetary assets in Q1 2013.

Income tax expense for Q1 2013 was RUR 601 million, up from RUR 344 million in Q1 2012. Our effective tax rate decreased from 21.5% in Q1 2012 to 21.1% in Q1 2013.

Adjusted net income in Q1 2013 was RUR 2.4 billion ($77.5 million), a 60% increase from Q1 2012.

Adjusted net income margin was 30.1% in Q1 2013, compared to 25.6% in Q1 2012.

Net income was RUR 2.2 billion ($72.2 million) in Q1 2013, up 79% compared with Q1 2012. Net income grew faster than adjusted net income due to large swings in foreign exchange losses and the associated income tax impact and a decrease in contingent compensation partially offset by an increase in SBC expense. We adjust for these expenses in our non-GAAP adjusted net income measure.

As of March 31, 2013, Yandex had cash, cash equivalents, term deposits (including long-term deposits) and long-term debt securities of RUR 29.3 billion ($942.6 million).

Net operating cash flow and capital expenditures for Q1 2013 were RUR 2.6 billion ($84.7 million) and RUR 0.9 billion ($27.6 million), respectively.

The total number of shares issued and outstanding as of March 31, 2013 was 328,612,094, including 232,623,523 Class A shares, 95,988,570 Class B shares, and one Priority share and excluding 340,000 Class A shares and 45,696 Class B shares held in treasury and all Class C shares outstanding solely as a result of conversion of Class B shares into Class A shares; all such Class C shares will be cancelled. There were also employee stock options outstanding to purchase up to an additional 9.1 million shares, at a weighted average exercise price of $4.36 per share, of which options to purchase 7.1 million shares were fully vested; equity-settled share appreciation rights equal to 0.9 million shares, at a weighted average measurement price of $20.37, none of which were vested; and restricted share units covering 1.9 million shares, of which restricted share units to acquire 0.1 million shares were fully vested.

Outlook for 2013

We are increasing our revenue guidance for the full-year 2013, and we now expect year-on-year ruble-based revenue growth of 30-35%. 1

The guidance is provided on a like-for-like basis, excluding the revenue associated with Yandex.Money from 2012 and 2013 results. In 2012, Yandex recognized total revenue of RUR 28,767 million, including RUR 552 million in payments commissions related to Yandex.Money and RUR 28,215 million in advertising revenue and other revenue. Yandex will continue to recognize revenue related to Yandex.Money until the joint venture with Sberbank is effective, which is expected to occur during the current quarter. 

Conference Call Information

Yandex's management will hold an earnings conference call on April 25, 2013 at 8:00 AM U.S. Eastern Time (4:00 PM Moscow time; 1:00 PM London time).

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