Q4 2019 Earnings Call

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Welcome to fourth quarter in full year 29, <unk> financial results P. ethics. Please continue to stay by the conference will be getting very children, maybe on music <unk> <unk>.

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Ladies and gentlemen, thank you the standing by welcome to the fourth quarter and full year 29 team financial results Conference call.

At this time all participants are in listen only mode. They will be a presentation followed by question and that decision.

Which time to ask a question. Please press Star then one though when you telephone keypad.

Finally, the call is being recorded today Friday, the 14th of Fabry Twentytwenty.

And the conference like the tool speaking today.

He has a kosta. Please go ahead.

Hello, everyone and welcome to underpin fourth quarter fiscal year 2019 earnings call what distributable earnings release. So that you can find it's called the <unk> website as well as only use watch as.

On the call today, we have forgotten what does it again, our deputy Chief Executive Officer Incredible Scout troop cooperating and your financial losses I'd be bullish our chief Executive Officer like you much Oh, we keep your corporate development and keep getting assembled chief financial Officer LP and its tax there will be available and the kidney session.

I will be recorded the recording will be available on the IR website. If you always have you get prepared if you're a supplementary slides, which are currently available under website now I will quickly walk you through the safe Harbor statement. Various remarks, that's been made during this call about <unk> patients Glenda plastics constitute forward looking statements our actual results.

May differ materially from those indicated the suggested by these forward looking statements as a result of various important centric, including those discussed in the risk factor section of our annual report them completely have they did April 19th 2019 wishes on file with the FCC and is available in place immigration any forward looking statements represent our views.

Lived up to date and should not be relied upon as representing our views as if any subsequent date also with me Lucky because forward looking statements at some point into future was specifically disclaim any obligation to do so even if I will use change. Therefore, you should not rely this forward looking statements as represented our views as of a new deep subsequent to date.

During the gold <unk>, referring to certain non-GAAP financial measures. They didn't non-GAAP financial measures I'm not prepared in accordance with <unk> GAAP a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures. It provided in yesterdays release, we should today and now I'm turning the call over two to grant.

Thank you quite to the thank you for joining our call today, we're pleased with our fourth quarter full year results or full year revenues grew 49% year on year, excluding get next Mark 2019 demonstration that there are truly diversified company more balance than ever.

Five years ago copies of search and portal accounted for 94% of total revenues to date, new businesses contributed more than one third our topline met all of them to growing triple digits rights to put in perspective search import accounted for 16 percentage points out.

49% Yo Yo where when you go from 2019 taxi contributed another 14 percentage points.

Lighting businesses together delivered 10%, that's cool primarily driven by young.

So Joe team continues to introduce new features advancements all the default.

So we know our latest surge update.

That book multiple improvements to search quality in brief we know you abella neural networks to anticipate the text <unk> two per rental results in real time in order to significantly accelerate loading die and improve the user experience, especially on mobile.

The relational searching to freed up computing resources, which allowed us to double the size, what we're searching and without requiring additional hardware. We believe that improvements in service quality combined with our stronger relationships with Oh, yes, I do increase our search.

So showed gains on Android accelerated in Q4 compared to the previous quarter.

In December where we used 54.6% and Android up 160 basis points from September up 520, Bips from December 2008.

Although well serve show in December average, 51.9% growing 460 basis points year on year.

As we have said on previous calls we continue to expect or so share or about to grow although at a moderate pace. We expect the new regulation opened the doors the installation of Russia software on mobile devices should have a positive effect on domestic internet companies.

In Q4, our mobile search traffic, which 57.5% what we're talking search traffic the bottom revenues represented 49.3% for search revenues.

In December while its search revenue exceeded that of desktop.

We're also very excited about the prospects of that our personalized content feed platform.

Continues to demonstrate strong growth.

In December General reached 8.8 billion rubles, no revenue run rate growing 49% in your own here.

Zones, there audience. The reached 13.4 million users in December also growing at 49% year on year.

User engagement as measured by times that grew 89% here and you know people spending approximately 10 viewing hours for be approximately 10% of use it as pets is driven by social features we added a year ago Zap platform, because I know generates 66% colleagues.

In 20 trend to continue to focus on the development and we expect the revenues to continue growing at a similar pace I also want to mention the incredible performance of Geo services, which in Q4 doubling its revenues here on your for the ninth consecutive quarter. The growth was driven in large part.

By local based advertising revenues immediate services Calix music continued to strengthen position the music streaming market not only in Russia, the pools and other builders, where we saw pfeifle, we for girls that level subscribers.

He's helped us to reach another important milestone, we 0.1 dealer subscribers.

The video side, we continue to invest in cotton to grow the Cowboys proven cattle in Q4, we know the new exclusive deal the BBC.

Risky GE becomes an increasingly appealing service for viewers, yes. The recently the number of monthly viewing subscribers or the platform has always wanting to do it.

In Q4 subscription based revenue so media services grew 175% year on year.

Now turning to Texas.

Thank you for Texas segment revenues grew 72% year on year on the back. So we grow you know white haven't conform to total numbers of tax the rights grew 49% to remind you a rise broke does not include for delivery performed by quarter yours.

December the total number of while the rights across all geographies reached 150 Miller.

Right, having JV and a lot of rate was $6.2 billion in December.

Our corporate tax revenues more than doubled year over year in Q4 on the back of Rep physical.

We expanded the number of restaurants to 15000.

There was no secret logistic side, the full delivery business model is challenging <unk> co. Your cost is the largest structural cost right.

The integration of delivery fees in 2019, combined with our prudent approach to incentive allowed for improvements even journey economics today, we continue focusing on technological solutions to bring delivery time, Dell, which will lead to further improvement in unit economics of this business.

2019 relaunched Yandex Walker, our hyper local convenience store delivery model by the end of December we had already opened $50 stores in Moscow earlier. This week, we launch in something.

Ever do every time, they love cookies, approximately 15 minutes that we use the same cool yours as any of these helps to significantly improve order density in our for that business. We are were excited about love could business, who actively investing you need in Twentytwenty I also want to highlight our investments in salt Lake and technology.

As you get an office in our press release, we haven't disclosed our investments as disease, which broke the sales in the Texas segment.

In Q4 these investments totaled 555 mailer rubles at adjusted EBITDA level. Since inception, we have spent approximately 2.2 billion rubles on the project, including 1.5 billion. In 2019, we believe that we have developed world class technology on par with global leaders in this space.

At the French over the course I hope some of you were able to twice in person in early January in Las Vegas.

In June we will be operating Robertex servicing downtown Detroit during the Twentytwenty North American International Ultra show in mature, though is to quickly summarize our recent achievements as the sitting here as of today, we draw or 2 million miles in the dollar was more the majority of which we draw from 2019 and.

Public rolled our fleet exceed 110, so driving cars, we continue to enhance our technologies both on the software another verifones, we suddenly we started.

Our own like.

It is a critical component for a full so driving platform and as of today the more expansive element in our self driving cars, having our own by there will not only allow us to bring down our current idle costs, but will also enable more control over the work all of these most crucial sensors to provide even better analyses of the outside.

But the lot common for me is about what you got to drive to book its revenue in Q4, despite declining evident chatter driven by competition.

Caution in marketing most was racial in terms of pricing can Q4, we believe that price personalization is inevitable there with decent joining the Mike over to Greg.

Thank you to grow up and thank you all for joining our fourth quarter earnings call. Today. It was a good quarter. Our consolidated revenue grew 33% you're on your in Q4 ex Tac revenues grew 30% compared to Q4 2018.

Total online advertising revenues increased 16% year on year.

Ex Tac basis online advertising revenues were up 19% compared with a year ago.

Revenues related to you on its properties grew 23% Q4 partner network revenues declined 5% year on year.

Total Tac grew 8% year on year and amounted to 12.8% total revenues down 310, Bips from Q4, 2018 and flat sequentially.

Traffic acquisition costs related to our partner advertising network increased 1% year on year on the back of modest partner advertising network traffic acquisition costs related to distribution partners grew 25% year on year roughly in line with Yandex properties revenue growth mainly on the back of Andrew.

In Q4 distribution Tac averaged 80% of Yandex properties revenues, which is 30 basis points higher compared to Q3.

On balance we expect positive tailwind from distribution Tac from a number of different factors.

Turning to cost structure in Q4 total opex, excluding talcott DNA and go to warfare and grew 61% year on year, excluding stock based comp operating expenses increased 61%.

This increase was primarily driven by higher as Jay expenses, where year over year growth was significantly impacted by a one off costs of 882 million rubles associated with our restructuring as well as by higher cost to sales mainly related to drive and our corporate tax service.

Excluding restructuring one off our opex would have grown 56% year on year.

As of December 31st we had 10092 employees, a 5% compared to September thirtyth, primarily reflecting new hires in search and portal taxi and Geo services.

On a year over year basis, our headcount grew 15%.

In Q4, our personnel costs amounted to 18% of total revenues.

DNA expense in Q4 increased 24% year on year, the growth, mainly reflected our investments and service and data center equipment expansion of our car sharing fleet as was by costs related to purchase office equipment.

Our consolidated adjusted EBITDA grew 7% year on year.

This quarter.

From Forex was a loss of 999 billion rubles related to appreciations Russian ruble during Q4 from 64.4 rubles. The dollar to 61.9 rubles the dollar.

Adjusted net income Q4 was down 22% year on year adjusted net income margin was 10%.

Flight of adjusted net income was mainly driven by increased losses, I mean equity method investments related to yandex market. Our joint venture was their bank due to significant growth of our Peru marketplace on a year over year basis.

Adjusted net income excluding FX market was down 8% year on year Q4 2019.

Our Capex in Q4 was 11% until Q4 revenues while for the full year 2019, our capex was 12% of revenues.

In 2020.

We expect our capex, excluding new HQ expenditures to be in the low teens as a percent of toll revenues.

Now, let me turn to the performance of our business units.

Search and portal delivered good results, despite tough comps with revenues growing 16.2% here on your.

Assertion poor revenue ex Tac rough teaching 0.6% year on year.

We expect search and portal ruble based revenue ex Tac to grow in the range of 14% to 17% in a four year 2020, compared with 29 team.

Adjusted EBITDA assertion portal grew 13% year on year in Q4 as adjusted EBITDA margin was 43.8, 740, bips compared with a year ago.

Excluding aiotv adjusted EBITDA margin of search and portal was 45.9% down 60, Bips from Q4 2018.

Margin decline was mainly due to higher personnel costs as we continue to invest in our key assets are people. In addition, we increased investments in video content and ramped up sales of our devices.

Turning to taxes in Q4, 2019 taxi revenues grew 72% year on year ascribed mentioned driven by the solid growth and ride hailing and Foodtech and ride hailing GMT grew 47% compare to a year ago.

Adjusted EBITDA for ride hailing a foodtech, excluding self driving car costs totaled 826 million rubles. This includes investments, Alaska, which we start to ramp up in Q4 as well as a one off tax provision or approximately hundred 66 million rubles, and our radio in business.

Turning to classified revenue Reclassifies business grew 45% you're on your Q4. The growth was mainly driven by revenues generated from listing fees and value added services, which increased 60% year on year.

Adjusted EBITDA classified was positive 330 million roubles to.

To media services.

Thank you for media services revenue grew 96% year on year, mainly reflecting the growth of our subscription services and video advertising driven by can avoid.

Media services adjusted EBITDA loss was 688 million rubles, mainly as a result of our ongoing investments in content higher advertising and marketing expenses and new hires in the back of business growth.

Turning to other patent experiments in Q4 revenues of other bets experiments represented by young strive exam Geo services cloud and education were 5.1 billion rubles and grew 120% year on year, driven by young strife Geo and.

Adjusted EBITDA lots of other bets experiments was 1.8 billion rubles, primarily as result of our investments and drive and cloud on a full year basis, adjusted EBITDA loss other bets and experience was 5.2 billion rubles.

We expect adjusted EBITDA loss of other bets and extend that to be roughly flat in 2020 compared to 29 gene in absolute terms, while the adjusted EBITDA margin of the segment should improve.

Now getting back to corporate matters.

We ended the quarter with approximately 80.3 billion rubles, and cash and cash equivalents, which is approximately $1.4 billion an exchange rate as of December 30 Onest.

Includes the cash if you have exactly which amounted to 24.4 billion rubles were approximately $400 million as of December 31st.

In Q4, 2019, we purchased 460000 class a shares as part of our share repurchase program announced in November.

We repurchased about 600000 class a shares since the inception of this last buyback program.

Turning to guidance, we expect our ruble based revenues to be between chartered 14, and 221 billion rubles or to grow in the range of 20% to 26% for the full year 2020, compared with 2019.

We anticipate our consolidated adjusted EBITDA to grown high teens year over year in 2020, we expect our fiscal year 2020 search and portal adjusted EBITDA margin to be approximately flat compared with 2019, while all other businesses, taking together, excluding self driving cars should deliver improvements of their adjusted EBITDA in 2020, we anticipate just.

You've got to grow slower than consolidated revenue because of the segment mix effect as a rapidly growing businesses, where we continue to invest in growth will account for higher share of total revenues with this I'm trying to make to the operator for the QNX session.

Thank you very much once again as a reminder, she'd like to ask a question over the phone today. Please press Star then one on your telephone keypad.

And then interest of time anchor to see we'd ask you we'd like to ask you just to ask one question plus a follow up once again, starting one to ask a question you can cancel the question by pressing the hash key.

The first question we have today comes from the line of sees a T. Rowe from Bank of America. Please go ahead.

Yes, hi, thanks, everyone for vertical and and allowing you to of course fronts.

So just one question Dan.

Can you please explain in more detail the key drivers of the of the schooled on in a partner revenue and if you expect human or trends in 2020. Thank you.

Hi, she's or its Greg.

Let me.

Address your question about the AD network and what's going on there. So this is something in line with what we've talked about in the past where.

We are seeing kind of a mix shift in terms of our partners and we're also seeing a decrease in the amount of traffic that partners and the AD part in the partner AD network are receiving show as a result of that the absolute revenues that we can get out of the AD network are declining at the same time.

We are.

Really trying to emphasize the growth of our owned and operated properties.

Such as young Zen and many others and I think you should expect to these trends will continue so I'd say, it's a continuation of the trends you've seen before we're obviously as you can tell from their prepared remarks are focused on driving ex Tac revenue growth and optimizing the amount of revenue the drops.

Down to the bottom line, which includes optimizing our relationships with various distribution partners as well as relationships with the various AD network partners.

Okay. Thanks, so much and just very quickly just on the onto distribution dock as a percentage of revenue can you can you. Please explain.

Was there anything exceptional into into Parker.

[noise]. So there were some exceptional things in the quarter.

Some of them wherever related to distribution partners I would say that in total in addition to the total amount of the restructuring charge, which we excluded from the adjusted EBITDA numbers. There was approximately 800 million rubles of expenses in the search and portal segment, which were included in the adjusted EBITDA numbers in which it.

Mostly impacted those adjusted EBITDA numbers and they there's a number of different ones.

One of them is sort of recognizing the contributions made by members of their team during the corporate restructuring efforts.

Another are certain one off payments to distribution partners.

There's also a investments that we made in.

Improving our educational products.

Such us Yandex textbook and there's some certain other items of smaller significance. So if you exclude those one off items.

The adjusted EBITDA on a full year basis of search and portal.

Would've been up 50 basis points so.

Excluding devices, our adjusted EBITDA in 2019 would've been up 50 basis points in Q4 are Ics <unk> again, excluding devices, our adjusted EBITDA margins would've been up 180 basis points year over year. So I think that's kind of an important thing to keep in mind.

The investments that we made.

In Q4 on distribution side and some of the changes in our arrangements with with certain other distribution partners should have a positive benefit to.

Distribution Tac going forward.

Is that clear. Thank you so much yeah Victor thank so much Greg. Thank you. Thank you.

Thank you very much of the next question today comes from the line of Liana Linzess scale from yes. Please go ahead.

Hi, Andrew on my first question will be understeer legislation about the the Russian software installations could you. Please elaborate a little bit on the mechanics of that out.

Yeah.

Oh, So I would appreciate and your comments on the potential market share gain but I understand that it's early and Oh. So can you. Please.

Okay, that's about the potential impact on Tac as a result to that but legislation.

Hi, Liana.

These are all excellent questions and unfortunately, I don't have all of the answers as it's still too early and some of the details have not been worked out. However, I think it is important to note that we do expect.

Positive impact from this legislation around pre installation.

We believe that it could impact a number of different it could impact us positively in a number of different ways. It could lead to increased market share it could lead to distribution Tac being lower and so on a but obviously, it's just too early to tell I think this is legislation that should benefit.

Domestic players in general and we are obviously excited to learn.

What this will all mean over the course of the next few months.

Thank you guys and then my second question will be on taxi do you see any intensification of competition.

In the fourth quarter, Oh now in the beginning of 20 to 22.

Thank you, Dan Ellis's, <unk>, well and you don't competition is natural and inevitable when we're always been.

In competition since inception of this company so competition.

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Exists and continue to exist, but if.

You look at the numbers already mentioned you don't rights grew 54% in 2019, 49% in the fourth quarter. If you look at our profitability margin excess D.C. up seven for EBITDA profitability margin of 7%.

You can see that sort of our Q4 performance troops. That's a weekend efficiency continue to grow the business in a pretty aggressive competitive environment.

You know we.

<unk> based in our internal analytics or you know, we believe that we've been steady maintaining market share across all geographies, where we can.

Densely compete and you know going forward and we think by focusing on quality on product on technology will.

Continued to maintain a leading market share.

Okay. Thank you.

Thank you very much once again it started in one if you'd like to ask a question today. The next question today comes from the line of slit a big appearance from Goldman Sachs. Please go ahead.

Yes. Thanks for the call. My question is on advertising side can you comment on any specific macro or second thoughts around a at the beginning of 20 to 20 and do you see high or low activity across any particular advertising category compared to 2019 levels. Thank you.

[noise] Slava, so I would say that in Q4.

What we've seen it is a continuation of weakness in the apparel segment.

And there's also some weakness in.

And by weakness I mean slower than average growth and the finance and insurance sector.

The other sector, that's been a little bit under pressure is real estate.

I would say and kind of year to date were generally seeing those same trends from Q4, continuing and I think that goes.

[music].

Sort of across the board both on the AD network side on the owned and operated side and so on.

Okay. Thank you.

Thank you very much the Nick's question today comes from the line of Lloyd Walmsley from Deutsche Bank. Please go ahead.

Hi, Thanks, This is Chris on for Lloyd.

Maybe just first on the taxi business here you flagged that the corporate.

Business taxi rides are booked on a gross basis. So can you remind us why again. This is the case and I think you guys you called out that they had doubled during the quarter can you just talk about their contribution to revenue growth for the quarter.

Well this is simply GAAP accounting. So a you know that's accounted on Gimi basis.

Of course it so once we get done number you get a clean if it done number.

But.

We don't disclose this specific number but I couldn't tell you. If you look at our GAAP revenue growth a roughly eight percentage points of that growth is attributable to growth and b to b.

And the rest.

Core business.

Okay, and then maybe just one follow up on on the food delivery business. Just quick update I know you talked about competitive dynamics within the core rideshare market, but.

You talked more as it relates to the food a few delivery business and maybe help us think about where things are out and what you guys are seeing in some of the major metros for some of the smaller cities in regions. Thanks.

Well you know just.

As of last quarter, as a down or up this quarter were delivering from 15000 restaurants, you know network.

And of course, just like in the ride hailing business were focused on building a long term viable unprofitable business.

You know throughout the year, we've seen significant improvement as already mentioned by taking around which seems significant improvement in our contribution margins.

And Oh, we see absolute growth in their business, but we're mindful that were.

Looking for them so.

So lifting our improvement that unit economics.

You know and overall in food, where you know continue to experience.

ER experience experiment with.

Kind of usage cases for our customers and one of them as left which is still in early experiment, but you know early signs are very encouraging.

Thank you very much at the next question comes from nine of Marine diesel from Morgan Stanley. Please go ahead.

Hi.

My question would just be on that Yandex NASCAR.

Just wondering if you could talk about the potential impact on on Capex as you are rolling out Doc stores.

And then also if you could talk a bit about begin economics that business and how that compares to the assess pacifico different model.

Well you know.

You know there you know talking about unit economics.

See continuous improvement, but you know it's very early days, because it's a very very young experiment.

One that we think there's a lot of interest from our customers, but oh.

We could you know we continue to experiment for that and of course, the impact on our financial statements will sort of Furthermore, should add to the six self.

We're.

Success of our <unk> business.

There's no more business model in the next several months throughout the year.

Okay. Thanks, and then my follow up could you speak on yachting strife you mentioned that that's been an increase in competition I guess, how long do you think you'll take for the market to rationalize and is there any area that you couldn't really differentiate your product or is it really just about the pricing.

[noise], obviously, there's a high Miriam its Greg there's obviously a lot of things that we're trying to do on the product side to improve the unit economics of this business.

Including things like a fixed tariffs and other algorithmic thinks that we're trying to do.

It is certainly our intention to try to rationalize this market and try to improve the prospects for all of the different players and if necessary, we will take steps to bring supply and demand in the car sharing segment closer.

In line to better sort of match the the number of writers and the number of cars, but I think this is a it's a very exciting segment I think it's a great effort that the department of transportation of Moscow has made to enable.

Car sharing it in the city I think it's very synergistic as I've said before with our core ride sharing business. So it's you know we're still very excited about the prospects here, but we also want to be prudent and manage the amount of burn in this segment.

Great. Thank you.

Thank you very much once again it started in one to ask a question today.

The next question comes from the line of letting me a paid flow from VTB capital. Please go ahead.

Hello, and thank you for taking my questions.

My first question will be on your partnership with better bunker.

Yandex market first.

How do you see these parts mr. developing in the future, especially given the three here quite a lot of unconfirmed reports the Fairbanks has increased in the looking at other Villanova potential alternative platform to develop its the commercial exposure and the second question is on the younger more young makes money at least trend. Thanks.

Fintechs has been a pretty hot topic, but we haven't talked much exciting about these joint venture between the Ondeck sense, there been cunliffe I knew something so what do you think about this one I've been chenier about too young to access potential to expand in between Tech area. Thank you.

Hi, Vladimir.

Thank you very much for your question so with respect to our joint venture Yandex market I'd say first of all we're extremely pleased with the performance of the joint venture on the price comparison side, it's demonstrating solid revenue growth.

On the newly created market lease Peru, we've reached a record 46 billion rubles and annualize GMB run rate based on December 2018 figures and sort of year to date. The marketplace is running ahead of budget and I think its executing well.

At the same time, we also a notice some of the rumors that you mentioned, but I just want to make it clear that the joint venture that we have formed on the basis of Yandex market is an exclusive arrangement for both the spare bank and for your Ondecks, such that any and all E.

Commerce activities of these two companies of spare bank and Yandex are conducted through this yandex market joint venture and obviously, it's Burbank is a reputable and high quality partner and we would expect them to follow the letter as well as the spirit of the joint venture agreement.

On the question of a yandex money. We also notice that Fintech is an extremely interesting sector.

And we are evaluating what are the various options for young index to play a more active role and that's in that space.

Okay. Thank you very much and maybe one more question, maybe you could comment I'll leave it will be on the margins so far different segments in particular in a into Texas segment could you give us more color for example, we take out before tech component.

I would hope the accretion awards will be the marchant roughly four be ride hailing business on their own.

Also our best the mix determines how much of that you'd be dot loss was attributable to younger strife. If you could come in summed up thank you.

Sure.

On the first question.

As you can see.

The foodtech part of the Yandex taxi business.

His.

First of all as Lossmaking second of all has ramped up in terms of absolute expense as a result of the rollout of the Yandex Laska convenience store delivery model, we have ramped up I think to about 50 stores by year end and I think since then Weve opened.

A dozen or so more.

And so.

I think its natural to assume that the underlying margins of the taxi segment are quite a bit higher the ride hailing part of the taxi segment than the segment overall and the other thing to keep in mind is based on what Youve Ginny talked about on the B to B segment.

If you kind of the B to B on a net basis as opposed to gross the margins would be even higher.

And then if I sort of dive deeper into the into the other bets and experiments segment first of all I just want to repeat what I said in the prepared remarks, which is that we expect an absolute.

Amount of investments in other bets and experiments in 2020 to be on par with 2019 levels.

The biggest loss maker, there frankly is yandex drive and as I mentioned were taking steps.

To optimize that.

Another major area of investment for Us is cloud.

We're much more pleased with the progress of the cloud.

Business unit and therefore, we will continue to invest in the cloud offerings, we've seen quite a number of corporate switch to a yandex cloud offerings and we think that this has an excellent potential.

The other segments that are in there are things like a maps and navigation, which I said is a is doing quite well. It's obviously a platform play and there's a fixed cost component to it but we've done a really good job of of getting smaller and medium sized businesses to advertise with us and and bring them online really for the first time ever.

Okay. Thank you very much.

Thank you.

Thank you very much. The next question today comes from the line basis.

Good day. Please go ahead.

Yeah, Hi, they want a please help me reconcile your guidance for the next year you guide at on a blended do that 96% growth wonderful.

Oh.

I know, it's which is actually below consensus I know that.

Yes.

Oh, what can you give us more color with how different lines for growth and wants to seek a question at all and this would be about loss.

You do report I think he and John.

Great. Thanks.

So a mine understanding that you should be reporting a loss on growing the basin.

As you say sale should grow that I could you didn't have any line, which should somehow.

And just those that having your line is it somehow Oh kids in the garden.

So it's kind of two small question.

Question maybe question.

Hi said lot of those are all excellent questions on the subject of guidance.

I think.

Historically.

If you look at the evolution of guidance over the course of the years you Ondecks tends to guide conservatively. We're early on in the year add as usual, there's lots of puts and takes and so as a as corporate policy, we tried to sort of.

Start off with a in a fairly conservative fashion and hopefully deliver against those expectations over the course of the year, which we historically have done on the topic of laska, you're absolutely right on the accounting this would be accounted on a gross basis.

So whatever revenues are booked by the end users with all of flow into the Onyx PML into the consolidated revenues line.

The thing here is we have so far budgeted the lock expansion of very conservative fashion.

And if the metrics that we've set out for ourselves our proven right. We will obviously accelerated the pace of Rollouts of those laska dark stores, and obviously that would imply considerable upside to the revenue growth as well. So we again, we just I want to emphasize that we want to seek a very conservative approach.

To the outlook and include only a fairly small number of convenience stores and this in this outlook.

To answer your question.

Yes, that's very fair enough and disclose what kind of conservative number you have <unk> docs stuff we have not.

Okay that we have no my seven.

Oh My second question would be on Battle that I think from what they should from your performance I may have missed that is that a about net net income decline if not all kind of investments in yandex market.

The net income decline would have been only 5%.

Well, that's kind of common type.

At this time.

So.

If you exclude yandex market losses, which were quite considerable and in the or adjusted net income line.

We do.

Obviously recognize about 50% of those losses and our joint venture partner recognizes the other the other 50% of the losses.

And if you excluded those than Q4 adjusted net income would have been down 8%.

8% I quickly to calculate person and I'm getting 8%, Okay. I was critical to Lincoln at 5% about them getting at that Alan.

Point 8 billion losses Yandex market in Q4, you said alright calculation.

I have to double check, but at ballpark it sounds probably a reasonable.

And you can you may recall, obviously the Q4.

Yeah.

That's it was exactly my question. So Q4 dawn to stands at low with this might be seasonally high is that in Q1, correct. When you see because of seasonality.

Correct.

And if you allow me very quick question I haven't I have missed and then going on right. If you have disclosed.

Can you help.

[music].

Sure the Zen right Xin run rate was 8.8 billion rubles.

And it was growing 49% if I remember correctly on a year over year bases in Q4.

Thank you so much better.

Thank you.

Thank you very much once again as a reminder, it starting one last question over the phone today and ma'am. Please just ask one question and a follow up question.

The next question today comes from the line of sees a T. Rowe from Bank of America. Please go ahead.

Yes, hi, thanks for allowing me a follow up just wanted to as you answered the question on homes and can you. Please explain what drove the.

Besides just like who don't in a in revenue growth and then I have the question just wanted to make sure on the adjusted EBITDA, which you which reported.

Does exclude the a professional fees, which were paid for de <unk> restructuring for the capital structure. Thank you so much.

Hi, Cesar I didn't understand the first part of your question could you just repeat that.

Sure the what drove the a this leaves only in a in a ins and revenue.

Well it grew 49% in Q4, it grew 59% on a full year basis.

And we expect that in 2020, it should grow in that same general range of call it 50% to 60% and on a full year basis.

And so yeah and so this you know if you think about slowdown obviously it is quite large already.

It's about 13.8 a million daily average users.

They're all spending in excess of 30 or 40 minutes per day on the on the service and so.

Clearly.

Going forward.

There are significant opportunities to accelerate that growth, but we still have a lot of work to do and once we.

Once we're able to do that I think we can for example, integrating it into our main search app and our other search properties.

Make it richer make add video and so on a week.

I would say, we're very excited about the prospects of zone, but it will take some time.

And then on the professional services again, I just want to be very clear.

822 million.

That was professional services was excluded from adjusted EBITDA. There's another 800 million up one off payments that was included in EBITDA and I can you know sort of repeat what I said before they were kind of recognition of the contribution of certain team members. During the corporate restructuring efforts there were certain one off payments to distribution partners.

They were investments in educational products and there's some other items that were less significant but all in all this was up about 800 million and total.

Thanks, so much of the merger is that clear.

Yes, because so much.

Thank you very much. The next question today comes amount of Catherine O'neil from Citibank. Please go ahead.

Hi, Thanks.

Yeah, I just want to.

It's possible to talk about the losses within the media division and especially for Twentytwenty given some of the content deals you've talked about and say, whether you think the media services could benefit from the pre installation legislation that's coming.

Hi on media services most of the investments are in content, we are acquiring rights to professional content from a number of domestic and international content creators I think one of the deals that we highlighted in his prepared remarks well.

The deal with the BBC.

Our estimate of total losses in the media services segment in 2020 is to be roughly on par with the total losses in 2019.

In 2019, we lost approximately 2.2 billion rubles and media services on about 3.9 billion or revenues and we expect to continue to strongly grow the amount of subscribers and media services. So we finished the year off at just over three and I think just last month, we already passed through.

The point 3 million subscribers and this includes both subscribers.

Two yandex music as well as a young index, a video or came up with <unk>.

And and do you do you have any thoughts on what the.

The music and so it it may decide if this could benefit so from a pre installation.

Oh, I'm sorry, yes.

And it's going to coming today.

I think it's too early to tell them and which frankly frankly don't know.

Okay. Thank you.

Thank you.

Thank you very much the Nick's question today comes from the line of that Dave Let Chin from would encourage please go ahead.

Hi, gentlemen, so I just want to ask.

A question on the.

Regulatory initiatives that have been over a couple of times, but in more broader term. So the new government I mentioned several times that we'd like to engage the leading tech companies in Russia.

Promoting various beaches health services.

So I'm just curious if you have had already any contracts with the new government and also which particular segment do you think.

Get additional.

Yes.

From just switch from various initiatives such as the free data traffic or.

Maybe all the initiatives thanks.

Hi, Eldar.

I would say that.

I've been a number of initiatives, which I think have been aimed at.

Sort of addressing various domestic players and supporting various domestic players.

In Russia.

You mentioned, a number of them and Theres, obviously, a lot more and we're obviously in constant contact with legislators and we are always trying to be constructive we want to ensure that.

Whatever new legislation comes into force is appropriate that it's a in the interests of consumers that it works to level, the playing field and if you recall a few years ago, we led globally and effort to.

Open up the Android platform.

And where we filed a case with the federal anti Trust service in Russia.

The result of that case, which you know a few years back seems surprising but today seems like very much ordinary course was the creation of a choice screen for search on the Android platform and interesting. We've obviously seen now many countries around the world follow in those footsteps and create a choice screen type windows and Android.

In order to level, the playing field and open up the chokehold, if some of the platforms a technology platforms that exist.

So I think Thats the journal global landscape and I think that a in many ways, sometimes Russia is ahead of the curves.

Thank and maybe just a quick follow up on that.

The subject of you'll potential merger acquisition of these local Texas company visit.

If theres any update I know you I think you filed a second application like could you give us some update.

[music].

Yes, So look I think we're very excited about the visa opportunity we think its.

Beneficial to consumers in the regions, especially it allows us to take our.

Technology platform that Weve developed inside of Yandex taxi and bring it to the regions to benefit both riders and drivers.

The case is a pending approval, we continue our constructive dialogue with the F.I.S. and providing them with additional materials for weighted and balance discussion.

Thank you.

Thank you very much the Nick's question today comes from the line of Carol Penryn from Renaissance Capital. Please go ahead.

Yeah, Hi, everyone. Thanks for taking my questions I get to police Firstly, just a follow up on your search and portal margin guidance. I think you mentioned to you expect fled dynamics in 2020 I'm just wanted to clarify does it reflect any potential positive impact from you legislation.

The second question is on the full departing merriment could you elaborate a little bit on this what drives drove the impairment I'm just interested in what was it business specific.

Related to execution or was it because of a worse than expected fundamentals of the of the business model basically thank you.

Hi, Carol on the question of impact on margins again, we tend to take a conservative approach with guidance and so obviously, we did not bacon.

Any benefit from any potential changes and alleged legislation with respect to market share with respect to traffic acquisition costs.

Or anything else and on the food Party question I'll hand, it over to you've Guinea, the CFO of Yandex taxi segment to answer that.

Hi, Carolyn well you know it's actually.

What happened is really change of strategy.

And the that required from our auditors that write off because Oh, yeah, you know the youngest chef.

Longer continues as a separate business, but is in fact ruled in into overall each business and you can find their products. If you go to our left or region. There have you will see their products and integrating the people in some of the production facilities that they've had into the lofgren each business, but unfortunately as it no longer.

There continues as a separate entity.

We had to take a write off.

Okay, great. Thank you.

Thank you very much a the next question today comes from the line of Eagle controls from gets from Bank. Please go ahead.

Oh, yes. Thank you very much just two quick follow up question on the Oh right showed in business. If I mean, if I heard you correctly, you mentioned in the Gimi and the business has increased by 47%.

This quarter.

All right indication of the Oh, the absolute sides of the running rate Gvhd.

Hi, Chipping business. Thank you.

Hi, Yes, we mentioned in her prepared remarks, but I'll repeat one more time.

The G.N.V.

Was six point.

2 billion a ruble.

Yes.

Dollar size $6.2 billion on a run rate basis in December 2019.

Okay, Yeah, Saudi for reputation there was another call I'm all the companion. Thank you very much.

No problem.

Thank you very much. The next question today comes from the line of and I could the Teva.

From Alfa Bank. Please go ahead.

Oh, yes. It was up and then thank you my question that he's on the destination.

So both.

Yup.

You know on the consolidated level and the Pepe.

Keep it sounds show a kind of pretty shallow continue keeping and my question is.

Mostly.

It's a relating to your approach to the pay somebody might they be so the you need to continue holdings approximately 25 [laughter] dealing with all both on the balance so most of the yes, let's contributor.

Pull into a joint venture creation, so just wanted to.

Well you your comments approach and a walk how could you expect to to use this cash [laughter], so that because oh segment looks like self see something in terms of a passion.

From my right hand income in this month.

So what would be them the main that he's on supply and when a this cash could this them thinking.

Hi, Adam I'll try to answer that question, so you're right that most of the cash that appeared on the balance sheet.

Your next actually at the moment of the combination of Yandex taxi and Dewbre businesses.

It's still there, which obviously reflect the sort of the excellent.

Execution by the team.

As they've obviously growing a sizable food type business as they built a self driving car efforts, which have now achieved two mill 2 million miles of self driving on public roads in Moscow.

So I think thats, all very impressive I think going forward, there's a number of businesses that you.

Your next actually May still expand into.

And we always look for new opportunities to create shareholder value potentially ondecks lasca could be a large investment idea.

Some of the cash.

It would be used for the result acquisition once that is approved by Fms.

So I think we feel good about our cash position, obviously, having a rich parents and in our case Hooper and Yandex is always good so that we can always inject more capital into yandex taxi if necessary.

Okay. Thank you [noise].

Thank you very much a we have a follow up question here from slot dig Tyrus from Goldman Sachs. Please go ahead.

Yeah. Thanks for the follow up a question on loyalty program younger plus any you see shows that we introduced recently or any plans for the yet ahead on that side. Thank you.

Hey, Slava so yeah we're.

I would say of of all the things at Yandex that we're excited about this is a one of the top three and along with design and taxi and self driving cars.

I think the reason that we're excited about it is obviously draws consumers into the ondecks ecosystem.

Draws the men by getting them to use our products and services more frequently.

And to pay us in a subscription basis, obviously as that a number grows in terms of size. It provides us with a much more stable revenue stream.

And one of the reasons why we are focused on investing in media services and specifically in video content is that we plan to get more and more people more of what they want so not only music, but also video also discounts on yandex taxi discounts on drive space and <unk> online cloud storage free.

Shipping on be route and so on so.

Almost all of the subscribers.

I mentioned, the 3.1 million Yandex music subscribers, almost all but not all also subscribers to yandex plus and over time, we plan to grow computer growing this number and as I as I mentioned, it's already grown by about 200000 subscribers in the in the first month of this year.

Okay. Thanks, good luck.

Thank you very much in the last question. So they can add another follow up question here from the line of let me add this follows from VTB capital. Please go ahead.

Oh, thank for taking my follow up question, if basically on advertising <unk>. They have been fun media reports that you're shifting your strategy and advertising and working with advertising agencies in particular.

And to you prioritize traffic to your video platforms and too young to give them a I'm maybe left priority to search in working with <unk>. As this could you comment from these I mean, how do you expect your stretching the theater to develop a baby how it can help you reignite growth.

In addition to what do you have fed already [laughter].

Yeah.

I will admit that just see we're on.

So Matt comment about changing.

And the landscape on agency side.

<unk>, so as we see no younger than direct is becoming more more more commoditizing.

And therefore are we seeing does that to the new like blended average commission that shouldn't be couldn't be paid on that couldn't be decreased on the same time, we are developing new products for advertisers and.

Coleman owned that market agencies are getting bigger commissions born you brought a new products and to the changes that we had made a they are reflects as is common strategy that anaemic platform usually have.

Okay. Thank you very much.

Thank you very much there no further questions over the phone at this stage. Please continue.

I just look lets speaking thank you all for joining our call today, please feel free to recap a with questions.

Well a yard.

Tim a and happy Valentine's day, Tampa Atlanta, Thank you bye.

Thank you very much they does conclude the conference for today. Thanks for participating you may disconnect speakers. Please standby.

[music].