Yandex N.V. (YNDX) announced reasonably strong second-quarter 2017 results on Friday morning, detailing broad-based growth across all of its various business segments and an intriguing partnership with Uber. But with shares down 4% on the day in response, that growth wasn't enough to appease the market.

Shares of the Russian internet search leader are still up more than 46% so far in 2017 as of this writing. Let's take a closer look at what Yandex accomplished over the past few months, as well as what investors can expect going forward.

Young people using smartphones

IMAGE SOURCE: GETTY IMAGES

Yandex results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Growth

Revenue

22.104 billion RUR

18.040 billion RUR

22.5%

Net income

3.484 billion RUR

1,069 billion RUR

225.9%

Earnings per share (diluted)

10.65 RUR

6.30 RUR

69%

Figures in Russian rubles (RUR). Data source: Yandex N.V.

What happened with Yandex this quarter?

  • On an adjusted basis, which excludes items like stock-based compensation, Yandex's net income increased 2% year over year, to 3.906 billion Russian rubles (RUR).
  • Revenue, excluding traffic acquisition costs (ex-TAC), which Yandex likens to sales commissions, rose 23% year over year, to 17.888 billion RUR.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBTIDA) increased 7% year over year, to 7.2 billion RUR ($122.1 million).
  • Yandex's share of the Russian search market (including mobile) averaged 54.3% in the second quarter, down from 54.7% in Q1.
  • Search queries in Russia increased 5% year over year.
  • Online advertising revenue increased 21% year over year, to 20.934 billion RUR, including 24% growth from Yandex properties, to 15.531 billion RUR, and 14% growth from advertising-network properties, to 5.403 billion RUR.
  • Other (non-advertising) revenue rose 59%, to 1.170 billion RUR, driven primarily by Yandex.Taxi.
  • By segment:
    • Search and portal revenue climbed 22% year over year, to 20.135 billion RUR.
    • E-commerce revenue rose 17%, to 1.168 billion RUR.
    • Taxi revenue increased 46%, to 772 million RUR, helped by a 425% increase in the number of Yandex.Taxi rides.
    • Classifieds revenue rose 48%, to 462 million RUR.
    • Experiments revenue grew 125%, to 344 million RUR, driven again by services including KinoPoisk, Yandex.Music, Yandex.Afisha, and Yandex.TV.
  • Subsequent to the end of the quarter, Yandex announced an agreement to combine its ride-sharing businesses with Uber in Russia, Kazakhstan, Azerbaijan, Armenia, Belarus, and Georgia. Uber will also contribute its UberEATS business in the region.
    • Per the terms of the deal, Uber agreed to invest $225 million and Yandex agreed to invest $100 million in the new company.
    • The transactions should close in the fourth quarter of this year, after which the new company will be 59.3% owned by Yandex, 36.6% owned by Uber, and 4.1% owned by employees of the company. Yandex.Taxi CEO Tigran Khudaverdyan will be the CEO of the combined business.

What management had to say

"Our team delivered another strong quarter," stated Yandex CEO Arkady Volozh. "Our agreement with Uber to combine ridesharing operations in Russia and five neighboring countries demonstrates the potential of our business units to accelerate innovation and create substantial shareholder value."

"We delivered solid results across all business segments in Q2," added Yandex CFO Alexander Shulgin, "and I was pleased to see strong growth and profitability in our core business. We expect continued investments in Taxi, e-Commerce, Classifieds, and other new initiatives to drive further growth."

Looking forward

Finally, Yandex also increased its full-year revenue guidance, calling for 2017 ruble-based sales to grow in the range of 18% to 21% (up from 17% to 20% previously).

All things considered, apart from Yandex's continued market-share slide in search -- which the company is working hard to stem per the terms of a settlement with Google earlier this year -- there was little not to like about this report. But with shares already up so much in 2017, it's also not surprising to see some investors taking profits today.