Q4 2020 Yandex NV Earnings Call
Ladies and gentlemen, you're currently on hold for today's conference call. At this time, we are assembling today's audience and plan to be underway. Shortly thank you for your patience on please continue to hold.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter and full year 2020 financials as a let's call. It I must advise you. This conference is being recorded today Tuesday, the 16th to February 'twenty 'twenty, one we would now like to hand, the call over to you for a speaker today.
Uli Yoga, a similar Investor Relations director. Please go ahead.
Good afternoon, and good morning, everyone and welcome to Yandex fourth quarter 2020 earnings call.
Can find our earnings release and a supplementary slides now on a younger bedside.
A key speakers on our call today to go on hold ever done a deputy Chief Executive officer than usual acre, our chief Executive officer of Yandex taxi and Greg a bulky, our chief operating and Chief Financial Officer, He's getting a syndrome, Chief financial officer, Yandex taxi will be available on the Q&A session.
I'll I'll quickly walk you through the Safe Harbor statement. The last remarks that we make during the call regarding our financial performance. Congratulations may be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially from more information. Please refer to the risk factors section of our most recent annual report.
On form 20-F filed with the FCC.
During the call will day for them to a certain non-GAAP financial measures you can find a reconciliation of non-GAAP to GAAP measures in the earnings release, we published a day and now I'm turning the call over to to go on.
Thank you Uli and thanks to everyone for joining a couple a cold stack in Q4, we continued to focus on deepening the integration between our businesses from developing cross service products to strength from our platform and export is one of the most important pillars in our ecosystem strategy. The total number of subscribers, which six eight.
At the end of December with a strong momentum continued into this year on our subscriber base is now approaching 8 million, including over wanted me on from Texas.
We're very encouraged by the results from the upgrade on a program or with a introduction of cash back in particular, we have seen on improvement in conversion from trials to paid subscriptions as well as a bedroom a cool service usage.
Also see that the average spend increases once it gives a subscribe to yandex plus for example, the JV generated by a plus member on Yandex market marketplace is on.
<unk>, 25% to 30% higher does that for a little customers. We believe other benefits of our subscription model will be in the areas of customer retention and customer acquisition costs.
We plan to further expand the kenworth programs to other services from this peak Yandex eats a lot.
As a part of a kind of a program.
With that let me walk you sort of a key highlights for Q4.
Starting with equal force internally, we see equal more as being a much more than just yandex market.
12, a marketplace.
Also includes GLA of our eagerness of a business loss as well as essentially a related JV of Yandex eats.
We believe this better reflects the index overall export or to ecommerce.
Therefore, a more comparable to the results of our peers.
Well, we were pleased that our total corporate G&A grew threefold in 2022, or a 56 billion rubles and specifically in Q4, we saw year on year a growth 127 per cent note that it doesn't include <unk> that goes through Yandex market price comparison platform, our logistics services, which together.
On the road, calling for another commodity so it could be a little rubles.
What are you on this market Q4 wasn't a fourth quarter with price comparison, a marketplace operating as a single class for under one brand.
A rebranding per se as well as we've successfully moved our existing buyers and merchants.
Your platform.
On the same time as we expected this was a transitional quarter, where customers were getting used to the new interface. We can margin really slow down organic growth during the holiday season.
This effect was temporary and the market January growth Reaccelerate in early 2021.
Despite a rebranding and wherever it a limited marketing support.
Most of a last year the number of active buyers increased by 2.4 times and now over six millet.
Our assortment has expanded by more than three times on a per reached 2 million skus.
We have launched on demand delivery, a o'shaughnessy energizing the yandex market, who do you have a capabilities of yandex loved the service or force 15 to 30 minutes delivers to a door and is now available to all users in multiple parts of some feature a book a need an awkward.
Integration with Yandex plus is also deepened.
<unk> to catch but most of all of a plus subscribers get food delivery on their orders above 700 durables in January of this year, we decreased our commission for merchants, which are now the most attractive on the market.
On the second half of 2020 will lay the foundation for the integration of a market with although a businesses 2021 will be much more about fast growth more active utilization of merchants from the CPC to CPA model and also expanding our logistics infrastructure.
Moving to a search and portal.
Our total sort a share reached a new record a 59 seven per cent in Q4 would you represents a photo of a 40 basis points increase from Q3 and a.
220 basis points increase year on year.
Search has been key driver behind the recovery and advertising revenue in Q4, a big CPA model is also gaining traction amongst small and midsize advertisers with a launch in Q2 and at a.
Already called for almost six per cent of total advertising revenue as of mid February and over 10 per cent per physical book within the Yandex advertising network.
For 2000 to enter a one hour priorities include a video PCP a subscription model for SME clients. We believe this initiative will helps us to maintain advertising revenue growth at or above the dynamic of a digital marketing to Russia.
We're encouraged by the trends we are thinking.
Their audience has reached $20 3 million users.
51% a year on year users consistently spent over 40 minutes per day when our platform.
Three per cent, a we'd use over video and a.
Addition to a solid user engagement, we have seen revenue growth of recovering to our pre COVID-19 trajectory in December Zen revenue reached 13 point, a 1 billion rubles or an annualized run rate basis growing 49% a year on year.
Major services with already a these cuts have a progress with yandex plus but another important milestone for the team was achieving more than three meal and a viewing subscribers per month as of January <unk>.
Just on our internal estimates we believe this makes us the leader in the Russian Ultra deep market had a bolt EV on local.
Finally, a couple of words on cloud the business continued its rapid expansion and reached an important milestone one below a rubles revenue 2020 growing four five times year on year imports.
Importantly, these impressive revenue growth was driven by both customer bases exposure on higher usage per customer.
December we had approximately 15000 active users.
A number of paying customers increased 40 per cent compared to December to close a nike to almost a thousand while the average check grew 180 per cent a year on year to.
To sum up we entered 2021 in a very good shape with a diversified range of services.
Our advertising going to ride hailing businesses are likely to gain from that is a basic economic recovery.
Also expect a maintained solid growth momentum in services that have benefited from the pandemic, including media services will deliver a logistics E. Commerce. We will continue to work on the further integration of services our platform, while exploring new opportunities such as Fintech and.
And with this I'm, turning the mic over to Daniel.
Thank you to go on and Hello, everyone.
1020 wasn't a truly transformational year because it takes a group as we extended the you on our core ride hailing service in debt.
Other vessels as a result of our efforts I mean, a finishes as children, yeah with a diversified portfolio, which in addition was there anything in series with a food and a grocery delivery b to C and b to be logistics as a start shooting.
This information and supports a soda as revenue growth.
Just a 4% year over a year in Q4.
Oh, a 40 percentage points of this growth was driven by a new businesses, a lock and logistics, let me comment on the performance of each business day.
I've had an exclusion logistic citizens was effected by the second wave what was a pandemic has a number of COVID-19 cases in a restaurant cause a significant thinking before.
On tour is deferred to implement additional restrictions.
Well this restrictions will not a severe as in the United States and some European countries, there's too as far as the fifth our extending across a range in Q4, right and Jamie are up 17% revenue grew 15% here over a year, what adjusted EBITDA OLED business group a.
A 6% on the back of multiple optimization into southern twins.
Therefore, a evidenced over exit in total to 55 per cent or was it totaled 700 revenues versus 74, a year ago.
Let's just use a became a key focus here.
On a full year basis revenue contribution for logistics was not that material.
It accelerated meaningfully as a thousand 20 progressed.
Of course, a bad business.
As a result in December Logistics Center, a license round range 55 million delivers.
With a continued to perform very well yandex eats our food delivery services from a state that's an acceleration of year over a year gross sales or.
Or the one standard 18 per cent. She can cause one kind of a 37 per cent. While the revenues were a 171 per cent for over a year before.
A copy grocery where we deliver groceries directly from a food retailers start to Republicans have either in Q3 2020.
And those one offs a driver on CV growth and go for.
As a ever a check on groceries is approximately 40% higher than in the restaurant.
December a grocery contributes a low teens or so.
You eat often deliveries from the winter it they'll change.
That sounds food deliveries, excluding the growth of the orders also show your or your groceries acceleration and all of a century every day.
Despite the high base in 2022 fueled by the pandemic useful it's a must have had a double digit growth in all of those into sales in 'twenty one.
These grocery all those are contributing.
With a growth.
Left on our express wants to grow CIT to do a cirrhosis did he was a book with 1 billion rubles, either revenues or 18% of text a group's total income for.
Sequential growth rates and Cook book, So there is a compare to a course sleep a.
A lot continues through the year 200, it sounds deductibles, while adjusted EBITDA loss was a services has been a constant and moderating.
However, yandex approach the grocery is beyond just a lot of a country be grocery a ofer you yandex.
E Commerce marketplace Yandex market, because a significant portion of <unk> being generated but from a synergy which expanded in 2020 compared with 2019.
In terms of that we start to look at all of our grocers initiatives as a just.
And businesses.
Alright. It took on provided our total a congress 2020 consistent of Yandex market marketplace, a lot of countries across it.
It's a narrow to a just food E commerce the aggregate G of our user growth Lufkin and marketed from synergy categories. Just approximately 24 billion rubles in 2020 and grew 366% year over a year.
What really makes US one was a largest if not sell a larger equaled a foolish deals and as a country and we don't intend to stop a here.
Of course, there's a tail is an enormous market opportunity will be well positioned to become a leader and penetrate into as a consumption scenarios, we use a variety of our other services.
At the same time, we defined our opportunity for unit sales growth and bear interest at Columbus markets from the Russia, We believe that our core addressable market is a over a Russian just a market reach in 2020 was approximately a $520 billion no class war sensor into a market in the U K basically.
Overall, a Russian there's still a market is highly fragmented a cent per win but because there is a clear trend towards on that well. We have just a few high quality corporate escape, a botox and there's a shift toward a lap.
Relief via a one of such players and you'll be focused to scale up our presence on this market and crews into a region.
Turning to the regions as you know are a separate you announced the acquisition of selected assets or visit group includes a call centers and logistics business losses.
It's a transaction that goes beyond just try to hit on and you'll help as to expense all as a cirrhosis as a region.
There's also a beneficial for the regional development of E Commerce, which is an important part of the other Savage is a acquisition will allow us to significantly improve customer care and diligence on a base of existing call centers or fees.
Because you know a very efficient.
Assuming a successful integration, we expect to reach a real does a supply demand per phone and offer drivers a variety of options to earn money on just right here.
Assuming completion of the integration in April we expense the seas and book the of mid to high single digits incremental to all of a creeps in GB on annual basis in 2021.
And turning the mic over to Greg.
Thank you Daniel and Hello, everyone.
A happy with a Q4 and fiscal year 'twenty 'twenty results, which yet again demonstrated the resilience of our business model and our financial discipline.
A few things to highlight firstly, how diversified our business has become a non advertising segments accounted for almost half of our total revenue for the full year of 2020.
Five years ago over 90% of our revenue was from search and portal secondly, searching portal is clearly no longer the only business segment generating cash flow, allowing us to fund a new investments into attractive opportunities.
Ride hailing generate solid margin is now the second largest business within the group with a very sizable contribution as a group adjusted EBITDA, helping us to fund our initiatives and through Tech and logistics.
Now, let me walk you through a Q4 performance and share the details of the latest trends across our businesses.
In search and portal, despite a more challenging macro backdrop on Q4 searching a pull revenue growth improved to 8% year over year from 2% in Q3, our ex Tac revenue increased 14% year over year, compared with 8% growth in a third quarter.
This solid growth was supported by advertising revenue recovery in our attack optimization efforts as well as by the strong performance of our devices business.
So far we're seeing that met them has continued in Q1 to date industry wise. The dynamic was similar to Q3 with a best performing industries, including IC, a telecom FMT G financing insurance and health care, while the worst performing a still travel domestic services and real estate, although we started to see gradual recoveries at all.
Autos is a supply demand balance is normalizing there.
Attrition portal adjusted EBITDA margin was 46, 6% in Q4, 2020 importantly, our adjusted EBITDA margin, excluding Iot came to a 54% up 400 basis points year over year, despite investments into Yandex, plus and add technologies. The margin was supported by tax optimization improving efficiency.
Tight cost control.
Moving on to taxes.
Taxi group revenues increased by 54 per cent year on year, driven by the strong performance of our food tech business, including blocker and needs as well as logistics.
Revenues, a ride hailing and food Tech services grew 65 per cent year on year. Despite the second wave of the pandemic, which put pressure on mobility and on a ride hailing demand during the important holiday period in December a growth of the ride hailing and food Tech segment remains solid and even slightly accelerated compared to 64 of a set in Q3, just because growth was supported by an acceleration of revenue.
A growth in each as well as a continued rapid expansion of lock up.
Adjusted EBITDA on the taxi group was a 1.8 billion roubles in Q4.
Slightly higher than Q3 in absolute terms, it's important to note that our adjusted EBITDA and a ride hailing segment, excluding logistics increased 97% year on year for the full year of 2020, despite many challenges and revenue slow down on the back of Covid.
Ride hailing also remains the key funding source for the development a food Tech services Yandex eats performed very well and accelerated revenue growth, 271% year over year on Q4, the segment posted a small adjusted EBITDA loss in Q4, which was primarily a result of the under supply of careers at the end of the quarter. The combination a very high demand for food delivery.
She serves as harsh weather conditions on border closures all resulted in significant increase in delivery cost per order.
Yeah Index drive again delivered positive adjusted EBITDA in Q4 for a second quarter in a row.
Turning to Yandex market.
The IDEXX market revenue increased 17% year over year, a Q4 price comparison revenue growth accelerated sequentially to 29% year over year from 23 per cent in Q3.
Our marketplace orders more than doubled despite the rebranding efforts that we undertook in Q4 as we end of life, the Peru bread and rebranded it as yandex market.
Despite solid orders growth GDP growth slowed down compared to Q3, primarily due to lower a obese.
Revenue from the marketplace was also affected by our success in shifting to three P model with 66% share compared to only 30% share a three peat in Q4 of 2019.
Q4 was in many ways, a transitional quarter for us and we're already seeing meaningful reacceleration in growth a JV in January and February month to date.
The adjusted EBITDA loss of Yandex market amounted to 3 billion roubles in Q4 up from 2.9 billion ruble loss in Q4 19 now on to other businesses.
Media services delivered another quarter, a strong performance with revenue growth of a 118% year over year, while subscription based revenues more than doubled in Q4, reflecting strong subs additions and a growing number of paying subscribers.
Growth remains solid in a quarter to date the level of investments in Q4 was $1 1 billion rubles, which is comparable to Q3 levels. We.
We continue to invest in quality content, including our original series, which helped us to achieve a leading position in the OTT market by the number a monthly viewing subscribers.
And on Classifieds grew 13% year over year on Q4, just slightly under 16% growth in the previous quarter, a supply chain challenges that led to a depleted a car stocks a dealerships continued to weigh in on a piece of a recovery.
However, we've seen a reversal of this trend since December with revenue growth in January a returning to the high teens.
Spec the market situation to normalize by the end of Q1 'twenty 'twenty one.
Stability wise, we achieved a record high adjusted EBITDA margin of 33 per cent as a result of positive operating leverage and a number of cost saving initiatives.
Turning to other bets on experience.
Revenue increased by 56%, primarily driven by strong revenue growth in zone for the recovery and Geo as well as a rapidly growing cloud business, which delivered over 300 per cent revenue growth in Q4 <unk>.
The adjusted EBITDA loss amounted to 1.5 billion rubles in this segment on the back of improving profitability in G. O is that on cloud and growing investments in development of a self driving technology and education platforms. Finally, a couple of words on our outlook.
Assuming no further escalation of a pandemic, we expect our group revenues in full year 'twenty 'twenty, one to be between 305 and 320 billion rubles.
He believes a growth of the online advertising market will likely be in the mid teens in 2021, and we expect our search and portal revenue to grow at least in line with a market.
We expect a stable year over year margins in search and portal, excluding the effect of a device business.
We expect both our yandex market marketplace, Jimmy as well as our total E Commerce G NV, including laska as well as grocery JV generated by Yandex eats to grow two and a half times in 'twenty and 'twenty one despite the high base in 2020, where.
Where we saw a normally high demand during a lockdown in months.
To support the growth, we will significantly increase investments with a focus on logistics infrastructure, a last mile delivery and improving the customer experience.
We anticipate our capex to remain in a low double digits as a percentage of a total group revenue, including planned investments and a new campus. Excluding campus construction costs, we expect our capex to sales to be in a high single digit range with this I'm turning the mic to the operator for the Q&A session.
Thank you, ladies and gentlemen, if you would like to ask a question. Please take a by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow you a second to reach our equipment. A please limit yourself to one question and one follow up question and Thats again.
A one to ask a question.
And we take our first question from Cesar, Taiwan Bank of America. Please go ahead.
Yes, a thanks, everyone for the call and the opportunity to ask questions I have two slides you've got a full up if that's okay. So the first one would really be on the on.
On the odd trends a can you please repeat a what youre seeing in a each one and how that compares with a weak Q4, and maybe if you'd December was a particularly stronger and it does it does a pattern of a bathroom once a month comp a as we as we move towards a 2021 and then the second question.
Can you please help us understand better on I know you mentioned some elements on the opening remarks, but just on the E commerce business on the on a slow down and a and the trends that you're seeing from.
A in Q1 and how long do you think these a integration a issues.
Issues that you're that you mentioned a will.
Well. Thank you so much of a help.
Hi, Cesar it's Greg. Thank you very much for your questions let's.
Let's start off a with the advertising trends that we're seeing a so if you look at the ex Tac search and portal revenue growth a.
We're seeing a January is a more or less on par a.
With a what we saw in November and what we saw in a quarter overall, we definitely did see a slight acceleration in December and some of the budgets are a were pulled in a.
But overall I would say the trends, we're seeing are fairly solid.
And then turning to your second question in terms of E. Commerce. So Q4 is very much a transitional quarter for US I mentioned that we end of life a the previous brand from a marketplace Bureau, we shifted everything onto the Yandex market platform and began a transitioning both to merchants and consumers to this new brand.
As you know, we saw a solid trends and G M B's a.
But we also saw the following we saw a rapid uptake in three P, which obviously translates into lower revenues since we only recognized in a commission portion.
We also saw lower a obese, which I think was potentially seasonal.
What we're seeing in Q1 to date is we're seeing a pretty strong re acceleration and a yandex market.
We're actually quite happy with the performance that we're seeing that gmb's are growing.
The platform a stabilizing a its a number of a users on the platform is growing significantly so I'd say overall, a we're pretty optimistic.
Optimistic about the outlook for the segment.
Thank you the net.
Next question comes from Slava <unk> of Goldman Sachs. Please go ahead.
Yeah. Thank you very much for a call. My first question would be on self driving car can you. Please share some recent data points over the key milestones a.
That you managed to achieve from the self driving division and also what you're most focused on in 'twenty 'twenty. One a is it's increasing a number of miles driven some geographic expansion or maybe a potential partnerships. Thank you.
Hi, Slava on S. D. G. Some data points is we currently have 160 cars autonomous cars, which are a spread between Russia, USA and Israel.
We've accumulated a 6 million a autonomous miles on public roads.
We continue to improve in terms of a you know a disengagement rates, we're seeing and overall I think we're very happy with the progress there.
We've also been investing in our delivery robot called Yandex Rover, a obviously that is a.
More on a testing phase now, but it is delivering in parts of Moscow, and as well as Annapolis and cause on.
And you may have seen them, maybe on Instagram, maybe on Facebook videos that people post of the delivery Rover actually delivering food for both Yandex Lapka in Yandex eats a and I think that's an exciting opportunity for it and at the same time, a we are exploring various partnership opportunities a width as D. G.
And a both a auto Oems and tier one suppliers. So you know I think this is a a business that.
That is progressing.
Progressing well I think we found more interesting applications beyond just self driving their and a I think we're very happy with the progress.
Okay. Thank you and my follow up would be a on E commerce.
So, but it's been more than six months. Thank you a deliberate strategic outlook on the segments, a with that acquisition of a bottoming stake can you share maybe the update a division over the possible with profitability as a leadership targets a or any other learnings that you've made over the last a half a year a have your views changed any halcion's them, especially taken into it.
On the competitive development.
Yeah.
Yes sure so.
We've been actually kind of.
Pulling on the various assets that we have and we're looking at the picture.
Today as one that is much more complex, where we're serving the consumer with a range of a different products, we're able to deliver groceries to them a within 2030 minutes using yandex Lufkin, we're also able to deliver a groceries to them from a retailer's kind of using the instant Carte model. If you will a within yandex eats and then.
Yeah on the market itself, which has a much more watch wider selection of goods approximately 2 million skus as of Q4, a which we attempt to deliver a next day or beyond a I think we have a range of assets that we can bring to bear to attack this problem.
And you know the assets that we have within Yandex, a which I think should help us a.
Achieve leadership position E commerce on the following obviously, we have a large and growing base a subscription customers of yandex, plus all of whom a receive free shipping a whenever they spend more than a 700 rubles ethics market. So that's 8 million consumers a that we can sell a and deliver yandex market products too.
We currently have about 30 million transacting customers per month across our various platforms, whether it's yandex go or Yandex market are you on the class car Yandex eats.
Also we cover.
Something like 20 million consumers 20 million adults with 15% to 30 minute delivery from you on the class of stores, which provides us with this last leg a.
Off deliveries and so what we've been doing is we've been actually a offering consumers in yandex market. The following use case.
You can actually get something deliver to you a.
In Moscow and St Petersburg, and usually a the very next day.
And anytime you need it so instead of having to coordinate with courier or having to go to a pick a point.
Or a pick up blocker, you essentially click a button a inside the app and a career is dispatched to U a and brings it brings you a something within a 20 or 30 minutes and obviously at that point, we try to upsell the consumer a with more products more groceries from Yandex lockup and I think that's getting a lot of traction and obviously, we have this last mile a which we've been.
Up with Yandex taxi and Yandex logistics I mentioned, a number of deliveries were doing a logistics and that business is a really a growing very very rapidly with lots and lots of businesses connected to that platform.
So overall I'd say, there's a the market is dynamic the market is competitive a there's strong competition, but we are looking to invest invest meaningfully in this we're looking to spend $4 million to $500 million a cross the various a E commerce initiatives that we have at yandex, excluding yandex market Yandex Lapka.
And the grocery part of Yandex eats and we still aim a to be a top player in this market in a few years.
Thank you. The next question comes from well you're on a line of Australia.
Australia of UBS. Please go ahead.
Hi, everyone. Thank you all and congratulations on good numbers.
I just wanted to discuss a couple a high level question. If I may firstly on the basis on the guidance a presentation and thank you for providing the guidance a toe.
At the moment the Covid agitation in Russia is quite favorable share all the restrictions are essentially be lifted them would it be fair to say that a the guidance. This time is not really super Conservative if it's based on the card and vitamin concerns.
Yeah, I think the guidance is based on the situation as we currently see it.
So a new like third wave or a <unk>.
It takes them a game, that's just balance it tastes good.
Correct, I mean, I think if things get better I think theres upside room, and if things get worse, there's downside room I think the guidance is the current view of the management as we as we sit here today.
I'm fine. Thank you and secondly, what does the current what is the kind of thinking about fintech initiatives. What are the options a management team is considering a.
There were a local discussions about yandex buying some sort of a bank the game and how far that's Oh My response from Cowen.
Yeah look on Fintech. This is there's a lot a proprietary work that's taking place now we are spending a whole lot of time on it.
It's one thing that we absolutely feel like we were going to do a we think it fits very well with all of our transactional products with our E commerce products.
And with a just the vast ecosystem that we've built a.
I'm not going on yeah sort of speculate on a specific.
Rumors in the market, but I would say that.
If we need certain licenses and we will go out in the market and acquire them a two sort of jump start the process.
A wet and sort of talk to you when it's appropriate.
Thank you the net.
Next question comes from Miriam <unk> from Morgan Stanley. Please go ahead.
Thanks for taking my question. The first one is on Yandex market I apologize. If you covered this in the prepared remarks, but just wanted to get a sense of how we should think about the EBITDA losses. This year on E. Commerce is it reasonable to take the full Q run rates for this year or should we as human on the step up given what you are saying earlier about introducing free.
A live free and also reducing a matching commissions. Thanks.
Hey, Miriam I covered a little bit, but I'll just repeat it.
You know what we what I've said in the end and and the answer to a I think slava question on E. Commerce was a following yes, we do indeed plan to accelerate the pace of investments in E. Commerce. We're looking to spend is a $4 million to $500 million a cross all of our E. Commerce assets that includes yandex market obviously.
But it also includes our investments in Yandex, Laska, which is R 2020 minute delivery, a one P based as well as yandex eats the grocery a portion of that which is the instant card model. So across all of those assets, we're looking to spend $4 million to $500 million and we believe that that will allow us to dramatically accelerate the pace of growth.
And a sort of a.
Kind of climbed a ranks if you will in the competitive landscape.
Okay. Thanks, and then my second question is just on a smart speaker on Iot contribution I mean, it seems to be having a bigger impact on the margin, but that's a tax imposed on but just wondering how much of this was a seasonal or how we should think about the country you shouldn't like yourselves minerals had impacts on session bolt on margin this year.
A lot of it was seasonal I think it's a high class problem a.
The products are selling very well, we're getting a lot of traction both with our large speakers are the new large speakers that we put out called decision Max as well as the many all of those are selling very well and you know in total we generated something like 4 billion a revenue from devices, a and we also.
See that the unit economics are improving to that and you should.
Expect that I think those device trends to continue obviously, there's seasonality in that business as you know well a.
But we also expect that U S unit economics improve the drag on search and pull a margins should decrease over time.
And you know I think I'm extremely proud of the of the of the work that the team has done.
Where these products are they are you know clearly the market leader on the Russian market by a very very wide margin and were looking to see if there are other applications of smart speaker in Internet of things technologies beyond just speakers with things like intelligence, that's where we're also building ourselves into.
And obviously that fits very well with with a story around media services with can a poorer skin with a yandex plus subscriber base, which is a growing rapidly.
Perfect. Thank you.
The next question comes from Vladimir I guess, that's polo on <unk>.
<unk> capital. Please go ahead.
Hello. Thank you for taking my question. My first question is on your guidance for G. M D. A.
Your all your ecommerce has its in 2021, if I got it correctly it should be something like a about 140 would be down a little goes this year and a basically a 2.5 times that growth is good but this does not resolve the key issue and breaching the GAAP with your competitors, which might grow slower, but you went absolutely true.
They will be growing much faster than you. So now how do you expect a breach the a game do you a GAAP and then basically what that would be a reason and maybe which preventing you from doing this in 2021 before filling capacity and the second question is kind of related to these.
Maybe you could update a lethal people on your strategy for the development of Yandex Slop, Scott how are you going to grow with you.
Go on to expand it to the region to grow the number of a dark stores or maybe a integrated closing to yandex market. Maybe you can provide more color. Thank you.
Hey, Vladimir.
Great questions. So you got a correctly in terms of the guidance around a G M B a.
Do you expect that the G V. A both of Yandex market itself and of a E. Commerce overall, so including contributions of laughter and groceries within Yandex eats will increase by two and a half times a and so the number you provided a about 140 billion G. M. B is more or less in the ballpark right a I.
I think that puts us squarely a and a number three slot in the Russian E Commerce landscape.
Which is I think a very very formidable achievement.
In a very short period of time.
At the same time, we recognize that the market is competitive and I think our competitors a E. Commerce are a very strong and we have a tremendous amount of respect for them and you.
What we're focused on is delivering on the a customer experience and bringing to bear whatever assets. We have in this a in.
A battle, if you will and I think I listed them, a when I when I talked a slop it just earlier on.
Hopefully that answers that and then on a question around Laska I would say that a our strategy is certainly to go beyond just Moscow and St. Petersburg, a we do exploit expect to roll those out a.
And we've actually been looking to.
Spanned those beyond just Russia as well as you know we have a small experiment and in Israel and a that's showing some promise, but focusing on the Russian regions.
We are looking to expand laska. It may not be the exact same type of laska, a we me a.
Make some alterations to the model, but the premise will be the same so maybe the the SKU assortment will be a little different maybe the price points will be a little different but we do think that there is a real need for this and we also think of this as a very important part of the overall E Commerce strategy.
Uh huh.
Thank you very much.
You might see a again.
I just wanted to add you know a quick point that you know a lot of co already you know we see it as a linguistic inform a logistics infrastructure platform and already currently.
We have a left or a dark store within a 30 minute walking radius for a 20% a Russian adult population. So that's.
Gonna grow going forward and of course from where we're going to focus on integrating it into our overall E commerce and overall ecosystem.
Okay. Thank you.
Thank you once again, ladies and gentlemen.
Please press star one if you wish to ask a question. The next question comes from Lloyd Walmsley of Deutsche Bank. Please go ahead.
Thanks, a two questions are probably for Greg they're kind of related I guess first just youll that vision of connecting a year.
On the X plus with Yandex market laughter kind of how far along in the integration are you you know maybe in markets, where it's rolled out what percent of transactions are running through the Alaska delivery kind of a and how's that impacting user behavior and unit economics and then a.
The second one is just can.
Can you give us a sense of what youre doing to drive that three P mix higher in the in the market and how is that may be impacting your gross margins and EBITDA margin.
And related to that like how.
Are your third party sellers bearing the cost of a lot of the logistics or are you guys still absorbing a lot of that to drive to drive market share. Thanks.
Hey, Lloyd so on Yandex, plus an a and a market integration those are fairly fresh and those have all taken place in the last call. It six months.
In fact, the idea that a deliveries above 699 rubles will be free for Yandex plus subscribers is a very recent.
And we think that this is a big opportunity we see that those users that have yandex plus are spending considerably more on yandex market on average, we're seeing 25% to 30% higher a G M B's from Yandex plus subscribers on Yandex market.
And obviously, we're focused on a growing cross service usage through various mechanics within within our apps.
And then on a question of three P. A what I could tell you is a we are we obviously are focused on building a three day marketplace. This is you know this is the idea that we have and it's to enable merchants a its not to compete with merchants to that end, we've been investing aggressively and just recently we dramatically.
Lowered our commission a on yandex market. So the take rates are some of the most attractive in a in the market.
And on the restaurant landscape I think that probably the most competitive.
And the most attractive and a obviously three P is more favorable.
Two marketplace margins compare to one P products, a that's obvious but we're also investing heavily to attract more merchants onto the platform.
Oh thanks.
Q.
The next question comes from.
The election, a fortune company. Please go ahead.
Thank you very much and congratulations on very good results.
Well, a one question I want a task on the.
On taxi and broad a logistics business.
Specifically with dry, but we know there was a bit of tightness in the market last year at certain periods of time do you see any a third a tightness, especially given the drive when the growth in E commerce deliveries.
And a what visitation with potentially a microphone if the board is a reopening.
And if you could specify the level a subsidy that you had.
In your Yandex taxi.
That would be my first question and I'll just ask a follow up on your guidance.
A have you included and yet a.
A benefits from.
From the text my new a on your a guidance for margin for this year and a also on the cost to call. A thing that you launched a last year have you already incorporated the growth in additional head count and a this year, where you are you're still operating in a.
More cautious.
On the vitamin a and so debt script comp growth and of course in point to point to which you kind of defeat last yeah. Thank him.
A high alert.
Let me a let me take the second question first and then I'll pass it on to you a guinea to give you some color on the first question on a the margins I would say that we baked into our outlook a various things as we see them. Today I think this is a really on asked this earlier, but you know our great guidance provides the outlook as we can.
We see it and then in terms of a sort of our pieces of hiring a we did exercise quite a lot of discipline a.
And a 'twenty 'twenty on I think we're pretty proud of that a in 'twenty and 'twenty. One we do a plan to expand the piece a hiring and that's built into the margins as well as the pace of investments and various E commerce initiatives as I, just sort of covered them.
And you are getting you can take a question on drivers and borders.
Yeah, Hi, Al Dor O S K.
As far as drivers and borders on the corridors I think in Europe like a separate in a first of all in text you would see some tightness, but I think that began to reverse itself at the end of last year, a what we our experience right now is very high search pricing really related to the so to give you an unusually cold and snowy winter for Russia.
So our <unk> is growing in excess of a in extra saw where trips growth right now a if we're talking about C. P. O in terms of delivery, yes, see pure was affecting you know sort of cost per a journey delivering goes both for you now.
Our eats and other business is a was affected by Korea Undersupplies and you know the borders have been closed and of course, the seasonality there, but I already mentioned a you know again winter in Russia is cold and snowy even for US This time.
And you know that's affected the overall food delivery market, but we have seen we started to see signs that sort of normalization so currency appeal.
In each business for example is down you know roughly 15% from the peak levels in December.
And you know we expect going forward you know this is going to moderate.
Alright. Thank you. Thank you.
Thank you. The next question comes from Liana <unk> of UBS. Please go ahead.
Thank you I just wanted to follow up a couple of things firstly, the cloud business performance looks really impressive, which you can see there showing that separately as a business unit.
Highly on a yeah I think we're we're pretty happy with a the cloud business is currently progressing.
You know it grew significantly in in Q4, and we expect that it's going to grow a further this year, we expect debt approximately triple a.
In 'twenty 'twenty, one and a I think is as we get more and more traction we will likely break it out a as a business unit a inter.
Internally, it's already set up as a business unit a and you know we think that this is a a great form a four encouraging entrepreneurship at Yandex and I think it's been a very successful and all of our endeavors and we think that this will help us win and cloud as well.
Oh, great. Thank you and a good I remember.
On the first quarter of 'twenty going to cool, we were discussing a the catalyst management comp, which actually helped to the margin on search and portal.
So, let's think Woodbury a win.
In 2020, where do you plan to a diverse it.
In the coming quarters.
No.
We didn't reverse it in 2020.
We are expecting a to pay bonuses and we have a.
We have gone back to normal salaries for management in 'twenty to 'twenty, one so assuming we achieve our keep your eyes on our targets in 'twenty 'twenty, one a management will be paid bonuses in 'twenty 'twenty, one and 'twenty 'twenty, a like I said before a.
Management decided to forgo all bonuses a.
At the beginning of the pandemic.
Thank you.
Thank you. The next question comes from Sebastian <unk> of Jefferies. Please go ahead.
Hello, everyone. Thank you for taking my questions on thank you for the presentation on here.
I've got two and I'll give the sick on one of the fall off the first one is regarding grocery delivery. There has been a focus recently on building your grocery delivery offering and indeed in that regard. The latest proof point is a partnership with Midland comes on can you. Please discuss the unit economics with a dynamic school building partnerships with <unk>.
These retailers such as Metro versus building your own stores and also in that regard what are some of the key points or levers that you would look at them on deciding between offering a partnership or be a dark store.
Second one is regarding search and portal globally, we're seeing governments into force search engines to paid publishers from us.
Threats to your cost base or you don't see that dynamic at play in Russia.
That's it thank you.
Hey, Sebastian on.
On the first question. So it's a very interesting question and obviously, where we have both a one P model with laughter at a three P model, it's instant card lock, a like and Yandex eats.
I would say that the differentiation is more about the customer experience a when consumers choose to have groceries delivered from yandex eats a.
They are looking for specific products from specific stores I E. They want a specific stake from me not to work or they want a specific popcorn from Coos Phil.
So they they choose to order at their and the experience in terms of a click to each time or order completion times are a little bit longer a.
If you're a little bit less accurate because obviously you don't know exactly what's in stock at every given a minute in a in the retail store.
Because you don't have 100 per cent integration.
And the retailers themselves don't exactly know what's on the shelf.
With Yandex Laska, you're offering a smaller SKU mix, you're offering more rapid delivery.
And it's a slightly different consumer experience and I think there's definitely a place for both and we will continue to pursue both of those models, a specifically on a metro and because I'm not going to comment because we have a lot of experiments with lots and lots of different partners.
And then onto your second question with a search and portal in paying for news. So that hasn't that question hasn't really gotten a lot of traction here, but obviously a you know.
It once and once once it does if it does we will explore it and and figure out what to do with that.
I think right now it's just not.
Not something Thats, a top of the agenda.
Thank you the net.
Next question comes from Corp, as a thought of as a bank. Please go ahead.
Oh, yes. Good afternoon. Thank you very much for a presentation a very simple question.
A key IPO.
My children, a through the company's agenda. So what's a condition you will be looking for I mean in terms of the well a little business. So sexy on segments really cash.
Yeah.
I think Sam that gets to a market.
True.
Hi, Anna.
So.
I would say that a the consideration of the IPO of Yandex taxi is not on the agenda.
A we are focused on building the leading digital platform.
In the countries in which we operate and we see a ton of synergies between the various assets that we have I think the power that we have is a platform that we've built and being able a two.
To offer all of these services to consumers.
Whenever they want wherever they want is what gives us real strength and so I think pursuing an IPO is just not something that we're considering.
Okay. Thank you.
Thank you.
The next question comes from Cesar <unk> of Bank of America. Please go ahead.
Ah, Yes, hi, I'd like to ask more questions. If that's okay. The first one would be on a on Zen do you believe that a Zen is a nox is monetized to its full potential today, so I'd like to explain what they mean bad debt of course, if you increase further a number of users a and even usage a.
You can get further impressions et cetera.
Revenues will increase book.
With the current user base and the current usage that you see on Zen is it in your view monetize tweets from potential or do you think there is a significant amount of inventory, which is not used or do you think that the the pricing how scope to increase significantly. So that's the first question.
And then on the second one would be on the a on the margins are usually a Greg.
You make some comments on these calls on a book stability outlook I might've missed it but is there a is there anything that you'd like to tell us for 2021. Thank you so much.
Okay.
Sure She's a high.
On <unk>. So it's a great question that you asked.
So I would say what we're seeing with Zen is that theres, probably not a whole lot of opportunity to increase monetization in its current format. The massive opportunity that we see to increase monetization and Zen is through new formats and specifically.
It is app install ads and video within the feed and their I would say that we're investing a lot of time and a lot of effort a.
To make this a much larger business so.
If you you know if you took just the existing newsfeed and said Hey is there a lot of inventory. There that you guys are not a monetizing the answer is no but what you can do is and what we're in a process of doing is replacing some of that existing AD inventory with new formats and I think we're getting.
Finally, starting to see traction with App install ads a with a video and you saw that video is growing as a percentage of total time spent as a percentage of total time spent that's over 2023 per cent now.
And we also see that the number of users is growing rapidly.
While revenue was up something like a 49% year over year in December they're users were growing 51% in December which is increasing.
Incredibly impressive and you know currently cut a quarter to date, we're seeing we're toying with 22 million daily average users, which is just fantastic so lots of opportunities for new products within zone and we're excited about that and then on margins. A we we we said that we expect that our search and portal.
Margins to remain a at the same level in 'twenty and 'twenty, one as in 'twenty 'twenty, a excluding the impact of devices and I think to the question on a mid that Miriam asked around smart speakers, we expect that the headwind from devices should a decline.
A decline over the course of the year.
Great as devices become more profitable a.
We're no longer subsidizing them quite as much.
They should not be as much of a drag on margins.
Thank you there are no further questions at this time I would like to turn the call over to you guys seem a lot for any additional or closing remarks.
Thank you very much for joining us today and thank you for your questions. If there's any more full on.
Please contact the IR team.
Fine.
Thanks.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.
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