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Yandex Announces Second Quarter 2013 Financial Results

MOSCOW and THE HAGUE, Netherlands, July 25, 2013 (GLOBE NEWSWIRE) -- Yandex (Nasdaq:YNDX), one of Europe's largest internet companies and the leading search provider in Russia, today announced its financial results for the second quarter ended June 30, 2013.

Q2 2013 Financial Highlights

  • Revenues of RUR 9.2 billion ($281.2 million 1), up 35% compared with Q2 2012
  • Ex-TAC revenues 2 (excluding traffic acquisition costs) up 37% compared with Q2 2012
  • Income from operations of RUR 3.2 billion ($98.4 million), up 43% compared with Q2 2012
  • Adjusted EBITDA 3 of RUR 4.3 billion ($131.6 million), up 40% compared with Q2 2012
  • Operating margin of 35.0%
  • Adjusted EBITDA margin 2of 46.8%
  • Adjusted ex-TAC EBITDA margin 2 of 55.6%
  • Net income of RUR 2.9 billion ($89.1 million), up 47% compared with Q2 2012
  • Adjusted net income 3 of RUR 3.1 billion ($93.5 million), up 48% compared with Q2 2012
  • Net income margin of 31.7%
  • Adjusted net income margin 2of 33.2%
  • Adjusted ex-TAC net income margin 2 of 39.5%
  • Cash, deposits and investments in debt securities of RUR 30.8 billion ($940.1 million) as of June 30, 2013

"Yandex delivered strong financial and operating results. We released the mobile version of our Yandex.Browser and a new, task-oriented version of Yandex.Mail," said Arkady Volozh, CEO of Yandex. "We also unveiled Yandex.Islands, a next generation search platform with interactive search results."

The following table provides a summary of key financial results for the three months and six months ended June 30, 2012 and 2013.

                                                                   
1Pursuant to SEC rules regarding convenience translations, Russian ruble (RUR) amounts have been translated into U.S. dollars at a rate of RUR 32.7090 to $1.00, the official exchange rate quoted as of June 30, 2013 by the Central Bank of the Russian Federation.
 
2This 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.
 
3Adjusted 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.
     
In RUR millions Three months Six months
  ended June 30, ended June 30,
  2012 2013 Change 2012 2013 Change
Revenues 6,801 9,199 35% 12,675 17,198 36%
Ex-TAC revenues 2 5,660 7,734 37% 10,542 14,428 37%
Income from operations 2,245 3,218 43% 3,804 5,671 49%
Adjusted EBITDA 3 3,070 4,303 40% 5,447 7,807 43%
Net income 1,983 2,915 47% 3,241 5,161 59%
Adjusted net income 3 2,069 3,058 48% 3,574 5,468 53%

Q2 2013 Operational and Corporate Highlights

  • Share of Russian search market averaged 61.7% in Q2 2013 (according to LiveInternet)
  • SERPs (search engine result pages) grew 22% from Q2 2012
  • Number of advertisers grew to more than 239,000, up 24% from Q2 2012 and up 6% from Q1 2013
  • Introduced a new concept in search engine result pages – interactive blocks, called Islands
  • Launched two versions of our mobile browser – for Android-based smartphones and for the iPad
  • Repurchased 4 million shares as of July 24, 2013 as part of the previously announced 12 million share repurchase program

Subsequent Events

  • Signed a cooperation agreement with Mail.ru under which Yandex is the paid search services provider for Mail.ru
  • Completed the formation of the joint venture between Yandex.Money and Sberbank on July 4, 2013

Revenues

 
In RUR millions Three months Six months
  ended June 30, ended June 30,
  2012 2013 Change 2012 2013 Change
Advertising revenues:            
Text-based advertising            
Yandex websites 4,890 6,717 37% 9,174 12,567 37%
Ad network 1,132 1,412 25% 2,152 2,716 26%
Total text-based advertising 6,022 8,129 35% 11,326 15,283 35%
Display advertising 628 822 31% 1,048 1,445 38%
Total advertising revenues 6,650 8,951 35% 12,374 16,728 35%
Online payment commissions 127 200 57% 241 387 61%
Other 24 48 100% 60 83 38%
Total revenues 6,801 9,199 35% 12,675 17,198 36%

Text-based advertising revenues, accounting for 88% of total revenues in Q2 2013, continued to determine overall top-line performance.

Text-based advertising revenues from Yandex's own websites accounted for 73% of total revenues during Q2 2013, and increased by 37% compared with Q2 2012. Text-based advertising revenues from our ad network increased 25% compared with Q2 2012 and contributed 15% of total revenues during Q2 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 29% in Q2 2013 compared with Q2 2012. Our average cost per click in Q2 2013 increased 5% compared with Q2 2012.

Display advertising revenue accounted for 9% of total revenues during Q2 2013, and increased 31% compared with Q2 2012. 

Online payment commissions accounted for 2% of revenues during Q2 2013, and increased 57% compared with Q2 2012. In July 2013, we completed our sale of 75% of Yandex.Money to Sberbank and the formation of our joint venture with Sberbank in respect of this business. From Q3 2013, we will deconsolidate Yandex.Money and no longer recognize its online payment commissions as revenue.

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 Q2 2013, Yandex added 326 full-time employees, an increase of 8% from March 31, 2013, and up 24% from June 30, 2012. The total number of full-time employees was 4,298 as of June 30, 2013.

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