Q4 2021 Yandex NV Earnings Call
Ladies and gentlemen, you're correct you're on hold for today's conference call. At this time, we're assuming today's audience sometimes to be underway. Shortly thank you for your patience and please remain on the line.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter and full year 2021 financial results Conference call I must advise you. This conference is being recorded today Tuesday, the 15th of February 2022, we'd now like to hand, the call over to your first speaker today Josh.
Global Investor Relations Director. Please go ahead.
Hello, everyone and welcome to Yandex fourth quarter 2021 earnings call you can find our earnings release letter to shareholders and supplementary slides on that.
That's like.
The key speakers on our call today are John could ever again, our deputy Chief Executive officer, and supplying at any stage, our chief Financial Officer.
But I'm not sure our Chief operating officer, Danny singer Chief Financial Officer of Yandex taxi, and Alexandra Bowling Green, Chief Financial Officer, and head of strategy of Yandex market, we will be available on the Q&A session.
Now I will quickly walk you through the Safe Harbor statement, well last remarks that we make during the call regarding our financial performance and operations may be considered 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 recent annual report on form 20-F filed with the SEC.
During the call will be referring to certain non-GAAP financial measures you can find a reconciliation of non-GAAP to GAAP measures in the earnings release, we published today.
Now I'm, turning the call over to John .
Thank you Union Hello, everyone. We are.
Pleased with our performance in 2021 and consider.
That's all year for the company.
We achieved solid progress in many of them will work scopes, including both our core segments advertising and the right talent.
Also our new businesses, particularly equal most deliberate and media services.
There was a lot of detail in our letter to shareholders published on our website.
Let me just highlight several key headline numbers.
<unk> for the year grew almost three times to 160 dealer rubles, we sold <unk> three times growth in our field structure and number of active merchants Isabella over 10 times, increasing the assortment.
Finished the year with 12, MELA Yandex plus subscribers.
Our $2 4 billion text right in 2021, which is even more than some of our global public peers have reported the revenue delivery. Our logistic business grew four times cloud three times devices, two six times and the list goes on.
In terms of key priorities for 2002, our top priority remains equal most followed by Yandex plus.
E Commerce I would highlight that we are focusing more on improving the efficiency of our operations and delivery channels and increasingly utilization and automation of our existing full clean room capacity.
To ensure the further we can pool.
Well continue to expand rapidly in order to outgrow the competition in the market.
The majority of our businesses, we will keep doing what we are doing as.
As we see that our strategy is working well.
Separately I wanted to share a few thoughts on our international potential.
We have always considered the possibility of taking our technologists abroad, and we see substantial opportunity here.
For the last 20 years, we have invested significantly in R&D in Russia to create the world class Tech stack.
Our domestic market from local and foreign competitors, who believes we have outstanding proprietary technology, a number of proven business models, where we are experts are such where we shouldn't be able to successfully leverage them as we continue to diversify and pursue selective opportunities internationally.
As you consider international expansion opportunities will always be guided by these core principles be storing selection of new market analysis of our competitive advantages with W. Baird to ensure we have a right to win in new geographies progressed gradually attract local talent.
<unk> local partnerships and remain disciplined in terms of capital in terms of how we are doing with some of our existing international projects.
<unk>, we have a presence in 20 countries without including the 11 in EMEA, where we are developing according to our pool playbook.
Our ride hailing business is getting good traction in EMEA countries with significant <unk> growth of 146% in Q4.
Our progress with robots in the U S to buy in Korea in neurology in Turkey, and Dubai as well as the success of quick cost pool.
Our technologies and products are attractive I will cite our domestic market.
Lastly, a few words also some ability.
21, so a number of important milestones in this area.
Such as publication of our first system be able to report, which allowed us to materially improve disclosure appointment of a chief stability officer visible progress on search and social and environmental initiatives at.
At least for US did not go unnoticed, our ESG ratings have materially improved.
<unk> has joined the Dow Jones sustainability World Index for the first time.
In conclusion I wanted to say that our focus has always been on prioritizing sustainable development over a short term game. This is now more important than ever we concentrate on things that are under our control, which is executing our key strategic initiatives to create long term value for our.
Our shareholders with this let me turn the mic over to Scott.
Thank you, Ron and Hello, everyone, you've seen our press release and all other supplementary materials provided on our IR website, let me focus on selected financial highlights from 'twenty to 'twenty, one and outlook for 2022.
We ended the year with 356 billion, Andrew Molson very young which is ahead of our full year guidance and 54% more than the previous year.
Stronger than expected results reflected robust trading your trends across our advertising and ridesharing businesses as well as solid performance in media and delivery services devices and lost sales.
Our main businesses performed well the advertising revenues exceeded our internal expectations and enable us to upgrade our guidance three times without trying to bring to them each.
Each time, we outperformed market progress, including with today's Q4 results.
This is a result of material progress you know Oh sure and further enhancements in the efficiency of our <unk>.
I think instruments for all types of clients, including Smbs.
In the mobility segment, we continue to focus on rapid growth and deficiency, which is the basis for increasing drivers of income and improving our margins. Our effective take rate is still less than 10%, which is one of the lowest levels globally. Thus stronger profitability is primarily a result of.
Improving driver utilization route efficiency, optimizing arrival times and implementing cost controls.
Although our key cash generating vertical section portal and mobility together earned 110 3 billion globally in the Jeff that you did that imply 50% year over year growth.
This has served as a solid foundation for our investments in attractive new initiatives.
Our ecommerce business expanded by almost three fold in terms of G&A and delivered numerous improvements in customer value preposition quality of service and streamlining of key operational processes.
Total cash burn for our e-commerce business amounted to $600 million less than our guidance of $650 million.
Emphasizing our commitment to disciplined capital allocation, we improved market unit economics by approximately 15 percentage points. During 2021, driven by discount optimization three piece take rate increase won't be pricing revision as well as the duration and cost efficient and Samsung <unk>.
Merrily related to logistics infrastructure.
Turning to the financial outlook for 'twenty to 'twenty two.
We expect our total group revenues in 'twenty to 'twenty two to be between 419 billion and 500 billion rubles, where such important though we expect our ruble based revenue to grow in the mid to high teens and adjusted EBITDA margin to remain stable compared with thank you for what you want.
As we have communicated previously we may consider reinvesting Walmart wanted to give them opportunities we choose to go help us to achieve a high absolute adjusted EBITDA and are in line with our long term strategic priorities.
We expect the Dnb of all second largest cash generating business might be alert you to be in the range of 700 to 720 million Google in 'twenty to 'twenty, two implying slight acceleration of two year stacked growth in 2022 compared to 2021.
We also expect the further expansion of its adjusted EBITDA margin as a percentage of G. M D by up to 50 basis points compared with <unk> 21.
Finally ecommerce sites remains the number one priority for the management team in 'twenty to 'twenty. Two we expect our total ecommerce gene visa double while limiting the increase in total cash burn to 20% maximum this is underpinned by a significant improvement in unit economics, we believe are.
Current warehouse capacity it will be largely sufficient to support the growth of our business since way situates itself and thus our focus will be more on improving the efficiency of our fulfillment operations, including further automation of our distribution centers.
The increase in personnel productivity and the utilization of the existing warehouse infrastructure.
Yeah, because capex, excluding accomplish as a percentage of revenue for 'twenty to 'twenty two are expected to remain at around the low teens, which is similar to last year.
<unk> accomplished of course Capex is expected around mid teens in percentage terms.
Last but not least a few words about our liquidity position. We finished the year with $1 $4 billion in cash after paying a consideration of $1 billion for the transaction with well there in second half of the year.
With this amount of cash until solid cash generating businesses advertising and mobility, we remain well capitalized to fund our planned strategic investments.
With this let me turn the mic back to Doctor right before the Q&A session. Thank you.
Ladies and gentlemen, if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
A reminder, you can ask only one question one follow up question. The first question. We have today comes from Slava detect Oh, sorry of Goldman Sachs. Please go ahead.
Hi, yes. Thank you very much for the call. My first question that would be on E. Commerce. So how do you see composition of the ecommerce cash burn progressing this year compared to 2021 or in other words how.
How will the investment priorities within the ecommerce shape for this year.
Hi, Slava that special audio speaking.
Let me try to answer this question. So first of all I wanted to highlight before I begin that are we.
This 20% increase is the maximum level of investments into the call. This year and the full allocation of that is subject to a children's all the certain products improvement our unit economics improvement and growth targets.
And as you may see from the absolute JV.
G. The number we plan to generate in 2022 the guidance clearly implies a material improvement in unit economics.
So now let me tell you how we think about the kept all the case well first of all with regards to capacity, although warehouses I wanted to highlight that despite we do not add the square meters of warehouses, we keep invest into the achievement.
All the maximum possible infusion shield those warehouses and that will require some capex on the automation process improvement. So keep this in mind and we have.
Sufficient capex allocated on.
Those things.
Apart from that are we have two main areas of investments.
Number one is our delivery in terms of quality speed and convenience.
We highlighted during our previous call, we have a fairly front loaded nature of.
Our.
Logistics investments as we add our warehouse capacity sortation centers pickup blends walkers higher careers and so on.
To put this a little bit on the perspective this allowed us to achieve two to three times improvement in our core retail operations.
Throughout 2021 and on top of that that allowed us to.
To introduce highly differentiated features as a super fast on demand delivery together with laughter.
Express delivery together with Yandex delivery and some of the exciting thing. So clearly we are satisfied with the progress in this area and it's reasonable to expect that logistics in a broader sense will consume.
A sizable portion of allowing the last months and well needless to say, we'll be further expanding our last mile capabilities.
We will invest in the brand at a pickup and delivery and drop off points.
The second big area for US he is our assortment to get a broader sense are we plan to develop the categories filter.
There are two fairly new categories for us are which are fashion and kids and in in those we need to fine tune. Our product are we need to fine tune, all logistics capabilities, and so on and last but not least within the same bucket.
We will double down on all that's M. C G efforts.
Where we will leverage our audience across our three.
Real estate is all philosophy that grocery and our end market.
Together with logistics advantage, we have to drive both growth and redemption at the.
The optimally unit economics, so I would say those two other key priorities for us I hope that answers your question.
Yeah. Thank you very much.
Second one would be on the others you have signed contracts with various the global players on the role of a delivery how would you describe the competitive landscape here and where do you see it.
Your competitive advantages.
How large are the antibody is a little oversight okay.
Hi, This is my name's speaking.
So let me take this question on the Rovers.
Look I mean, the reality is it's very much kind of white space, It's open field with.
Some competitors that differ significantly.
With respect to the level and quality of technology.
The differ with respect to.
How their raw where swap rates. So for example, you know there was another company a competitor of ours that actually use us are all worse on a on the streets as opposed to the sidewalks are which means that regulated somewhat differently.
And.
So truth be told we don't really feel the competition just because the space is so widely open.
And right now it's a you know a receipt as an excellent opportunity.
<unk> is an excellent opportunity to you know.
Further test our technology further test the <unk>.
What's your borrowers in themselves and also one of the important metrics for example that we track is hominy rowers Kent one.
Ken one.
Operator tracks just in case, something goes wrong and what we are seeing that we are significantly ahead of the competitors based on the information that we have and our goal is to further increase that ratio, but I would say probably by increasing its five or six.
Fold from wherever you are now.
Okay. Thank you very much.
Our next question comes from Bank.
Bank of America Merrill Lynch. Please go ahead.
Yeah.
Yes, hi, good afternoon, everyone, thanks vertical and the opportunity to ask questions.
I have to I'm, just going to ask them in one go through the first one is really on the search and portal guidance.
Given that Q4 was a growing closer to 30% do you already see evidence of often slowdown in search and portal in Q1, which would make.
Make it grow only a mid to high teens or easy outlook more reflection of the macro visibility in Russia going forward and then the second question would really be on.
E Commerce, just wanted to check if you see any signs that your competitors are probably.
Pulling back on on marketing or any.
Our intensity in there in the competitive behavior.
Probably due to a tougher.
Tougher funding funding.
Conditions. Thank you so much.
She's a hi. This is lightning speaking, let me take the first one.
So look with respect to the trends.
It would be seen January trends.
As comparable with Q4.
But also I think what's important to note is that the base has been the lowest in Q1 last year and therefore, the growth will be normalizing towards the E. R. M is actually as implied in our 2022 guidance and sadly the sold the January trends remain.
It remains solid and we're seeing the lease growth continuing in the first two weeks.
In February .
All sectors are positive from year on year basis.
The only factor that is negative.
He is in the negative territory on a two year stack basis, as travel wishes, which still hasnt recovered from its.
To its pre COVID-19 levels.
Yes.
Hi, Cesar that Sasha all the competition overall for the customers I would say that most of our competitors are still fairly well funded.
And speaking specifically of our marketing we don't see it sold for significant changes other than the seasonality of I would say the start of the year is normally.
On a quiet aside here.
And Ah well, we saw quite quite a bit of a competition for the new customers and <unk>.
The reactivation of the existing ones in the end of the year.
If we speak.
Broadly in terms of competitive environment.
Probably mentioned if you think number one the <unk>.
Competition has been fairly stable over the last six months.
But please keep in mind that the competition in the corner stretches.
Yawn, just the pricing competition as we compete not just for the customers, but also for four years pick up points locations.
Even for the delivery trucks.
And I must.
Say here is that beta part of Yandex with its through all of the businesses like taxi drive delivery among others.
Helps us significantly in that competition.
On a positive side.
With regards to the competitive environment, we see very stable situation in terms of the take rates.
Our main competitors are the keep them stable or even increase them and I.
I would say that.
That's a that is a good thing that's been said, we still see a potential for the market to rationalize further because the Russian thing creates a fairly low in a global context for the depth of services.
We and auto leasing market places provide to the market. So we would definitely welcome some further ratios in that area.
Thank you so much work here.
We can now take our next question from Yolanda Linda <unk> of UBS. Please go ahead.
Hi, everyone. Thanks, a lot for the call congratulations on a strong quarter first of all I wanted to discuss profitability and in the core ride hailing business. Our we have seen quite a stay the congress over the past quarters and years longer term how.
Do you see them.
The potential of the core ride hailing business in terms of EBITDA.
EBITDA margin.
I think five years from now.
Hi, Liana, it's even get any center of look as you know it was given by reiterating the guidance. We expect next year to improve by 50 basis for it but going forward, we continue to see.
Operational improvement I think.
We expect further expansion in 'twenty, two and beyond frankly again based on our continued historical focus on operational efficiency improvements and benefiting from the existing sort of network effect that has really.
Playing in our favor.
So we.
We continue to expect improvement specifically and we're guiding to it next year.
We see further improvement in the outer years.
That's clear thank him and the second question is about either business unit.
Yeah.
The investments over there are visibly going.
Honestly, just becomes a bit too big the segment itself. So good and transparent in my personal opinion could you. Please comment on the maybe the key priorities within the other business units and also the EBITDA Louis trajectory.
For the coming years say at least you know the trajectory very system into 'twenty one.
Hired Anna and thank you for the question.
So first of all are we are very cautious and conservative in terms of our investments and I would say that's at lately, you know where the situation on the markets and with the growing number of businesses, where investor we became even more conservative and rigorous in the way how we prioritize.
It is and how we make our investment decisions. So our number first priority as we already mentioned is e-commerce , followed by Yandex plus and Fintech.
And you understand that are you know these elements are crucial off of building our ecosystem and that's why it's crucial for us to continue investing in this.
And this directions.
At the same time during the last year, where do you prioritize and scaled back several projects for example, general classifieds or regional expansion in Lafayette, where we became much more cautious in terms of opening of new stores and regions.
So overall in other segment, we do have businesses like Ah self driving and Fintech. If we're talking about 2021 our cloud business devices and for all of them are we do have a very good developments in terms of their growth and more.
Positions. So that's why we will continue investing in this nah directions wholesome.
Okay.
I think I said, but within the other business units are cloud is the biggest one right.
Alright.
Somehow described the biggest but if it that Bernie.
Oh, well, we know it's our guys on the you know cash Burns in this business units, which are included in other segments, but in terms of the revenue. For example are the run rate for cloud in December reached four seven.
Billion with 100 than 74% year on year growth.
And.
Almost all of it is generated by enterprise clients. So we're really happy with the results.
Uh huh.
Another direction, which is included in other business units is fintech and as I mentioned, yes. We're building are the core.
Of the platform for Fintech, a while we will continue building the product itself with the verticals of our ecosystem during the next year.
Okay.
Okay. Thank you.
We can now take our next question from Vladimir <unk> Capital. Please go ahead.
Hello, Congratulations on the great Tom for some thank you for taking my question.
First of all I'd like to ask you about the coolness.
Yeah.
You.
Fair bump in price comparison, the total turnover.
More than 200 billion photos I understand you have almost completed the switch from the CPC model. This new drop ship buy sell or model, but when I look at the growth of a G. N V of yandex market for the past year.
It's roughly ATB vulnerable so maybe could you comment whether some of that turnover.
That was in the CPC platform well for lost you is there anything else remaining which few of your growth in 2022 and beyond and in general how do you see beef and then.
Related to the some of your growth do we see the numbers from the key marketplaces and sort of like wild versus growing very fast in that.
Absolute truth I was the one that's growing fast in absolute terms and the guidance that youre providing.
Does it mean that you're going to have them bridge the gap in absolute terms youre going to be well well behind in 2022 and probably be wrong. So what is the strategy here. What do you expect to turn into a kind of a niche play in e-commerce , focusing more on the unit economics kind of profitability, but.
Not aspiring to leadership in this area. Thank you.
Hi, or a team there that Sasha speaking.
To your question on the price comparison to 100 billion rubles, Jamie we had let me.
Mind you that.
We we have different lax over quarters within the Yandex ecosystem and we are the obvious one with.
The marketplace and Oh, obviously benefited.
During 2021 with the price comparison to marketplace migration, but please keep in mind. We also have as substantial ecommerce vertical as a part of our Soc business switching portal business and.
The search and portal is developing its own products vertical, which we mentioned and we demonstrate very solid results here.
Some of that God, who does he visits to the advertising traffic and we do not think we host Danielle <unk> 200 billion rubles to be honest.
Uh huh.
Why do you let me take the second part of the question.
So look.
You're right.
Bose Ozona and Wilders continued to grow quite fast given their size and absolute.
The way, we think about where are we going to end up and how are we going to compete and what exactly is going to be our place in this market.
When we think about it one with the whatever.
What reconsider and what I think other should consider is but frankly, we are.
The market is still in very early stages.
There is definitely a gap between different players in terms of size, but we do think that the market will reshuffle in terms of leadership within a certain period of time, when we think about what exactly can you give us a claim.
To be wanted with the market leaders is BBB kind of outline a couple of things. So that we do not think other players have or are likely to develop in kind of in the short or medium term and therefore those are our kind of unparalleled advantages. So superpowers if you will.
Which as you know yandex, plus which is the kind of cross utilization of the logistics infrastructure that we have in different platform based verticals, where there's going to be food tech delivery ability et cetera.
That allow us to be much more flexible come up with new business models. So for example, a market Express, which you know we put together and launched quite quickly and essentially what it does it's a it offers a approximately one 4 million skus delivered within one to two hours.
Without the need to build a very heavy and expensive infrastructure and currently I think recover 55% of Russian population.
You know it was market express.
So that's one component and the other component that I mentioned, mostly yandex plus what do you do need to keep in mind that the dental the day once you kind of assortment depths and breadth.
<unk> will be comparable with other players when your delivery times and convenience, which by the way be improved very significantly over the past 12 years 12 months when those things will be comparator dental the day, the consumer will be choosing.
Based on the number of other benefits. In addition to E com that they can receive and we do believe that our subscription program Yandex plus is unparalleled in its width and the quality of different you know leading services that are part of that subscription.
That's pretty much it.
But can I clarify maybe if you could provide when would you expect that to your growth in absolute terms in e-commerce would be compatible to the market leaders in your lungs long term planning.
Look I mean, it's an excellent question right.
As you understand that we can you know have every time, a projections today, but they become relatively irrelevant in a vacuum because you know they like the competitive situation changes.
The competitive pressure changes from the entry of new players et cetera in our <unk>.
Do have an internal views as to when we would be able to reach some of the players, but three thing it's absolutely pointless to guide you guys towards that data point simply because so many things that will change in the next call it 612 or 18 months.
Okay. Thank you very much and May I ask another question on another topic here on the right here. So when I look at the guidance that you're providing for <unk> the growth.
I would say would be it might be later in mobility, it would be comparable maybe slightly higher than in the incision portal and advertising whatever so do you think that this market you are getting more mature and the growth opportunity here are shrinking and as a result, you expect that kind of a higher profitability.
Which of these more mature businesses or you still believe that there are quite a lot of opportunities to accelerate this business going forward. Thank you.
Hi, Great question. This is yogesh.
There are a couple of ways I think if we're looking at as you know.
Breaking the numbers you know 2021 was very strong for us so rides were up 50%.
And Jamie was up 74%.
Look at 2020, our rides were up 18% year over year and 13% in terms of Jamie So that was a low base year for us.
On a two year CAGR basis, our rides were up 33% in 'twenty, one and Jimmy was up 40% and actually if we look at 2022 I think the right way to look at it as a two year CAGR basis, where should we expect growth to accelerate so if you look at our guidance do you mean growth would be somewhere between 44%.
246%.
So second of all I think we're typically prudent and cautious when we're giving our forecast there are a number of things are going on in the world and in general we're cautious in the beginning of the year.
But you know it.
Maybe it's not always rise to compare different markets, but our global peers actually was still down from the pre pandemic levels. While we have exceeded them significantly. So you know if you look at lift in terms of revenue they are still down low single digits.
To compare it on two year CAGR and older is down in high single digits in the fourth quarter on a two year CAGR basis.
While my Yandex mobility was up 40% onto your CAGR in the second quarter a quarter. So we actually think we're going to see strong growth continued strong growth on the topline the bottom line and you kind of have to look through this pandemic cycles in other cycles, but we are very we're not arguably extracting profit.
But where experts continue to expect strong growth in this business.
Thank you very much.
And we can now take our next question from Luca <unk> of Morgan Stanley . Please go ahead.
Yeah, good afternoon, and congratulations on the results and I just wanted to ask how youre thinking about the category mix. It in e-commerce over the next three years got 42% of <unk> now from electronics apparel was 1% and you've mentioned that you want to build out this apparel and kids segment over the next year in particular, let's say any day.
Telephone on how Youre Envisaging your platform looking that would be very helpful. Thank you.
Hi, Luke that Sasha speaking.
Yes, Youre right, we are well given our background, we obviously know them.
We're very skewed towards electronics.
Given all of our price comparison.
And the way we think about this is a well now if you think about.
Not just here in this market, but broadly ecommerce you have 200 still lacks one is electronics and others as M. C. G.
They are largely comparable between them and the.
The categories were weak.
We develop now.
Fashion, and Keith and with with those.
Well I think they will be big parts of our effort.
In 2022 and beyond specifically speaking of fashion, we just launched it three months ago and already now have hundreds of brands on the platform.
Including the premium luxury wants.
And our ambition is to increase this for at least five full tier in the 'twenty to 'twenty two.
For the development of that vertical we.
The redesigned the logistics are always in a special process in the warehouses delivery.
Redesigned just to give you an idea.
The.
Partials, which one was only available only in Moscow and St. Petersburg, It's now available E and 60 out of the regions.
And our careers and pick up points now offer at the trial in service.
That's that's on the offline side I mean, clearly the development of the category also requires quite significant changes on the online.
Side of the.
Business and we.
Basically redesigned products specifically for that category.
To ensure the distinct.
Distinct category experience. The other one is keeps which is low single digit.
And we plan to a low single.
Sort of mid single digit of <unk>, and we plan to increase the contribution during 2022 over that so I would say that the distribution will be 70 G electronics DIY professional keith's.
Okay.
Alright, Thank you and just that and and and and Luke just just for their wounds have dealt with I mean, obviously a huge ambition is to.
Maintained the leadership in both S. M C G and consumer electronics categories, which we believe we now hold.
Understood and just on just to clarify the AR on the investment spend you came in $50 million under budget in 'twenty. One is this just a phasing wireless pushing out by investment into 2022 simply because of the utilization that you were saying in the fourth quarter was that more jobs drop.
Being adopted than you expected is that the right way to think about this.
That's pretty a right way to think about this I would say we have a very rigorous investment allocation approach within the company.
And or the metrics I was mentioning earlier in the call.
Strictly pointed toward and basically as we were.
Thinking about whether we should.
Or should not.
Press here or there and just.
Decided that we Pat is safe.
Million.
In in the market circumstances.
Alright, Thank you very much.
Later the next question please.
I apologize we can now take our next question from Dmitry <unk> of Wood <unk> Company. Please go ahead.
Hi, yes. Thank you for the opportunity to ask the question. So I have two bulk on the E Commerce business. So the first one we can see that you've made.
<unk> continues.
Continue to be there.
Solid JMP go and you guide that you would focus on the utilization next year.
It just seems to me that you are more focused on unit economics, rather than to grow given the fact that.
Yeah.
<unk> you.
The leading players.
Doug I'll, let you show them.
Other participant mentioned before I'm just curious maybe you could provide some more color one when do you expect.
Breakeven, we'd be ecommerce business, how do you see progress.
First question on the second one on your all express delivery yes.
You've made some progress.
Or is it really just still.
Definitely.
AUM.
And you still have a lot of next day delivery I was just wondering how youre going to look like next year are you planning to significantly improve same day delivery.
Maybe the express delivery.
<unk> continued to do that.
Thank you.
Hi, Dmitry.
Let me try to answer your question on price sort of the pecking order of our decision making.
First of all it.
We do believe that.
And that should be always a right balance between.
The growth in the U S.
The economics because that is the.
Cornerstone of building a sustainable business and we are in the business of building a sustainable business is I would say.
That's the first and.
There are several of the level of unit economics, which we believe is a must have sort of all else equal situation.
And.
We try to achieve that.
Obviously, we are not in a vacuum in the market.
And.
Once we see I don't know the.
Aggressive pricing by any of the participants or some some other.
Events we.
Participate as a market player but.
For us, it's sulfate paramount importance to keep a right balance between growth and and even if the economic dynamics.
That's that's one.
That's been set.
I do think while we.
Don't you think I mean, we were growing.
Faster than any of the market participants and we gain market share while.
Building shouldn't.
Differentiated capabilities for all marketplace.
And many of those are just unparalleled I mentioned are.
On demand delivery I mentioned.
Press and bills to already account for 20% of all business in Moscow.
And given.
How.
Practice, those I and.
Given the retention of those businesses.
All of those customers, it's reasonable to expect the share to go further up.
And.
There will be more of that.
Yeah.
Have a luxury of either part of yandex and by adding together different.
Capabilities of different businesses within the food Tech right hailing.
Delivery groups, we would basically create new products, which helps.
So actually I don't think those will be.
Will it be a differentiator for us.
Dmitry Hi, this is <unk>, let me just quickly add to something that's towards social mentioned.
I think in your question.
If I heard you correctly I just wanted to kind of clear up the misconception here.
Based on the numbers that we have we believe that our market Express is.
Is larger in Moscow than I was on express.
And b are slightly smaller than them.
Country Wise, so and then just keep in mind that was something that we built in the past six or seven months.
The trend is extremely encouraging you know how quickly this is.
This is rolling out in <unk>.
How quickly our customers actually adopting this.
So we do things at least in that terms of of delivery.
Especially once you at loft parts of our food Tech, which we also consider for.
For comparison purposes, as a parcel that E com platform.
Once you combine all of those forces, we do think that the quick.
And Schwartz.
<unk>, especially with why its selection of a skew which has seen a $1 4 million escapes today.
This is something that we are extremely well positioned to overtake our competitors in the market.
Thank you very much just a quick follow up.
Is it possible given.
Given the fact that you have.
The lowest rates in the market.
And I would express and you also have 42%.
Sure.
As a potential JV.
Taking into account I didn't try it.
Lois.
Hey, Great I'm just wondering.
At the current mix he didn't even possible to kind of a cheapening Amit.
Does it have you need to Cogs.
Maybe it would have to see.
Got you.
Right great. Thank you.
Hum.
Again.
So first of all I would say on a like for like basis.
Our take rates are fairly comparable to the other marketplaces.
So we are not a discounter by any means.
And.
With that.
Hum.
The take rates between take rates and the unit economics, the rife Hugh.
Elements Walgreens take rate to the unit economics so.
From that standpoint, I would say, we are fairly comparable to the to the other participants.
For us the strategy of unit economics improvement comes from one.
Just overall operations improvement and.
Adjusted for some.
Uh huh.
Oh Wow.
And the utilization during the fourth quarter, our unit economics across the country would be in a.
Hello.
Single digits percents, so that's that's clearly where many of our competitors huh.
And.
The other layer, obviously is the diversification into other categories and driving the retention and the business doesn't stop with the unit economics. It's also the March implementation and that's also a big focus.
So rest assured we did a good progress.
During 2021 the trough two.
At peak unit economics.
Swing was 15 percentage points and we are very proud with that dynamics.
And also.
We are working hard on the delivery channel mix, we almost got rid of the third party deliveries now it's basically the utilization play.
So it's it's all goes into one direction.
Hope that answers your question.
Yes, thank you very much correctly.
As a reminder, please ask only one question and one follow up question. We can now take our next question is from catching O'neill of Citi. Please go ahead.
Hi, Hi.
I just wanted to go back to the investment levels.
When I look at media services, and other business units and initiatives.
EBITDA losses at 10% do you want to place a days increased quite significantly year on year. So I just wondered if you could give us any sense.
How we should think about <unk> should we expect them to be much higher than 2020. Thank you Ron.
Can you at a similar pace, given the fintech and content investments.
And then on Yandex market I know you meant kidney.
FMC G fashion kids.
Should we expect to see to take rate improve given the expansion of those categories, which tend to be higher take rate than electronics. For example, say you should go back and you guys came in ahead of us with JMP.
Hello kitchen, I will start with the other business units. So overall for all our businesses, we do expect them to become positive in midterm in the horizon of from three to five years. So.
And that means that even for our businesses, which are on labeling.
The other business units. It's like for example media are which you asked about are we still do expect profitability from them are familiar it's a horizon of three to four years.
And it's achievable.
Subject to an increasing number of paying subscribers wherever we do see very good dynamic as we already mentioned.
Ready to have a 12 million subscribers out of them around 80% are paying subscribers and actually this proportion improved significantly during the last year.
And the same trend.
We do have on the total number so we need the scale and we need to get this scale quite fast so.
So we are committed to invest in this direction and believe that media is one of the core.
Advantages are well, our plus program and our media segment are one of the key advantages for our ecosystem. So I'm talking about other business units like cloud for example, as I mentioned already that we do see a very good progress in our growth.
And then fourth quarter, you know the run rate even improved at the same time, we do of course, how far the five year model and we do see the profitability of this unit also in the horizon of three to five yes.
So talking about other segments on <unk> already commented today. That's L. A we believe that did your unit has very good international perspective, and we are ready to how far they're good contracts in the U S. In terms of rover's. So the monetization will firstly outcome from our.
Rover's Division.
And then some.
Ghansham horizon from our self driving cars.
And other segments, which we do have in other business segments is alphatec. We just started building it last year.
Still we do expect them to become a profitable from three to five years just for the other businesses.
Yeah.
Hi, Catherine that Sasha to your question, yes, you're absolutely right as we are aging.
Those new categories and grow their share.
It's reasonable to expect the effective take rate to go up.
As it is reasonable to expect it to go up when.
Yeah.
We.
Oh, the merchants from drop shipping.
Asian model to the warehouse model, which will also develop.
I mean this this this transition so yes, there are many.
Layers, how the effective take rate to observe.
We will be improving.
Okay. Thank you can I just come back to <unk>.
Comment on EBIT EBITDA losses in media services and other business units and initiatives should we I just want to understand that should we expect that to be higher in 2020 'twenty. One and is there anything you can talk about the impact in terms of.
<unk>.
How much investment we should expect.
Hum. So overall, we do not give a guidance on the EBITDA of this specific segments.
But you can be sure that we're always considering our liquidity position and our overall EBITDA levels.
Making decisions in terms of prioritization of our investments and of course, we do discuss all of this factors when we make decisions on our next year budget. So we can assure that the budget for this year is well balanced and we ensure that we do have sufficient liquidity coming.
<unk> from our core businesses, such important and mobility.
No Catherine was with respect to Fintech again, we don't give specific guidance.
For investments in.
Other than E com.
But overall I would say that in 2022, the amount of investment into Fintech will definitely not going to be as high as e-commerce or even self driving group.
Is going to be less.
What are you going to focus on in 'twenty two.
How should we kind of three pronged effort, we're going to continue developing of.
Platform for the bank.
And further expanding the bank debt.
The team itself in.
When are we going to start rolling out.
The the products first transactional and we do plan to launch well I wouldn't say the first but essentially second credit product because of the first one was.
Our buy now pay later service, which we launched in September of last year.
But overall, we rethink that and the last one so I'd be gonna be putting them into fintech itself are going to help us to quickly gain.
Customer base, among our loyal customers and overall, we are planning to focus on several <unk>.
Synergetic retail products with our other Yandex services.
Yes.
Okay. Thank you.
Yeah.
We have no further questions I would now like to hand, the call it back to Uli duress and Lowe for closing remarks. Please go ahead.
Thank you very much for all your questions. If you have any follow ups as usual you know myself and Carter you may our team who are available to help you with us. Thank you very much and have a good day.
Thank you very much that does conclude the conference call for today. Thank you for participating you may all disconnect.
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