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Yandex Announces First Quarter 2013 Financial Results



Yandex Announces First Quarter 2013 Financial Results

MOSCOW and THE HAGUE, Netherlands, April 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 first
quarter ended March 31, 2013.

Q1 2013 Financial Highlights

  * Revenues of RUR 8.0 billion ($257.3 million^1), up 36% compared with Q1
    2012
  * Ex-TAC revenues^2 (excluding traffic acquisition costs), up 37% compared
    with Q1 2012
  * Income from operations of RUR 2.5 billion ($78.9 million), up 57% compared
    with Q1 2012
  * Adjusted EBITDA^3 of RUR 3.5 billion ($112.7 million), up 47% compared
    with Q1 2012
  * Operating margin of 30.7%
  * Adjusted EBITDA margin^2 of 43.8%
  * Adjusted ex-TAC EBITDA margin^2 of 52.3%
  * Net income of RUR 2.2 billion ($72.2 million), up 79% compared with Q1
    2012
  * Adjusted net income^3 of RUR 2.4 billion ($77.5 million), up 60% compared
    with Q1 2012
  * Net income margin of 28.1%
  * Adjusted net income margin^2 of 30.1%
  * Adjusted ex-TAC net income margin^2 of 36.0%
  * Cash, deposits and investments in debt securities of RUR 29.3 billion
    ($942.6 million) as of March 31, 2013

"Yandex is off to an excellent start in 2013 with strong financial results and
important product improvements," said Arkady Volozh, Chief Executive Officer
of Yandex. "During the quarter, we unveiled our newly redesigned homepage,
updated our Yandex.Navigator and Yandex.Market mobile apps, and released a
number of innovations aimed at enhancing our advertiser solutions."

The following table provides a summary of key financial results for the three
months ended March 31, 2012 and 2013.

 
In RUR millions        Three months
                       ended March 31, 
                       2012  2013  Change
Revenues               5,874 7,999 36%
Ex-TAC revenues^2      4,882 6,694 37%
Income from operations 1,559 2,453 57%
Adjusted EBITDA^3      2,377 3,504 47%
Net income             1,258 2,246 79%
Adjusted net income^3  1,505 2,410 60%

_______________________

^1 Pursuant to SEC rules regarding convenience translations, Russian ruble
(RUR) amounts have been translated into U.S. dollars at a rate of RUR 31.0834
to $1.00, the official exchange rate quoted as of March 31, 2013 by the
Central Bank of the Russian Federation.

^2 This 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.

^3 Adjusted 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.

Q1 2013 Operational and Corporate Highlights

  * Share of Russian search market averaged 61.6% in Q1 2013 (according to
    LiveInternet), an increase of 1.1 p.p. sequentially and a 2.2
    p.p. increase on a year-over-year basis
  * SERPs (search engine result pages) grew 25% from Q1 2012
  * Number of advertisers grew to more than 226,000, up 26% from Q1 2012 and
    up 6% from Q4 2012
  * Enhanced the contextual ads served through our partner network with the
    addition of images
  * Launched a newly redesigned Yandex.ru homepage
  * Announced a share repurchase program of up to 12MM shares; as of April
    24^th, 2013, we have repurchased 2MM shares

Revenues

 
In RUR millions               Three months
                              ended March 31, 
                              2012  2013  Change
Advertising revenues:                      
 Text-based advertising                    
 Yandex websites              4,284 5,850 37%
 Ad network                   1,020 1,304 28%
 Total text-based advertising 5,304 7,154 35%
 Display advertising          420   623   48%
Total advertising revenues    5,724 7,777 36%
Online payment commissions    114   187   64%
Other                         36    35    -3%
Total revenues                5,874 7,999 36%

Text-based advertising revenues, accounting for 89% of total revenues in Q1
2013, continued to determine overall top-line performance.

Text-based advertising revenues from Yandex's own websites accounted for 73%
of total revenues during Q1 2013, and increased by 37% compared with Q1 2012.
Text-based advertising revenues from our ad network increased 28% compared
with Q1 2012 and contributed 16% of total revenues during Q1 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
18% in Q1 2013 compared with Q1 2012. Our average cost per click in Q1 2013
increased 14% compared with Q1 2012.

Display advertising revenue accounted for 8% of total revenues during Q1 2013,
and increased 48% compared with Q1 2012. Display advertising rebounded
strongly from the 12% growth observed in Q4 2012.

Online payment commissions accounted for 2% of revenues during Q1 2013, and
increased 64% compared with Q1 2012.

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 Q1 2013, Yandex added 211 full-time employees, an increase of 6%
from December 31, 2012, and up 19% from March 31, 2012. The total number of
full-time employees was 3,972 as of March 31, 2013.

Cost of revenues, including traffic acquisition costs (TAC)

 
In RUR millions                           Three months
                                          ended March 31, 
                                          2012  2013  Change
TAC:                                                   
Related to the Yandex ad network          657   820   25%
Related to distribution partners          335   485   45%
Total TAC                                 992   1,305 32%
Total TAC as a % of total revenues        16.9% 16.3%  
Other cost of revenues                    526   671   28% 
Other cost of revenues as a % of revenues 9.0%  8.4%   
Total cost of revenues                    1,518 1,976 30% 
Total cost of revenues as a % of revenues 25.8% 24.7%  

TAC decreased from 18.7% of text-based revenues in Q1 2012 to 18.2% in Q1
2013, reflecting the larger growth in revenues from our own sites.

Other cost of revenues in Q1 2013 increased 28% compared with Q1 2012,
reflecting growth in personnel, content acquisition costs and data
center-related costs in line with revenue growth.

Product development

 
In RUR millions     Three months
                    ended March 31, 
                    2012  2013  Change
Product development 1,066 1,328 25%
As a % of revenues  18.1% 16.6%  

The absolute increase in product development expenses in Q1 2013 was in line
with increases in product development staff and employee remuneration.
Headcount increased 18% from 1,842 as of March 31, 2012, to 2,181 as of March
31, 2013, with 154 employees added since December 31, 2012.

Selling, general and administrative (SG&A)

 
In RUR millions    Three months
                   ended March 31, 
                   2012  2013  Change
SG&A               1,070 1,363 27%
As a % of revenues 18.2% 17.0%  

The absolute increase in SG&A in Q1 2013 was driven primarily by the increased
advertising and marketing expenses in Russia and in Turkey.

Share-based compensation (SBC) expense

SBC expense is included in each of the cost of revenues, product development
and SG&A categories discussed above.

 
In RUR millions                             Three months
                                            ended March 31, 
                                            2012 2013 Change
SBC expense included in cost of revenues    6    11   83%
SBC expense included in product development 39   82   110%
SBC expense included in SG&A                36   58   61%
Total SBC expense                           81   151  86%
As a % of revenues                          1.4% 1.9%  

Total SBC expense increased 86% in Q1 2013 compared with Q1 2012. The increase
is primarily related to new grants issued in 2012.

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

^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).

To access the conference call live, please dial:

US: +1 631 621 5256
UK: +44 (0) 1452 560 304
Russia: 8 10 800 23942044 
 
Passcode: 32596104#

A replay of the call will be available until May 2, 2013. To access the
replay, please dial:

US: +1 866 247 4222 
Russia/International: +44 (0) 1452 550 000 
 
Passcode: 32596104#

A live and archived webcast of this conference call will be available at
http://ir.yandex.com/eventdetail.cfm?eventid=127979

ABOUT YANDEX

Yandex (Nasdaq:YNDX) is one of the largest European internet companies,
providing the world with search and online services one market at a time.
Yandex's mission is to help users solve their everyday problems by building
people-centric products and services. Based on innovative technologies, the
company provides the most relevant, locally tailored experience on all digital
platforms and devices. Yandex is the leading search service in Russia and also
serves Turkey, Ukraine, Belarus and Kazakhstan. More information on Yandex can
be found at http://company.yandex.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and
uncertainties. These include statements regarding our anticipated revenues for
full-year 2013. Actual results may differ materially from the results
predicted or implied by such statements, and our reported results should not
be considered as an indication of future performance. The potential risks and
uncertainties that could cause actual results to differ from the results
predicted or implied by such statements include, among others, competitive
pressures, changes in advertising patterns, changes in user preferences,
changes in the legal and regulatory environment, technological developments,
and our need to expend capital to accommodate the growth of the business, as
well as those risks and uncertainties included under the captions "Risk
Factors" and "Operating and Financial Review and Prospects" in our Annual
Report on Form 20-F for the year ended December 31, 2012, which is on file
with the Securities and Exchange Commission and is available on our investor
relations website at http://ir.yandex.com/sec.cfm and on the SEC website
at www.sec.gov. All information in this release and in the attachments is as
of April 25, 2013, and Yandex undertakes no duty to update this information
unless required by law.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which are prepared and
presented in accordance with US GAAP, we present the following non-GAAP
financial measures: ex-TAC revenue, adjusted EBITDA, adjusted EBITDA margin,
adjusted ex-TAC EBITDA margin, adjusted net income, adjusted net income margin
and adjusted ex-TAC net income margin. The presentation of these financial
measures is not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in accordance
with US GAAP. For more information on these non-GAAP financial measures,
please see the tables captioned "Reconciliations of non-GAAP financial
measures to the nearest comparable US GAAP measures", included following the
accompanying financial tables. We define the various non-GAAP financial
measures we use as follows:

  * Ex-TAC revenue means US GAAP revenues less total traffic acquisition costs
    (TAC).
  * Adjusted EBITDA means net income plus (1) depreciation and amortization,
    (2) share-based compensation expense, (3) accrual of expense related to
    the contingent compensation that may be payable to employees in connection
    with our acquisition of the mobile software business of SPB Software and
    (4) provision for income taxes, less (A) interest income and (B) other
    income/(expense).
  * Adjusted EBITDA margin means adjusted EBITDA divided by US GAAP revenues.
  * Adjusted ex-TAC EBITDA margin means adjusted EBITDA divided by ex-TAC
    revenue.
  * Adjusted net income means US GAAP net income plus (1) SBC expense adjusted
    for the income tax reduction attributable to SBC expense, (2) accrual of
    expense related to the contingent compensation that may be payable to
    certain employees in connection with our acquisition of the mobile
    software business of SPB Software, and (3) foreign exchange losses (less
    foreign exchange gains) adjusted for the (reduction) increase in income
    tax attributable to the foreign exchange losses (gains); less gain from
    the sale of equity investments.
  * Adjusted net income margin means adjusted net income divided by US GAAP
    revenues.
  * Adjusted ex-TAC net income margin means adjusted net income divided
    by ex-TAC revenues.

These non-GAAP financial measures are used by management for evaluating
financial performance as well as decision-making. Management believes that
these metrics reflect the organic, core operating performance of the company,
and therefore are useful to analysts and investors in providing supplemental
information that helps them understand, model and forecast the evolution of
our operating business.

Although our management uses these non-GAAP financial measures for operational
decision making and considers these financial measures to be useful for
analysts and investors, we recognize that there are a number of limitations
related to such measures. In particular, it should be noted that several of
these measures exclude some costs, particularly share-based compensation, that
are recurring. In addition, the components of the costs that we exclude in our
calculation of the measures described above may differ from the components
that our peer companies exclude when they report their results of operations.

Below, we describe why we make particular adjustments to certain US GAAP
financial measures:

TAC

We believe that it may be useful for investors and analysts to review certain
measures both in accordance with US GAAP and net of the effect of TAC, which
we view as comparable to sales commissions but, unlike sales commissions, are
not deducted from US GAAP revenues. By presenting revenue, adjusted EBITDA
margin and adjusted net income margin net of TAC, we believe that investors
and analysts are able to obtain a clearer picture of our business without the
impact of the revenues we share with our partners.

SBC

SBC is a significant expense item, and an important part of our compensation
and incentive programs. As it is a non-cash charge, however, and highly
dependent on our share price at the time of equity award grants, we believe
that it is useful for investors and analysts to see certain financial measures
excluding the impact of these charges in order to obtain a clear picture of
our operating performance.

Acquisition-related costs

We may incur expenses in connection with acquisitions that are not indicative
of our recurring core operating performance. In particular, we are required
under US GAAP to accrue as expense the contingent compensation that may be
payable to certain employees in connection with our acquisition of the mobile
software business of SPB Software in November 2011. The maximum aggregate
amount of such contingent compensation is $14.1 million, payable on the
achievement of certain milestones and the continued employment of the sellers,
$7.1 million of which was paid in November 2012 and $4.1 million of which was
paid in February 2013; the remaining $2.9 million is payable in November 2013
upon the satisfaction of defined milestones. We have eliminated this
acquisition-related expense from adjusted EBITDA and adjusted net income to
provide management and investors a tool for comparing on a period-to-period
basis our operating performance in the ordinary course of operations.

Foreign exchange gains and losses

Because we hold significant assets in currencies other than our Russian ruble
operating currency, and because foreign exchange fluctuations are outside of
our operational control, we believe that it is useful to present adjusted net
income and related margin measures excluding these effects, in order to
provide greater clarity regarding our operating performance.

Gain from the sale of equity investments

Adjusted net income also excludes a gain in the year ended December 31, 2012
from our sale of our minority interest in face.com in connection with the sale
of that company. We believe that it is useful to present adjusted net income
and related margin measures excluding the effect of this significant one-off
item in order to provide a clearer picture of our operating performance.

The tables at the end of this release provide detailed reconciliations of each
non-GAAP financial measure we use to the most directly comparable US GAAP
financial measure.

YANDEX N.V.
 
Unaudited Consolidated Balance Sheets
 
(in millions of Russian rubles ("RUR") and U.S. dollars ("$"), except share
and per share data)
                                          As of
                                          December 31,   March 31,  March 31,
                                          2012*          2013       2013
                                          RUR            RUR        $
ASSETS                                                               
Current assets:                                                      
Cash and cash equivalents                 7,425          7,757      249.5
Marketable securities                     76             114        3.7
Term deposits                             4,629          2,947      94.8
Accounts receivable, net                  1,767          1,850      59.5
Prepaid expenses                          597            592        19.1
Assets held for sale                      2,024          2,079      66.9
Deferred tax assets                       456            451        14.5
Other current assets                      1,217          1,055      33.9
Total current assets                      18,191         16,845     541.9
Property and equipment, net               8,095          8,183      263.2
Intangible assets, net                    323            306        9.9
Goodwill                                  750            755        24.3
Long-term prepaid expenses                695            669        21.5
Restricted cash                           214            89         2.9
Term deposits                             10,330         13,650     439.1
Investments in non-marketable equity      500            512        16.5
securities 
Investments in debt securities            4,810          4,946      159.1
Deferred tax assets                       35             66         2.1
Other non-current assets                  342            522        16.8
TOTAL ASSETS                              44,285         46,543     1,497.3
                                                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                 
Current liabilities:                                                 
Accounts payable and accrued liabilities  2,513          2,622      84.4
Taxes payable                             1,455          1,109      35.7
Deferred revenue                          1,092          970        31.1
Liabilities related to assets held for    1,619          1,646      53.0
sale 
Deferred tax liabilities                  3              1          --
Total current liabilities                 6,682          6,348      204.2
Deferred tax liabilities                  448            430        13.8
Other accrued liabilities                 108            95         3.1
Total liabilities                         7,238          6,873      221.1
Commitments and contingencies                                        
Shareholders' equity:                                                
Priority share: €1 par value; 1 share     —              —          —
authorized, issued and outstanding 
Preference shares: €0.01 par value;
2,000,000,001 shares authorized, nil      —              —          —
shares issued and outstanding 
Ordinary shares: par value (Class A
€0.01, Class B €0.10 and Class C €0.09);                             
shares authorized
(Class A: 2,000,000,000 and
2,000,000,000, Class B: 159,494,722 and                              
159,494,722, and
Class C: 159,494,722 and 159,494,722);                               
shares issued (Class A: 202,318,864 and
232,963,523, Class B: 125,441,218 and                                
96,034,266, and Class C: 27,972,630 and
57,379,582, respectively); shares
outstanding (Class A: 202,318,864 and                                
232,623,523, Class
B: 125,441,218 and 95,988,570, and Class  445            336        10.8
C: nil) 
Treasury shares at cost (Class A: nil and -              (243)      (7.8)
340,000, and Class B: nil and 45,696) 
Additional paid-in capital                13,617         14,020     451.0
Accumulated other comprehensive income    961            1,287      41.4
Retained earnings                         22,024         24,270     780.8
Total shareholders' equity                37,047         39,670     1,276.2
TOTAL LIABILITIES AND SHAREHOLDERS'       44,285         46,543     1,497.3
EQUITY 
_____________________                                                
* Derived from the audited financial statements  

 
Unaudited Condensed Consolidated Statements of Income
 
(in millions of Russian rubles and U.S. dollars, except share and per share
data)
 
                                           Three months ended March 31,
                                           2012        2013        2013
                                           RUR         RUR         $
Revenues                                   5,874       7,999       257.3
Operating costs and expenses:                                       
Cost of revenues^(1)                       1,518       1,976       63.6
Product development^(1)                    1,066       1,328       42.7
Sales, general and administrative^(1)      1,070       1,363       43.8
Depreciation and amortization              661         879         28.3
                                                                    
Total operating costs and expenses         4,315       5,546       178.4
                                                                    
Income from operations                     1,559       2,453       78.9
Interest income                            167         368         11.8
Other expense, net                         (124)       26          0.9
Net income before income taxes             1,602       2,847       91.6
Provision for income taxes                 344         601         19.4
                                                                    
Net income                                 1,258       2,246       72.2
                                                                    
Net income per Class A and Class B share:                           
Basic                                      3.88        6.84        0.22
Diluted                                    3.75        6.67        0.21
                                                                    
Weighted average number of Class A and                              
Class B shares outstanding
Basic                                      324,444,817 328,376,050 328,376,050
Diluted                                    335,035,919 336,739,465 336,739,465
                                                                    
 _________________________________                                  
(1) These balances exclude depreciation and amortization expenses, which are
presented separately, and include share‑based compensation expenses of:
                                                                    
Cost of revenues                           6           11          0.4
Product development                        39          82          2.6
Sales, general and administrative          36          58          1.9

 
YANDEX N.V.
 
Unaudited Condensed Consolidated Statements of Cash Flows
 
(in millions of Russian rubles and U.S. dollars)
                                         Three months ended March 31,
                                         2012*         2013        2013
                                         RUR           RUR         $
CASH FLOWS FROM OPERATING ACTIVITIES:                               
Net income                                1,258        2,246       72.2
Adjustments to reconcile net income to
net cash provided by operating                                      
activities:
Depreciation and amortization of          643          856         27.6
property and equipment 
Amortization of acquisition‑related       18           23          0.7
intangible assets 
Share‑based compensation expense          81           151         4.9
Deferred income taxes                     (98)         (53)        (1.7)
Foreign exchange losses/(gains)           114          (7)         (0.3)
Other                                    13            (25)        (0.8)
Changes in operating assets and
liabilities excluding the effect of                                 
acquisitions:
Accounts receivable, net                  89           (82)        (2.6)
Prepaid expenses and other assets         (318)        —           —
Accounts payable and accrued              (18)         (325)       (10.4)
liabilities 
Deferred revenue                          (85)         (122)       (3.9)
Assets held for sale                      54           (59)        (1.9)
Liabilities related to assets held for   6             27          0.9
sale 
                                                                    
Net cash provided by operating           1,757         2,630       84.7
activities 
                                                                    
CASH FLOWS USED IN INVESTING ACTIVITIES:                            
Purchase of property and equipment       (764)         (859)       (27.6)
Investments in term deposits              (3,950)      (5,220)     (167.9)
Maturities of term deposits               2,663        3,600       115.8
Escrow cash deposit                       —            130         4.1
                                                                    
Net cash used in investing activities    (2,051)       (2,349)     (75.6)
                                                                    
CASH FLOWS PROVIDED BY/(USED IN)                                    
FINANCING ACTIVITIES:
Proceeds from exercise of share options  119           132         4.2
Repurchases of ordinary shares           —             (243)       (7.8)
                                                                    
Net cash provided by/(used in) financing 119           (111)       (3.6)
activities 
                                                                    
Effect of exchange rate changes on cash  (379)         162         5.1
and cash equivalents 
                                                                    
Net change in cash and cash equivalents  (554)         332         10.6
                                                                    
Cash and cash equivalents at beginning   5,930         7,425       238.9
of period 
                                                                    
Cash and cash equivalents at end of      5,376         7,757       249.5
period 
                                                                    
* Cash flows related to Yandex.Money are reclassified from their historical
presentation to cash flows related to changes in assets held for sale and
liabilities related to assets held for sale 

 
YANDEX N.V.
                                                                         
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES 
TO THE NEAREST COMPARABLE US GAAP MEASURES
                                                                         
Reconciliation of Ex-TAC Revenues from US GAAP Revenues
 
In RUR millions                                             Three months
                                                            ended March 31, 
                                                            2012  2013  Change
Total revenues                                              5,874 7,999 36%
Less: traffic acquisition costs (TAC)                       992   1,305 32%
Ex-TAC revenues                                             4,882 6,694 37%
                                                                         
Reconciliation of Adjusted EBITDA from US GAAP Net Income
 
In RUR millions                                             Three months
                                                            ended March 31, 
                                                            2012  2013  Change
Net income                                                  1,258 2,246 79%
Add: depreciation and amortization                          661   879   33% 
Add: share-based compensation (SBC) expense                 81    151   86%
Add: expense for acquisition-related contingent             76    21    -72%
compensation
Less: interest income                                       (167) (368) 120%
Less: other income/(expense), net                           124   (26)  -121%
Add: provision for income taxes                             344   601   75%
Adjusted EBITDA                                             2,377 3,504 47%
                                                                         
Reconciliation of Adjusted Net Income from US GAAP Net Income
 
In RUR millions                                             Three months
                                                            ended March 31, 
                                                            2012  2013  Change
Net income                                                  1,258 2,246 79%
Add: SBC expense                                            81    151   86%
Less: reduction in income tax attributable to SBC expense   (1)   (2)   100%
Add: expense for acquisition-related contingent             76    21    -72%
compensation
Add: foreign exchange loss/(gain)                           114   (7)   -106%
Less: (reduction)/increase in income tax attributable to    (23)  1     -104%
foreign exchange loss/(gain)
Adjusted net income                                         1,505 2,410 60%

 
Reconciliation of Adjusted EBITDA Margin and Adjusted Ex-TAC EBITDA Margin to
US GAAP Net Income Margin for the Three Months Ended March 31, 2013
 
In RUR millions 
             US GAAP   Net                               Adjusted   Adjusted
             Actual    Income   Adjustment   Adjusted    EBITDA     Ex-TAC
             Net       Margin   ^(2)         EBITDA      Margin     EBITDA
             Income    ^(1)                              ^(3)       Margin
                                                                    ^(4)
Three months
ended March  2,246     28.1%    1,258        3,504       43.8%      52.3%
31, 2013
 
(1)  Net income margin is defined as net income divided by total revenues.
(2)  Adjusted to eliminate depreciation and amortization expense, SBC expense,
expense related to SPB Software contingent compensation, interest income,
other income/(expense), net, and provision for income taxes. For a
reconciliation of adjusted EBITDA to net income, please see the table above.
(3)  Adjusted EBITDA margin is defined as adjusted EBITDA divided by total
revenues. 
(4)  Adjusted ex-TAC EBITDA margin is defined as adjusted EBITDA divided by
ex-TAC revenues. For a reconciliation of ex-TAC revenues to GAAP revenues,
please see the table above. 
                                                                     
Reconciliation of Adjusted Net Income Margin and Adjusted Ex-TAC Net Income
Margin to US GAAP Net Income Margin for the Three Months Ended March 31, 2013
 
In RUR millions 
                                                         Adjusted   Adjusted
             US GAAP   Net                               Net        Ex-TAC
             Actual    Income   Adjustment   Adjusted    Income     Net
             Net       Margin   ^(2)         Net Income  Margin     Income
             Income    ^(1)                              ^(3)       Margin
                                                                    ^(4)
Three months
ended March  2,246     28.1%    164          2,410       30.1%      36.0%
31, 2013
 
(1)  Net income margin is defined as net income divided by total revenues.
(2)  Adjusted to eliminate SBC expense (as adjusted for the income tax
reduction attributable to SBC expense), expense related to SPB Software
contingent compensation and foreign exchange losses/(gains) (as adjusted for
the (reduction)/increase in income tax attributable to the loss/(gain)). For a
reconciliation of adjusted net income to net income, please see the table
above.
(3)  Adjusted net income margin is defined as adjusted net income divided by
total revenues. 
(4)  Adjusted ex-TAC net income margin is defined as adjusted net income
divided by ex-TAC revenues. For a reconciliation of ex-TAC revenues to US GAAP
revenues, please see the table above. 

CONTACT: Investor Relations
         Greg Abovsky, Katya Zhukova
         Phone: +7 495 974-35-38
         E-mail: askIR@yandex-team.ru
        
         Media Relations
         Ochir Mandzhikov, Dina Litvinova
         Phone: +7 495 739-70-00
         E-mail: pr@yandex-team.ru

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