Yandex N.V. (YNDX) announced first-quarter 2018 results early Wednesday, detailing steady market share from its core search platform, healthy advertising revenue growth, and broad-based strength from its various other business bets. Yandex also boosted its full-year revenue guidance.

But shares of the Russian internet search giant fell around 1.6% in response. So let's take a closer look at how Yandex kicked off the new year, and what investors can expect going forward.

Yandex text logo with red 'Y.'

Image source: Yandex.

Yandex results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Growth


26.573 billion RUR

20.652 billion RUR


Net income attributable to Yandex N.V.

2.380 billion RUR

835 million RUR


Earnings per share (diluted)

7.10 RUR

2.54 RUR


Figures in Russian Rubles (RUR). Data source: Yandex. 

What happened with Yandex this quarter?

  • Revenue excluding traffic acquisition costs (ex-TAC) grew 33% year over year to 22.256 billion RUR.
  • On an adjusted (non-GAAP) basis, which excludes items like currency exchange and equity compensation, quarterly net income rose 7% year over year to 4.009 billion RUR.
  • Adjusted EBITDA increased 12% to 7.704 billion RUR.
  • Yandex's share of the Russian search market (including mobile) remained steady sequentially at 56.5%, but increased from 54.7% in last year's first quarter.
  • Search share on Android in Russia -- which historically represents roughly 70% of total traffic in the country -- increased to 46.3%, up from 45% last quarter and 38% in the same year-ago period.
  • Search queries in Russia increased 10% year over year.
  • Paid clicks increased 7% year over year, while average cost-per-click -- a metric that helps measure how much Yandex actually makes per ad -- grew 8%.
  • Online advertising revenue grew 17% to 22.84 billion RUR, including a 22% increase at Yandex properties, to 17.475 billion RUR, and 4% growth at network members' sites to 5.365 billion RUR.
  • Other (non-advertising) revenue grew 228% to 3.733 billion RUR.
  • Revenue by segment included:
    • 19% growth in search and portal sales to 22.285 billion RUR.
    • A 3% decline from e-commerce (from Yandex.Market) to 1.255 billion RUR.
    • A 301% increase in taxi revenue to 3.116 billion RUR, including Yandex.Taxi, Uber in Russia and its neighboring countries, and food delivery under Yandex.EATS and UberEATs.
    • 92% growth from classifieds to 706 million RUR, driven by, Yandex.Realty, and Yandex.Jobs.
    • 73% growth from media services to 421 million RUR, including sales from KinoPoisk, Yandex.Music, Yandex.Afisha, and Yandex.TV. Previously these products were included under the experiments segment.
    • 176% growth from experiments to 182 million RUR, including Zen, Yandex.Cloud, Yandex.Health, Yandex Data Factory, and the recently launched Yandex.Drive car-sharing service.

What management had to say

Yandex CEO Arkady Volozh elaborated:

2018 got off to a fast start with 29% year-over-year revenue growth. Our investments are bearing fruit. Taxi, Classifieds and Media Services, our newest business unit, as well as our Experiments were key to accelerating revenue growth. Our business units and experiments, in aggregate, contributed over 20% of total revenues in the quarter.

"The pace of innovation and new product launches continues," added Yandex COO and CFO Greg Abovsky. "We unveiled exciting new products this quarter, including Yandex.Drive, a by-the-minute car rental service, and Yandex.Cloud, our virtual cloud computing infrastructure, which is now in technical preview."

Looking forward

Given its performance in the first quarter, Yandex now expects ruble-based revenue this year will grow in the range of 28% to 32% (from 94.1 billion RUR in 2017), marking an increase from last quarter's guidance for growth of 25% to 30%. Here again, Wall Street was expecting this outperformance to an extent, with consensus estimates calling for full-year 2018 growth near the low end of Yandex's new range at 28.9%.

In the end, the stock fell less than 2% on the news, and is likely still reeling from worries over the imposition of new U.S. sanctions on Russia earlier this month. But if it's any consolation, Yandex shares are still up more than 30% over the past year as of this writing. And this was as strong a quarter as Yandex investors could have hoped to see.