Q1 2021 Yandex NV Earnings Call
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You are currently on hold per day.
First quarter 2021 financial results call.
At this time, we are assembling today's audience from funds to be underway shortly.
Appreciate your patience I'm pleased for a man on the line. Thank you.
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Ladies and gentlemen, thank you for standing by.
And welcome to the first quarter 2021 for answer was old school.
I must advise you. This conference is recorded today Wednesday, the 28 of April 2021.
We'd now like to hand, the call over to your first speaker today.
Garage, a mobile Investor Relations director, Hello, everyone and welcome to Yandex first quarter 2021 earnings call you can find our earnings release and supplementary slides on that site, but you speakers on our call today are Steve.
With a again, our deputy Chief Executive officer than usual acre.
Homeless in writing business growth.
Theres, a bosky, our chief operating and Chief Financial Officer, and begin Marchuk, our VP of corporate development, you're a Guinea singer Chief Financial Officer organic sexy will be available on the Q&A session.
Now I will quickly walk you through the Safe Harbor statement. The rest remarks that we make during the call regarding our financial performance and operations, maybe you could sort of its forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially for more information. Please refer to the risk factors section of our most.
A recent annual report on form 20-F filed with the SEC.
During the COVID-19 will get referring 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 Guang.
Thank you Julia and thanks to everyone for joining our call today, where we need cars by having started the year with a solid recovery our advertising from a ride hailing businesses as well as continued strong momentum in other verticals such as media services for delivery and logistics.
We have also made significant progress executing against our strategic roadmap E. Commerce sales earlier this year as a business has been wrong by day mutual acre with a great track record in both a developing market leading services that's a L.
A list improving their profitability with a taxi book and we are already seeing great results.
Total ecommerce, including.
Including Yandex market marketplace laughter, and gross related G&A of each grew 186% year on year. In Q1. These growth has been accelerating from month to month with a highest year on year a growth rate of 199% in March despite a high base effect from condemning related growth.
In March 2020, Yandex market JV on a standalone basis.
Also accelerated to 126% in Q1 from 71% in Q4 2020, all tobacco a significant expansion in the assortment the logistic infrastructure.
Solid results from targeted investments in performance marketing campaign around the whole day weekends in February and March as well as improving the product for our consumers and merchants. We are now even more confident in our ability to deliver on our full year guidance to increase total e-commerce.
By two five times, but let me give you an update on another important initiative Yandex plus.
A total number of subscribers kept growing above 100% year on year.
Now over 9 million Yandex services continued to benefit from better integration with Yandex class and we see that our plus subscribers already generate a material part of <unk> for market taxi Ethan Lufkin shrank.
Frank of Yandex, plus a special a visible in yandex market.
About half of the JV came from cross members in a March up from 24% in Q4 2020.
On a explore subscribers for a loyal customer base, who spend more and transact more often in our services if compared to our non plus customers for instance in market plus customers generate on average more than 40% higher JV and 50% higher frequency of transactions than non <unk> customers.
We are also seeing encouraging trends in the average check as well as new customer flow for you to Alaska seems a these services going the Yandex plus category program in February.
We are investing appropriately to support as a for little girls with a yandex plus platform, including investments in the expansion of program benefits for our subscribers and targeted marketing and promotion to improve cross service usage.
Content as a majority of plus numbers to come from our streaming services.
Please can music to this point the number of a unique viewing subscribers a keener boys exceeded formula in March from two one which has further strengthened our leading position in the Russian market based on this metric.
Turning to search and portal.
Search and portal has continued to grow well and ahead of our expectations in Q1 in March 2021, we reached a record 59, 4% share on Android.
250 basis points increase for a March 2020, our total sales share also went up and reached 60% in Q1, which represents a 190 basis points increase year on year search was again, a key driver of our AD revenue growth acceleration with 18% year on year growth.
In Q1, 2021, which was supported by our market share gains and the high effectiveness of search paths as a digital marketing channel for our clients.
Key investment areas for us in debt remained media on a simplified solutions for small and midsize businesses with a lateral include a CPA and subscription models interest continues to grow rapidly.
For our large clients, we are developing highly effective CPA based conversion strategies.
<unk> optimized for a specific targeted action with a share of such instruments in our total AD revenue has exceeded 20% in capital among other initiatives, we're focused on improving our market share on Ias devices, we see an opportunity to address the discrepancy between an actual use of yandex.
As Google application on Apple devices, which was previously set by default and a real customer preferences. We are confident that targeted investment to support a distribution of our products on all of these devices will help us to gain access to war affluent customer base and to improve a installation.
Moving to debt and then continues to outperform our search and portal revenue and overall online advertising market than a revenue increased by 65% a year on year in Q1 'twenty one.
For a video a formula continues to gain a very good traction and debt.
Sir of video in the time spent has now reached 28% low daily audience grew over 50% year on year in January February and slowed to a steel sold 35% in March primarily due to the high base effect.
In conclusion, we see solid momentum across our key verticals, which gives us the confidence to continue to prioritize growth and to invest prudently into new attractive opportunities, which will benefit the yandex into loan growth.
And with this I'm turning to the mic over to Daniel.
Thank you for the garage and Hello, everyone.
I will start as a result of the tester group in Brazil provided more detail on the performance of our E Commerce business reached a begin to or.
For this year.
I am very proud of how the succor. Thank you. Thanks a lot.
So sort of recovery in our exit.
And a further acceleration in growth rate a lot.
And logistic services demonstrates a significant sequential growth, while yandex market JV have been accelerating each month.
Well listen to a market share gains.
Call a mou for in Q1, right here right grew 24% year over here and a <unk> grew 44% this significant acceleration from 17% growth in direct and Judy in Q4 ambitious even by a number a affects us first of all we have seen a continuation is a recovery or user.
Whereas a condition also helped gross a cold weather and record snowfall in Russia in January and February contributed towards a demand for accurate and sales.
Starting from the late March this year, we began to face easier year over year comps as on March 16 left yet when the election for a price.
Initial work from home measures synergy, we grew significantly faster from right as a driver under supply existing basis by a close its borders and growing demand.
Risks and the supply was also an issue as a manufacturer and not able to completely satisfy demand from our partners for a specific new models.
To ensure a high quality of service proper balance of demand versus supply low ETS and had a liability.
I have searched for fees.
Rich lip.
And there were a surprise for us and has a UV growth also impacted the growth rate.
<unk> and Kiran urgency of our partner a significantly increased in Q1 drivers will take orders on our platform on 104 billion rubles. The celerity with one third over a 200 billion rubles. They earn for the full year.
And the effective tax rate remains below a 10%.
I also want book Iraq. Despite a 12 expected acceleration of growth in March on tobacco is a little ways. Our performance in much strongly exceeded our internal expectations and all of that March 2021 run rate was two point for you can write a 44% higher than last year and well above one.
A beat and raise foundry from December.
Jewelry around here in March 2021 came in a total half a T in rubles or $6 a billion years ago.
The 9% year over year increase.
Ruble terms and up 32 per cent per 180 billion rubles, either a December 2009.
Today, we see significant acceleration of year over year growth rate as you can play a is a very at a low base right.
On a per pass and viewpoints.
Viewpoints expenses higher than a year ago onto a year CAGR basis threatened a grow in the range of REIT searches a low for just a neighborhood.
Multiple which is a major market growth mid to high teens owns a two year a cargo basis invest in mid to high strength in June.
Now for care.
Thank you Juan Yandex is a must be the towards exploration and growth rate orders grew 131% year over year, GBP, 147% compared to 118% growth in August and 100 for the cell.
1% growth in jewelry and before August isn't used for a few grocery business contribute to the growth. However.
And for delivery a vertical continues to grow a triple digits on a year over year basis, and did not slow down versus go for.
In Q1, we focused on certain our position on the food delivery markets and in fact, a newco.
We eliminated delivery fee for the first order for new users lunch a loose program.
Significantly lower order, a installation ratio and importantly, pretax income and we continue to invest in who'd be grocery vertical as a result of our efforts the share of losses Vigo to meet a football.
<unk> and muscle strength.
A lot for continues to growth sequentially in a growth is driven by a frequency of usage for them.
Also in a number of vessels in much luck a orders increased by around 30% compared to December at the end of Q1 left a head too.
208.
Just a fintech stars from December.
Logistics demonstrated solid growth as well in Q1 as a number of deliberate reached listen even this wasn't possible day.
So it's a 20 mile you continue to increase our partner base in March we've had over 16000 activity to be beaten.
Wholesale price.
And then for debt commute a among our top accounts.
And now to equal.
The gun mentioned earlier that we have delivered a very strong growth of our total equivalents.
This growth.
<unk> 25 billion in Q1 45 per cent of the entire full year type of thing.
<unk> of our FMC Jewish accounts included a JV of our user growth and reached a level and how you can rubles.
We got two minutes. This solid performance was at the east.
The expansion of assortment.
Okay.
With the improved price position across key categories. Some parts from a yandex plus program as well as expansion of our largest cash.
As the effect from new buyer at an accelerated pace increased the number of orders per client and broker.
Our assortment is growing very fast almost double the total number of skus during the quarter to a $3 8 million.
End of March and food.
A 6 million a case.
We are also actively congrats from our mentioned from CPC CPA model and the number of active sellers on our marketplace is now approaching 10000 from seven 6000, a end to end of December.
Convention is supported by the month, a deck with merchant Commission as a market and a recent launch of dropship buy sell a module, which already accounts for a meeting for policy of unit.
We are also investing heavily in the expansion of our logistics infrastructure, especially in a region and they'll manage it career a network is well positioned to support CV growth and improved delivery speeds.
Our total for few months and social incentive adversity.
Around 170, <unk> square meters across price warehouses with a latest edition a 50000 square meters unique sample and 28 sorting center.
Also continued to expand network of Lucas and pickup points.
I'm a half of orders in March 2021 was delivered via our own delivery versus 10% in Q1 last year. We continue to develop on demand delivery of marketplace orders from our love for desktop you've already reached 10% of all those in muscle and it keeps growing.
Customers, who use this option, so a better retention and higher order frequency.
All in all and well at least as a results achieved so far and how we progressed according to a power plant.
In the coming quarters, we will focus on further expanding our logistic capacity assortments and our marketplace celebrate.
Also improved as a product and quality service for our consumers and merchants.
It gives me even more confidence in our ability to achieve our ambitious goals for this year and became one of the leading player with a highly attractive.
e-commerce market in the future.
And turn the mic over to Greg.
As many of you know after more than eight amazing years at Yandex and decided to take on a new challenge.
While I will Miss Yandex greatly I know I'm, leaving things in excellent hands with many exciting prospects ahead.
There is still a lot of unrealized potential and attractive opportunities for yandex in areas, such as e-commerce and to grow and that the needle already talked about the impressive progress that we're seeing here in Fintech, where we're working actively on our strategy and preparing the ground for the rapid future development of this vertical autonomous driving.
As well as a number a BBB initiatives around cloud AI and SaaS.
Firmly believe that the main driver behind all the past and future successes at Yandex is a phenomenal team of people who care deeply about building great products innovating and serving the consumer.
I'm delighted to be handing over to such a great team I know they are extremely well placed to take advantage of all these new opportunities and on a personal note. It's been a great pleasure working with all of you and I hope to stay in touch with that let me hand, it over to lithium.
Thank you, Greg and for everyone. I am pleased that we haven't delivered yet another quarter of a robust results with solid growth and execution across multiple verticals, our core and most cash generative businesses advertising right scaling accelerates on the back of the team's efforts supported by debt.
Post pandemic recovery of the economy and social activity.
Most of the other segments have demonstrated strong performance as well, including E Commerce food Tech.
Media services zone.
Cloud, we see that the investments we are making so this business is already delivering results and a growing our market position we.
We are confident that our capital allocation strategy will help us unlock their full strategic potential in the yard for the call.
During Q1, we made a few changes for our segment reporting to enhance our disclosure and further improve the transparency power results.
Have included the <unk> advertising business into our search and portal segment.
And at the same time multi devices to other business units had initiatives a segment.
<unk>, which previously was referred to as other bets and experience. We believe the new title is a better reflection of the businesses in this segment.
The changes were applied for is respectively to Q1 2020, all my further comments will be based on this new structure. Additionally.
Additionally, we have disclosed GV figures for Yandex market and a total e-commerce and provided a detailed breakdown of yandex market revenues.
We will continue working on further improvements to our disclosure by segment.
Now, let me walk you through the Q1 performance across our business units.
Search and portal, we are very encouraged by the search and portal revenue growth, which significantly accelerated from the previous quarter by nine percentage points to a solid 15% year over year from 6% in Q4 2020.
Note that we have restated our Q1 for <unk> 'twenty numbers to include <unk>, which means that all the growth rates on a comparable basis.
For the ex Tac revenue grew even more strongly by 17% year over year.
It is a robust performance was primarily driven by 18% growth in search as revenues, partially offset by the weaker trends in the AD network.
We have seen an acceleration across most industries, even travel, whereas the decline is now less pronounced most sectors now in positive territory overall industry. Some positive year over year growth accounts for 85% of our total AD revenues.
For the best performing sectors, our IP, and telecom finance and insurance healthcare education and employment.
While the worst performing are still travel domestic services and real estate.
The growth is significantly accelerated in April due to the low base effect importantly, two year stacked growth rates are also improving and we expect the strength to continue as the year progresses.
The adjusted EBITA margin in the search and portal business came to a 46, 6% in Q1 2021 compared to 48, 3% in Q1 2020.
Do note however that in Q1 last year, we made a several pandemic related cost savings decisions, including a decision to proceed cash bonuses for top management adopt a slower rate a hiring and rigorous control over non essential marketing and overheads, which helped us to deliver a strong margins from Q1 2020.
And preserve cash ahead of them certain second quarter.
Revenue recovered towards the end of 2020, we began to scale back the cost cutting measures excluding the effects of the pandemic related cost cuts that we made in Q1 2020, our search and portal margins were broadly flat year over year. Thanks for further tax optimization in terms of the full year.
'twenty one we are confident in our ability to deliver a stable year over year margin in the search and portal business.
Moving to taxes.
Overall, a taxi group revenues increased by 89% year over year.
The revenue of ride hailing a full tax grew 111% year over year, which is a material acceleration from 65% Q for 2020, the growth was driven by the following factors the recovery of our ride hailing business overall.
<unk> strong performance in <unk>, despite the removal of lockdown measures.
<unk> revenue of each and loss increased four times year over year.
And rapid development of the logistics business.
<unk> revenue growth accelerated to 63% year over year in Q1, 2021 from 15% in Q4 2020, driven by both a recovery in rights and Jamie.
<unk> revenue increased by 139% year over year, despite investments in customer acquisition by providing free delivery.
Which is a component will keeps revenue <unk>.
<unk> revenues reached $4 8 billion roubles in Q1 <unk>.
We are seeing a slowdown of growth in April on the back of the base effect, but importantly, two year stacked growth rates remained solid.
Adjusted EBITA for the taxi group was $3 7 billion rubles in Q1 significantly above Q4 levels as a result of the strong profitability improvement in the ride hailing business, leading to a 195% year over year growth of adjusted EBITDA.
Which has absorbed increased investments in food technologists.
Profitability of the ride hailing business, which supported by efficiency improvements as well as solid growth in JV. In Q1, we are planning to reinvest this profit into driver a position beginning Q2 in order to address under supply conditions.
<unk> revenues were down 5% year over year, primarily reflecting significant decrease in the fleet versus a year ago. Adjusted EBITA would drive a remained positive at 108 Midland rubles in Q1 maintenance in the third quarter in enrolled as a positive adjusted EBITDA.
One year after launch logistics is developing very well and we plan to continue investing into this business to further scale it.
Turning to Yandex market Yandex market marketplace, JV accelerated to a 126 percentage year over year in Q1 for 2020, primarily driven by growth of a <unk> model. The JV share, a which was 66% in Q1 2021 versus 46% a year ago the revenue.
Most of our marketplace was more moderate than a GMB growth as a result of the changing one P. Three P mix as well as a reduction of partner commissions from mid January.
Moving the integration of price comparison marketplace platforms into a single product in Q4 2020, we continued leveraging our traffic to stimulate the transition from a CPC to a CPA model.
This has helped us to increase the number of merchants and expand the assortment of our marketplace.
But it also led to a slowdown in price comparison revenue growth two 5% year over year in Q1.
Despite a stronger base the solid GMP momentum has continued into April with a growth of around two four times on year over year basis.
Adjusted EBITDA loss of Yandex market was $6 5 billion rubles in Q1 up from the two points have been on a ruble loss in first quarter, a 2020, primarily reflecting our investments in expanding logistics and delivery infrastructure distribution and marketing support customer acquisition on tough comps.
Overall, we are progressing well with our full year <unk> target and planned investments.
Moving on to our other businesses media services continued its rapid growth in the quarter, reflecting increasing demand for our services in a growing number of paying subscribers. We achieved revenue of $3 5 billion rubles per 143% year over year, the adjusted EBITA loss amounted to one three.
Bill and rubles due to ongoing investments in content on the back of increasing demand for our services.
We continue to invest in original series production and exclusive assume launches, which allowed us to offer our customers a unique product and become a leader in the Russian OTT market by a number of unique viewers. We will continue to make disciplined investments to scale the business in an appropriate stability.
Revenue in classifieds delivered healthy growth of 20% year over year in Q1 compared to 13% in the previous quarter as the dealership stock level is improving.
Not yet enough to fully satisfy current demand due to supply chain bottlenecks.
Justice EBITA margin came in at 21, 6%, which implies a material improvement on a year over year basis on the back of marketing cost optimization initiatives.
Turning to other business units and initiatives.
Revenue increased by 171%, mainly driven by strong revenue growth in devices zone and.
And cloud as well.
It's a rapidly developing education business in.
In Q1 for the devices business was the largest contributor to year on year growth with revenue growing by more than four times to $1 7 billion rubles cloud was a second fastest growing business in this segment generating almost three seven times revenue growth from Q1, the adjusted EBITA loss amounted to $2 for.
For Bill in rubles.
From a loss of $1 8 billion rubles in Q1, 2020, primarily driven by the increased investment in Yandex a slowly.
All driving growth, where the adjusted EBITDA loss was 942 million rubles in Q1 2020 a month.
And education initiatives, and partially offset by the improved performance of that.
Finally, a couple of awards from our outlook.
Taking into account faster than expected growth across several businesses we are operating.
Operating our full year revenue for our test and now expect group revenues to be between 315, and 330 billion rubles. We are also increasing our guidance for search and portal revenue growth to high teens from mid teens. Previously. This is despite the fact that we have moved.
Our fast growing devices business to another segment.
Our other commitments and expectations remain unchanged.
With this I'm, turning the microphone to the operator for the Q&A session.
Thank you.
If you'd like to ask a question. Please sigma by pressing star one on the telephone keypad.
You're using a speaker phone. Please make sure your mute function is turned off to Cigna, a channel to reach our equipment.
Again price star one to ask a question.
And as a reminder, only one question and one follow up question is allowed for all participants asking questions.
Now a pause for just one moment.
Okay. So we will now take our first a question from Slava <unk> from Goldman Sachs.
Go ahead.
Yes, thank you very much for the call.
My question is on the ride hailing margins, which had a continuously improving.
Would you highlight an effect of that can reverse that trend in the medium term and does it make sense to expect a further margin expansion with our ongoing increase in the rides and potentially improving that drive a supply conditions and Easter can also commands.
How the food delivery margins are progressing.
Currently in the medium term outlook and if that will have a follow up then.
Hey, slow or how are you a few again a sell in ride hailing we had a great first quarter, a Daniel already mentioned some top line numbers in his remarks, a we had really strong <unk> growth and as you highlight it some of it was driven by a onetime factors.
Such as a unusually cold and snowy winter, even for Russia in January and February persistent driver under supply a it also a vehicle under supply, which will hopefully as a temporary issue in the medium term but.
Yes.
If we talk about EBITDA right hailing grew almost two a 200% year over year and 86% sequentially again on the back of <unk> growth.
That EBITDA margin was extremely strong.
You know by adjusted EBITDA, and free overhead spaces, where 7% a JV in the first quarter.
And really a.
Jamie, but also taking a sort of.
A.
Are you utilizing that cost efficiency a discipline.
That was put in throughout.
Throughout 2020, and getting the benefit from those measures.
In the first quarter.
I am not get a promise you that we're going to deliver the same margin every quarter and ride hailing as we see.
In.
In the first quarter, but in a long term I think margins of the ride hailing business can reach search and portal levels credit for a look.
If we look Oh for 2021, with all things being equal it or we don't expect a.
A significant increase in our net.
Net take rate because we do care about our drivers and our partners.
Daniel already mentioned growth for numbers that they receive it in his remarks, we think in 2021 ride hailing margins are still going to expand versus a 2020.
All things being equal of course.
As far as eats margins.
Well you know.
We did have a the.
The same factor that cold and Snowy winter makes it hard to hire Korea or so.
We had an increase in CPO in our in our business. We're also investing significantly in something we believe in a very strong emphasis <unk> gross delivery.
It's a pure there is currently higher than our risk for a restaurant delivery business, but we think as a sort of.
That should improve as the <unk>.
Density of orders improves.
We improve our technology and approach as we did in a in the restaurant delivery business.
Uh huh.
We you know on absolute basis, we're probably going to see higher.
Again, a at this point, we're probably going to see a higher absolute number in terms of EBITDA loss in 2021 versus 2020, but in margins is going to be roughly the same and that accounts for the significant investment in grocery delivery.
Thanks, and my second question would be on them.
E Commerce, a JV. So it overall is training involved a full year expectation of a 150% growth.
But the non growth had a part of yandex market is a bit lagging.
Where do you see the medium term means a between the two businesses yandex market and the growth initiatives and maybe as a relative growth rate this year.
Slow a hi, this is <unk> speaking.
Look we as we guided last quarter.
Expect the overall, two and a half times growth for the total E Commerce JV and we do expect to see the kind of a similar breakdown between the two categories broadly speaking.
Yeah.
And so far what are you seeing a tracking quite a 12 of those numbers, but that guidance.
Okay. Thank you very much.
We will now take our next question from Arturo.
T Rowe from Bank of America. Please go ahead.
Yes, hi, thanks for the call and the opportunity to ask questions. So just two very quick ones I guess, the one on <unk>.
On taxi I guess specific day ride hailing.
Is the do you think the DMV growing ahead of Hawaii is a Easter.
A sustainable or was it just a kind of.
Just a Q1 impact on the because of the sort of pricing or do you think thats sustainable and then the second one would be on the.
On the search and portal could.
Could you please make any comments on the obviously you have very easy comps.
In Q2, so can.
Can you please make any comments on the on the <unk>.
Just first a couple of weeks how that that business was growing on a year on year basis. Thank you so much.
Hi, Cesar, it's so youre getting you again, let me take the first.
First for your questions.
Oh, Yes, we're already mentioned sort of a onetime factors, but an interesting thing is for example, we saw in cross a not a growth in non economy tariffs as part of our business I think.
That will continue.
Some are a big part of our business is still a relatively depressed away from us before pre pandemic. The airport rides that <unk> business has continued to grow.
But we do not like a <unk> to grow a well ahead of a trip. So we believe in balanced growth and we're willing to invest in the quality of the service and driver acquisition as.
We prefer that balanced growth so for the year, our expectation would be that Jamie.
You would go trips would go grow a 40% and Jamie about the same maybe slightly less also affected by.
Our regions are got a grow faster than Moscow and.
A slight difference.
At least 40% in trips growth.
And she is a hi. This is <unk> speaking, let me take the second question so look.
As we said in Q1, we grew by a 15% quarter over quarter.
What are you seeing in April and what do you do need to keep in mind debt at April last year.
In Russia, and especially for Us was.
Probably particularly the most weakest months so.
So you're definitely seeing a V.
Material acceleration compared to April of last year.
Again, the base was we're at a low.
A side, what I would say it doesn't really make sense to talk about April month to date, because it's not a representative in terms of what to expect for Q2.
We do focus on two year stack, which is improving and we expect it to accelerate further in the coming quarters and this is one of the reasons why a comfortable enough to increase our expectations for search and portal revenue guidance from mid teens to high teens and the.
The upgrade is based on the better than expected performance of search and other yandex properties.
And as we see a broad based recovery across many sectors.
Thanks very helpful. Just to confirm so you're basically expecting a reactive deterioration of search and portal on a if you look at growth on a two year basis right.
In the next quarters.
Okay.
Yes that is correct.
Thank you so much.
We will now take a next question from Vladimir <unk> from BTB capital. Please go ahead.
Hello. Thank you for taking my questions. My first question would be on a Fintech you Havent commented about this area, but curiously you have mentioned a lot of times that this is one of the key for profit maybe could you update us where do you stand now Unfortunately, we expect from.
This.
And the second question a will it be on net profit.
And adjusted net profit for as I understand this was pressured by from non deductible expenses, maybe you could provide more color on debt and.
How should we look at this going forward for this year and also how the change of the tax treaties between Russia, and the net Netherlands will affect your bottom line and Texas.
Texas and to whether there will be a one off effect or whether it's going to be extended over a certain period of time from this or no effect a phone. Thank you.
Uh Huh, followed a hi. This is why I'm speaking so let me take this one.
So essentially three questions, let me start with the first one the fintech.
Look I mean, it's pretty much for what you said before it's the work in progress.
We do believe if he made a decision for ourselves that we will enter the financial services market.
It is a rather competitive from a crowded space in Russia.
And we believe that investing more time to prepare is the proper way to proceed and it will pay off in the future.
Via a working on obtaining all day irrelevant in a required licenses.
And the only thing frankly, what I can say at this moment just stay tuned for more updates that will be coming shortly.
Moving on to the adjusted net income the impact on adjusted net income debt.
You see in our reported results is essentially a combination of couple of factors.
Search and portal, a ride hailing and vertical at a classifieds.
<unk> performed better than.
Then.
They actually increased their profitability in absolute terms, however that was offset by.
Our investments in our other businesses such as for example, where there's going to be for Tac well, that's immediate services and yandex market. In particular. So this is the overall mix of the impact a swell now moving to the third question related to the double taxation treaty between Netherlands in Russia. So.
Look first and foremost the situation is still rather unclear and uncertain at this stage.
Once we do understand is that the likelihood of denunciation, a the tax agreement with Netherlands is relatively high however.
We also do haul without the negative consequences of such developments.
What would be addressed at the legislative level in Russian Federation.
But in any case, what do you do need to keep in mind is that the.
Have a plan to liquidity or the Dutch level as of now because this is why we keep power.
A convertible debt proceeds and equity raise proceeds down in 2020 and on top of that we do generate all our cash in Russia, and Geely and the fact that we have quite a few.
Highly rewarding and promising project to reinvest our net income in Russia, we do not expect to be up streaming any cash.
In the kind of call it in the near future.
Okay. Thank you very much.
We will now take our next question from Karen Kwan Irene from Renaissance Capital. Please go ahead.
Hello, everyone. Thanks for taking my questions for.
Firstly on your investments at the Yandex market, you mentioned quite a lot of initiatives in Q1 included an assortment expansion lower commissions fulfillment delivery marketing.
Could you comment on which of these areas somewhat.
Our efficient in driving past, a GMP growth and so presumably will be the largest focus for you.
It would also be helpful. If you share your thoughts on the midterm growth and marginal book when the price comparison business given the conversion of merchants to the marketplace.
The first one thank you.
Hi, This is why I'm speaking so let me take this one.
Look.
All of the initiatives that should be kind of mentioned and highlighted during our last call in February.
Namely the expansion of our fulfillment and Sortation center capacity.
The expansion on the delivery capabilities, including the last mile expansion, a assortments improving the day.
They take rates for our partners for our merchants.
And then proving the delivery accuracy I mean, all of those things would be.
Essentially view us equally important because at the end of the day. What is important is just overall experience of the platform both for the buyers and for the sellers.
We do believe as we measure our progress.
In our E Com initiative.
We actually take stock in pretty much the same.
Level of importance and allocate the same way to all of those.
Initiatives. So overall if you go one by one there are the.
The expansion of our fulfillment and sortation centers actually increased from.
From a 100000 square meters to.
So a 170000 square meters.
We also expanded our delivery capabilities and added a one.
A one 3000 pick up points and more than a thousand lockers and I think we added approximately 1000.
You know a cargo.
Volume, so that actually intra.
Deliveries for the last mile deliveries.
<unk> mentioned in his opening remarks.
We expanded our assortments quite significantly we went from a 2 million.
A SKU use at the end of two.
2020 a.
Up to 6 million Skus in.
In April.
All of those pieces right I mean, the kind of the bid.
Built the overall experience again for the buyers and the sellers when we think about the commission levels that would be a low words.
In January or February of 2020.
If you look at the overall experience for our sellers on our platform and.
It has to work in a balanced now moving to CPC.
The CPC business, which will obviously be affected by the merchant transition to CPA model.
You will see great results in insurance in that from that transition on our marketplace side.
Potentially lead to somewhat slower growth in CPC, a revenues and but overall if you look at this one call.
<unk> experience in e-commerce for Yandex.
Great. Thanks, a lot and just a follow up on media service.
And can you share your thoughts on a sustainable lumped a market structure in online video and how far do you think the market leaders from breakeven that's it from me. Thanks a lot.
Alright, so good question right.
Frankly, I mean this is a question that'd be a property could spend the next 45 minutes kind of discussing and debating.
Which we don't have.
So I think it's two selling standard as a function of the market size right. So Russia is sizable enough if youre looking at a 140, a midland population overall.
So it definitely large enough to support in our thinking and again. This is something thats kind of the future will tell us what it is probably the market of two to three players.
How far RV from.
Getting to breakeven well, it's frankly, it's a it's a function of a market share how the market structure will actually will split between first second and third player and obviously it could be.
I, probably would speculate that's assuming the first player I guess, a significant market share earlier that we'll get to a breakeven faster compared to other players.
Yeah.
Great. Thanks, a lot.
Just a reminder, if you'd like to ask a question. Please signal by pressing star one on a telephone keypad a please ensure your mute function is turned off.
We will now take a next question from on a corporate number from Gazprom Bank. Please go ahead.
Hi, good afternoon. Thank you very much for presentation and a bunch from Asia to ask question.
My first question.
We'll do that again a software for installation.
It was a <unk> I understand that.
From a final conclusion so for.
Full picture how would go a song, but given its holiday just Scott it's a can.
Maybe you can give us some understanding how a lot.
Hum.
Embarked over your online, leaving us a.
And your market share in this segment and my second question, a little bit Okay got you yandex market the game.
And a couple of them make sure that this year.
First one how do you see a correlation between the Yandex plus.
And the Amdocs market for you guys sort of a seafood can give some may be a sale yandex plus subscribers.
Julien Yandex market.
As a result of sales quota for example, a.
And second question loans, a market will do a.
A change in <unk>.
E Commerce, <unk> and a first quarter. He also send over a year if you could give such a number thank you.
<unk>.
<unk>.
On a high.
This is about even speaking so let me take it one by one and let's start with pre installation.
So look so far we see no impact and overall it is likely to be.
Rather limited at first given that it applies to new devices only and there is always a few months' lag before a new newly produced device would actually hit the shelves for the stores and people.
By them and start using them. So there is a lag.
As <unk> mentioned, though again in his opening remarks, there was an opportunity to increase the actual usage of yandex apps on iOS devices as we believe the real customer preferences would imply a higher market share for us.
What we are also doing in addition, so it's a total.
No.
At the same time as the pre installation.
It's a rolling out we are making targeted investments to support distribution of our products on iOS devices that should help us to gain access to a more affluent customer base and to improvement utilization overall.
Now going to your second going to your second question with respect to Yandex market and how you should think about yandex plus users and their behavior in yandex market. So look what we see in yandex market and frankly across some of our other.
Other services.
Is that the Yandex Yandex plus users a.
Typically a higher frequency users.
And you know and they do.
Generate a higher average check transactions. So when you know why do we talk about John.
Specifically for Yandex market currently.
Somewhat.
Well I would say somewhat.
Somewhat more than 50% of market GMB comps from a plus subscribers.
Plus subscribers generate on average more than a 40% higher G M B a.
And so a 50% higher frequency and for transactions. What we also see that the plus member show, a better retention and stronger cohort behavior.
And then.
Question number three a M.
Could you could you repeat it.
Thank you for your answer my second question was.
If you could give.
For some number from you guys.
A J for ecommerce in first quarter this year versus fourth quarter, a fast here.
Maybe I missed but I say it was a nominal.
For a full get a thousand thorington, all I see a first quarter net sales quarter, but I'm interested from the standard.
And then there's a.
Fourth quarter, a fast here.
Yes.
On a if you did not disclose the breakdown between.
Between the different gene vs in our e-commerce platform in the fourth quarter.
I understand okay. Thank.
Thank you very much a game.
So just a reminder, a food I'd ask a question. Please sigma by pressing star one.
It appears there are no further questions.
Excuse me one question is just coming through and I would take a next question from Alex a cash outflow from prosperity. Please go ahead.
Hello, gentlemen, thank you very much for this granularity in for the call overall.
Can you give us some update on your 2000 per plane to you on the Capex.
How much do you plan to spend how does a can.
Headquarter also fits into this equation.
Alex a hi, this is a lot even speaking look there is no change to what we guided to a previously.
Okay.
For you.
Thank you.
We will now take our next question.
A corpus Ola for Calvert.
Please go ahead.
Yes. Thank you very much. So basically my question was also a installation to capex, but a good day for a malaise in such a way. So there is no change from your earlier guidance in terms of Capex, but could you maybe give some update on a what.
Do you expect a in terms of for works a type of works a lot like.
Engineering, <unk> construction et cetera to start or to continue during this year in relation to <unk>.
HQ. Thank you.
Hi, Ana this is.
Look so the way you should think about our capex.
The way, we typically spend it it's two thirds allocated to our infrastructure and.
And servers.
Another third is essentially allocated some of our other businesses.
Yes, thank you, but I just wondered what a works.
Works.
We'll be well what will be a real progress in terms of HQ construction project construction. This year. So are you still busy with a project implementation.
Will you be like starting to destroy the debt no Alt a.
Building on the Cathedral, a fleet will you'll be able to start a construction thing youll building so what's going on there. Thank you.
Got it.
Thank you for a clarification. So look wherever you stand was the hour kind of new campus construction, we actually demolished.
They all building I think towards the end of last year we.
We started construction of the foundation.
And Oh.
All they clearly all the paperwork and permits already received in.
In place.
And the construction is fully ongoing.
So hopefully you know a.
Within a reasonable period of time, we all Kim celebrates.
Do the housewarming in our new headquarters.
Okay very helpful. Thank you very much thank you.
It appears there are no further questions at this time.
Pass the call a buckle over to Julia <unk> for any additionally for closing remarks.
Well. Thank you very much for all your questions as usual with any follow ups. Please contact the IR team. Thank you and have a good day.
Yeah.
Thank you very much that does conclude the conference today. Thank you for participating you may now all disconnect.
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