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Yandex N.V. Is Rightly Excited for the Future

By Steve Symington - Updated Apr 28, 2017 at 3:49PM

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After another strong quarter and striking a deal in its antitrust case with Google, the Russian internet search leader can't wait to move forward.

Yandex N.V. (YNDX -6.79%) announced exceptional first-quarter 2017 results on Thursday, highlighted by a recent antitrust deal with Google, stabilizing market share in its core search segment, and strong growth from its various other business units.

With shares closing up more than 10% yesterday as the market absorbed the news, let's take a closer look at how the Russian internet search specialist kicked off the year, and at what investors can expect from the company going forward.

Students using cell phones

Yandex's antitrust settlement with Google should help it take market share on Android in Russia. IMAGE SOURCE: GETTY IMAGES

Yandex results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Growth

Revenue

20.652 billion RUR

16.473 billion RUR

25.4%

Net income

819 billion RUR

1,069 billion RUR

(23.4%)

Earnings per share (diluted)

2.54 RUR

3.31 RUR

(23.3%)

Figures in Russian rubles. Data source: Yandex N.V. 

What happened with Yandex this quarter?

  • Revenue excluding traffic acquisition costs (ex-TAC) -- which Yandex compares to sales commissions -- increased 28%, to 16.7 billion RUR.
  • Adjusted net income -- which excludes items like stock-based compensation -- rose 18%, to 3.7 billion RUR.
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBTIDA) grew 19%, to 6.9 billion RUR.
  • Yandex's desktop browser share climbed two percentage points to 23% from last quarter, while mobile browser share rose one percentage point sequentially, to 12%.
  • Search queries in Russia increased 2% year over year.
  • Revenue on a segment basis included:
    • 23% growth in search and portal revenue, to 18.656 billion RUR.
    • 24% growth from e-commerce, to 1.295 billion RUR.
    • 75% growth in taxi revenue, to 778 million RUR.
    • 54% growth in classifieds revenue, to 371 million RUR.
    • 76% growth in "experiments" revenue, to 326 million RUR, driven by services including KinoPoisk, Yandex.Music, Yandex.Afisha, and Yandex.TV.
  • Online advertising revenue grew 23% year over year, to 19.515 billion RUR, including 26% growth from Yandex properties, to 14.356 billion RUR, and 17% growth from ad network partners, to 5.159 billion RUR.
  • Non-advertising revenue grew 77% year over year, to 1.137 billion RUR, primarily driven -- as usual -- by Yandex.Taxi.
  • Earlier this month, Yandex and the Russian Federal Anti-monopoly Service (FAS) reached a settlement with Google in their antitrust case, through which Google has "agreed to take significant steps to open up its Android platform in Russia."

What management had to say

Yandex CEO Arkady Volozh elaborated:

The recently announced settlement between Yandex, Google, and the FAS will provide real choice to users and move us closer to a level playing field in Russia. We expect this will open the door to market share gains on mobile in 2017 and beyond.

"Continued investments and innovation in the core search business and our business units are delivering results," added Yandex COO Alexander Shulgin. "I am particularly excited about Yandex.Taxi which delivered 484% growth in rides in Q1."

Looking forward

As it stands, Yandex anticipates full-year 2017 revenue will climb in the range of 17% to 20% year over year, representing an increase to its previous guidance for 16% to 19% growth. Given Yandex's broad-based growth this quarter, its freshly boosted outlook, and its favorable antitrust settlement with Google, Yandex investors have every right to celebrate with shares hovering near 52-week highs today.

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